Dan Peters 23 July 2015

Our study reveals extent of income generation in local government

The way local authorities are using commercial methods to secure financial stability has been highlighted in a new study by LGN and The MJ, in partnership with think tank Localis.

In what is hoped will become the first of an annual barometer of how councils are responding to the shift towards independence from government grant, we heard from more than 250 senior and other officers.

Our research found almost one in five senior managers expect their council will be generating up to 30% of revenue through commercial activity in four years’ time.

And just under half expect their authority will be generating between 11% and 20% of revenue from commercial activity by 2019/20 – up from less than 10% for 90% of senior managers in the current financial year.

Localis chief executive Alex Thomson said: ‘Nearly half of councils anticipate that between a tenth and a fifth of their income will be derived from entrepreneurial sources.

'It is therefore not surprising that survey respondents highlight the need for a commercial mindset to be prevalent throughout the upper echelons of local authorities.

‘The survey underlines the profound effect these changes are having on the ethos of local government, and the challenges that council officers and members face in adapting to a far more entrepreneurial world than was the case only a handful of years ago.

Currently, about half of those who took part in our research said their council had at least one post dedicated to encouraging their authority to be more commercial.

But there was little discernible pattern in the types of roles or seniority of positions charged with taking responsibility for developing councils’ commercial business.

Some called for all managers to think and work commercially and for it to become a ‘mainstreamed approach’.

Others expressed concerns that becoming more commercial would not be the panacea of the body blow of cuts to come, and warned the sector not to underestimate the change in culture and mind-set that would be needed.

Is your council generating income in an innovative way? Email d.peters@hgluk.com to tell us more.

For in depth analysis of our findings, click here (£).

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