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    Norse Group – achieving market leadership through partnership

    Norse Group is a Business Reporter client.

    Norse Group has risen to become the biggest – and best – in its field through its pioneering partnership model

    Business Reporter: Norse Group

    There are more than 700 local authority-owned companies in the UK, set up for specific projects – such as housebuilding – or to deliver council services in a more commercial fashion and contribute to increasingly stretched budgets. This business model, known as a local authority trading company, or LATCo, has become well established over the past 30 years or so, and one stands head and shoulders above the rest.

    Norse Group is the largest and most successful LATCo in the country. Wholly owned by Norfolk County Council, it was the first to recognise that opportunities existed to expand outside its home territory, by setting up joint ventures with local authorities who wished to embrace a more commercial approach to delivering essential services – without compromising their public service ethos.

    The company (originally known as Norfolk County Services) was set up in 1988 as a response to compulsory competitive tendering (CCT), introduced by the Thatcher government. Under the visionary leadership of founder Peter Hawes, it began as purely a trading operation, bidding for public sector cleaning and catering contracts in East Anglia.

    Unique offer fuels growth

    As the business grew, other services were added, and turnover increased rapidly. It became clear that an appetite existed for a company with its roots in the public sector, but which could deliver services on a par with the best of the private sector, and compete on price.

    In 2003 the first of Norse’s joint ventures was formed, quickly followed by the second, and this was the moment when the board realised it had a unique proposition to offer the local government market.

    In subsequent years the focus shifted to promoting and developing the partnership model and capitalising on being the pioneers in this market. The 2008 rebrand to Norse established a new identity and reinforced the company’s status as a commercial entity, providing distance from its public sector roots and giving it greater credibility as it started a push into different regions.

    Today, Norse Group has more than 20 local authority partnerships and operates as widely as the South West, Wales, Wigan, Leeds, London, Kent and the South Coast, while of course retaining a strong presence in its East Anglian homeland.

    Norse now boasts a forward order book of £2.1 billion, an annual turnover in excess of £350 million, and a workforce of more than 9,000 people, putting it among the UK’s top outsourced service providers. The group comprises three primary companies:

    • Norse Commercial Services, which provides environmental, highways, transport and facility management services
    • Norse Consulting, a property services specialist
    • NorseCare, which owns and runs care homes in Norfolk

    Norse’s government ownership means there is a deep-rooted commitment to public service values throughout the organisation, and its profits are returned to the public purse, rather than to institutional shareholders. In the past ten years, Norse has repaid over £65 million to its council owner and the group’s local authority partners.

    Prosperity through partnership

    Today, councils across the country face a raft of problems: ever-rising costs and general inflation, combined with a drop in revenues, are pushing them towards Austerity 2.0; they face great uncertainty as new procurement legislation is introduced and more demanding waste regulations are being enacted; and their local residents’ demands continue to increase. As they grapple with their finances, their appetite for providing social value and achieving Net Zero is undiminished. How do they square this circle?

    Justin Galliford, Norse Group CEO (pictured) says, “I am convinced that Norse’s partnership model provides the answer. Our track record in delivering cost efficiencies matching those of the private sector; the greater control and flexibility which co-ownership gives councils; and our deep-rooted public service ethos all make our offer more compelling than traditional outsourcing and in-house delivery.

    “But our trump card is the freedom to trade in external markets, opening up profitable new income streams. Joint ventures, run along commercial lines and making use of Norse’s business experience and substantial resources, can raise considerable additional revenue through trading – and allow partner councils to enjoy greater prosperity through the profit share mechanism which is a feature of all our partnerships.

    “All this, while helping to protect frontline services, providing job security and generating much-needed income for financially stretched local authority partners.”

    Blending ethics and commercialism

    Most companies turning over hundreds of millions of pounds exist to provide a return to their shareholders; profit is all, and the share price paramount.

    In recent years social value, now included in the catch-all term ESG, has risen in importance. It is seen as a way to increase returns, as well as giving back to society, especially when selling to the public sector.

    From its inception Norse Group has been founded on public service values, and as the company’s commercial skills have developed, its ethos remains undiluted. The term “ethical commercialism”, coined by Jonathan Werran of the think tank Localis, encapsulates Norse’s approach, and is proving increasingly attractive to a public sector which seeks to make social value a key component of the business world.

    Shared control provides flexibility

    In an ever-changing environment, with the prospect of new legislation bringing uncertainty, the public sector needs flexibility more than ever. When frontline services such as waste collection or highways maintenance require re-engineering in response to change, the ability to move quickly is paramount. In a traditional outsourcing arrangement this generally leads to protracted contract renegotiation, and, more often than not, increased costs.

    A Norse partnership offers no such complications: the joint venture company is part-owned by the partner council, and this includes board representation, giving members direct control. This means that any changes to service delivery can be quickly agreed by the JVC board and implemented straight away.

    This unique combination of responsiveness, commercial knowhow and public service values has propelled Norse to market leadership, and firmly places the company among the best of the best.

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