All the indications are that local government will be expected to take efficiency one step further in 2008 and start to look at ways to make money and use assets more effectively. Heather Jameson reports
Since the change in prime minister and Cabinet last summer, there has been a step change in the local government efficiency agenda to match the new the Government.
It is unsurprising that the ex-chancellor – and former Treasury minister, John Healey – has put a more economic focus on the local government agenda.
Now, councils don’t just have to meet increasing efficiency targets to find cash to re-route into frontline services. There is an ever-growing expectation councils will help fund themselves by taking their skills and assets to market.
Latest research from the University of Birmingham estimates councils generate around £1bn a year by trading – yet only half of all councils are actively involved in tendering or advertising their services, and only one-quarter are trying to make profits to plough back into their services.
Last autumn, local government minister, Mr Healey, called on councils to up their game and become ‘more business-like’. In the run-up to the Comprehensive Spending Review, he focused on trading. Not only would it provide extra cash for councils, but it also shifted the balance of funding away from government grant and passed the buck back to the town hall on council tax.
In addition to trading, late November also saw a further call for councils to follow in the footsteps of their private sector partners in terms of property management.
A report by York Consulting, commissioned by the Government in 2001, looked into asset management in local authorities.
The report showed councils were becoming more business-like, but there was still a lot more to be done.
Mr Healey said: ‘When businesses need to balance their books, they look for innovative ways to increase trade and spend less.
‘There is no reason why all local authorities can’t do the same. The best are, but many are not. This is wrong, not just because it is what tax-payers expect, but because savings can be used to improve services for local people too.
‘Over the next three years, local government is expected to develop a more strategic approach to asset management, securing better value for money and making more effective use of the asset base as the foundation for delivering high-performing public service.’
According to the report, the amount of property and land classed as ‘surplus to requirements’ had jumped by almost one-third since 2000. Councils were also spending more cash on maintaining property, and it was now in better condition. It also found councils were learning to use their space better, with a 10% cut in the amount of office space occupied by council workers.
Some councils were far further ahead in asset management expertise than others. The York report put this down to three factors:
l corporate culture
l buy-in at a senior level
l leadership.
Most local authorities had improved their asset management in the past six years, but this was largely put down to government initiatives – for example the use of resources element of CPA – but there was more to be achieved. There was very little long-term planning.
The report recommended councils:
l regularly review corporate management arrangements for capital asset planning
l designate a member of the cabinet to hold the property portfolio
l involve scrutiny and backbench members
l ensure property management has a strong corporate component and is adequately resourced
l set up a corporate project management system
l ensure capital projects are reviewed after they have been set up
l collect data on their property – and use it effectively.
Since the report was commissioned in 2001, the local government landscape has moved on. The door to transfer of assets to community management has opened since the Quirk review was published last year.
Mr Healey welcomed the report and offered councils his help in moving the efficiency agenda forward. He said: ‘We continue to work with local authorities to promote efficient and effective management of their property portfolio and other resources.
‘Councils should also be local leaders in tackling climate change and are encouraged to run their buildings in an environmentally-sustainable way. And our drive to improve the energy efficiency of new and existing commercial buildings will help them achieve this.’
It is unsurprising that the ex-chancellor – and former Treasury minister, John Healey – has put a more economic focus on the local government agenda.
Now, councils don’t just have to meet increasing efficiency targets to find cash to re-route into frontline services. There is an ever-growing expectation councils will help fund themselves by taking their skills and assets to market.
Latest research from the University of Birmingham estimates councils generate around £1bn a year by trading – yet only half of all councils are actively involved in tendering or advertising their services, and only one-quarter are trying to make profits to plough back into their services.
Last autumn, local government minister, Mr Healey, called on councils to up their game and become ‘more business-like’. In the run-up to the Comprehensive Spending Review, he focused on trading. Not only would it provide extra cash for councils, but it also shifted the balance of funding away from government grant and passed the buck back to the town hall on council tax.
In addition to trading, late November also saw a further call for councils to follow in the footsteps of their private sector partners in terms of property management.
A report by York Consulting, commissioned by the Government in 2001, looked into asset management in local authorities.
The report showed councils were becoming more business-like, but there was still a lot more to be done.
Mr Healey said: ‘When businesses need to balance their books, they look for innovative ways to increase trade and spend less.
‘There is no reason why all local authorities can’t do the same. The best are, but many are not. This is wrong, not just because it is what tax-payers expect, but because savings can be used to improve services for local people too.
‘Over the next three years, local government is expected to develop a more strategic approach to asset management, securing better value for money and making more effective use of the asset base as the foundation for delivering high-performing public service.’
According to the report, the amount of property and land classed as ‘surplus to requirements’ had jumped by almost one-third since 2000. Councils were also spending more cash on maintaining property, and it was now in better condition. It also found councils were learning to use their space better, with a 10% cut in the amount of office space occupied by council workers.
Some councils were far further ahead in asset management expertise than others. The York report put this down to three factors:
l corporate culture
l buy-in at a senior level
l leadership.
Most local authorities had improved their asset management in the past six years, but this was largely put down to government initiatives – for example the use of resources element of CPA – but there was more to be achieved. There was very little long-term planning.
The report recommended councils:
l regularly review corporate management arrangements for capital asset planning
l designate a member of the cabinet to hold the property portfolio
l involve scrutiny and backbench members
l ensure property management has a strong corporate component and is adequately resourced
l set up a corporate project management system
l ensure capital projects are reviewed after they have been set up
l collect data on their property – and use it effectively.
Since the report was commissioned in 2001, the local government landscape has moved on. The door to transfer of assets to community management has opened since the Quirk review was published last year.
Mr Healey welcomed the report and offered councils his help in moving the efficiency agenda forward. He said: ‘We continue to work with local authorities to promote efficient and effective management of their property portfolio and other resources.
‘Councils should also be local leaders in tackling climate change and are encouraged to run their buildings in an environmentally-sustainable way. And our drive to improve the energy efficiency of new and existing commercial buildings will help them achieve this.’
