The National Audit Office has said that a large increase in spending by English local councils on commercial property over the past three years (up x14 on the previous three) has left them exposed to financial difficulties in an economic recession or property crash. This is undoubtedly true, especially given that much of the spending seems to have been financed through borrowing.
But, as the Local Government Association’s Richard Watts pointed out, local authorities follow strict rules when undertaking these kinds of decisions with public money and, aside from trying to plug funding gaps, they are also attempting to boost their local economies, with retail centres high on their 'shopping-spree' list.
With much debate on social channels and elsewhere about whether the Government’s latest funding settlement is a step in the right direction or just papering over the cracks left by ten years of austerity, it seems to me the media doesn’t give councils enough credit for adding a strong commercial element to their financial plans.
Going forward – however generous or not a future central government settlement might be – there will be significant budgetary pressures on councils, not least from the vast sums increasingly needed for social care, especially for older people with health needs.
Council website advertising in the dock
Recently, my own company, CAN, became part of the media story when another local government 'Shock! Horror!' klaxon went off. The Guardian and the BBC (and a few other local and specialist news publishers) lambasted councils for showing what they portrayed as potentially damaging advertising to vulnerable residents as they read pages on subjects like benefits and bereavement on council websites.
On the surface, these articles were supposed to highlight issues of council non-compliance with data privacy regulations like the GDPR and the risk of sharing personal data with third parties. But the councils that are part of our advertising network are fully compliant in the advertising environment and the third parties involved are contracted to use data only to serve relevant ads, not to sell it on.
The fact that the media very quickly strayed into a harsh criticism of the whole notion of the public sector earning income from advertising speaks volumes, flagging up what I would consider useful ads for motability vehicles and Black Friday deals as its unacceptable face. The unsaid assumption being that councils shouldn’t have to sully themselves with commercialism even though our advertising network automatically blocks categories of ads unsuitable for that sort of environment, such as gambling, alcohol and payday loans.
Utilising council-owned assets to raise revenue
So, where does the media think the public sector’s relationship with commercialism should begin and end? Commercial property portfolios have been cited as potentially risky if they were bought by borrowing, so I’d argue there should be absolutely no qualms about local authorities utilising assets councils already own and that have been paid for by the council taxpayer.
This applies to print publications, roundabouts, bridges, street furniture and, yes, council websites – so long as the advertising is done safely and appropriately and abides by regulations – just as surely as it would apply to council-owned premises left lying idle. And local authorities have a long tradition of forging partnerships and sponsorship deals with the private sector to help deliver initiatives and public events which should continue to be encouraged.
Take the strain away from the public purse
Without these injections of private finance, the amount of council tax paid by residents would surely need to be set at publicly unacceptable – and unaffordable – levels.
The Institute for Fiscal Studies issued a recent report on the challenges for local government funding which showed councils were increasingly reliant on local taxes from both residents and businesses. I believe it is perfectly appropriate to seek sensible commercial avenues to alleviate some of the burden on the taxpayer.
Indeed, local businesses and local jobs could be boosted by a council’s commercial endeavours – increasing the amount of business rate revenue councils can collect in return. My company is currently negotiating with big-name brands keen to advertise their local outlets around the country on council websites to strengthen their ties to local communities, and is also about to launch a way for SMEs to advertise cost-effectively on their local council website in an automated way.
Post-Brexit, maybe local government can lead the way in getting back to the UK tradition of the successful mixed economy – and show that the partnership of public and private really work.
Lloyd Clark is managing director at CAN Digital Solutions