Vivien joined Local Partnerships in 2022 as a Project Director with a focus on commercialism in local government.
LATCo guidance 2023 edition
Vivien Holland
03 Jul 2023
Introduction
LATCo guidance – Local authority company review guidance
The toolkit, Local authority company review guidance, is for undertaking strategic and governance reviews of wholly or partly owned council commercial entities – 2023 edition.
A tool to help councils ensure that they strike an appropriate balance between allowing a company the freedom to manage its activities and ensuring that it is accountable for its actions.
Conclusion
Why is this LATCo guidance needed?
Local authority-controlled companies continue to be a popular model for carrying out commercial activity. Whilst there have been a few high-profile failures, there remain a significant number that are successful, taking advantage of the freedoms enjoyed by operating outside the council itself. However, given the current uncertainties in the general economic landscape including increased borrowing rates, it is important to ensure that all councils who own such companies maintain a watching brief on them and make any necessary adjustments. This could entail changes to the structure, shareholding or indeed to bring the operation back in-house.
Close monitoring of companies’ performance and those who operate them is all the more important. It is always important to recognise that the skills required to operate a company are distinct from those needed within a council. Ensuring that the skills mix is appropriate also requires a watching brief.
Purpose of LATCo guidance
As this LATCo guidance is primarily aimed at reviews of existing council owned companies, the first sections focus on the effectiveness and appropriateness of governance arrangements that are critical so that the companies may be held to account and to protect the interests of taxpayers.
Sections 3 and 4 of this guidance provide a best practice checklist of issues to consider while conducting governance reviews. Section 3 focuses on councils’ governance arrangements for overseeing wholly or partly owned entities and holding them to account.
Section 4 focuses on the establishment of effective governance arrangements for the entities themselves.
Section 5 has been included for context, and sets out the questions and challenges that we believe are relevant to the decision-making processes for establishing wholly or partly owned entities; why is establishing a company the right approach and would an alternative delivery model be more appropriate? It provides guidance as well as questions and issues to address as part of the process to plan and approve the establishment of a commercial entity.
This guidance can be used as a tool to help councils ensure that they strike an appropriate balance between allowing a company the freedom to manage its activities and ensuring that it is accountable for its actions. A summary of evidence and an accompanying action sheet is provided in Section 9
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