Brave new entrepreneurial councils
As Northamptonshire CC has recently picked up two awards from the Department for Business, Innovation & Skills for being the most enterprising place in Britain and for encouraging export, I thought I would focus my partnership article on councils as businesses.
Like any business, there are two simple financial rules:
- Ensure revenues exceed costs, at worst over the medium term
- Ensure cash flow does not cripple you in the meantime.
So if you are running the profit and loss of a council and are faced with the ‘graphs of doom’ where social care costs will in the next 10 years outstrip your revenues you have three simple choices:
- Increase income and/or:
- Reduce costs; or:
- Declare bankruptcy.
There is a fourth temporary measure for councils that can draw down from large reserves or sell high-priced assets. Northamptonshire has neither.
Increasing income in this climate isn’t about the traditional fees and charges review that sees 10p being added to service x or y. It means creating income streams through entrepreneurialism, whether directly or as a purveyor of the ingredients for enterprise.
This role demands new entrepreneurial skills within councils. At the least it requires the commercial and business intelligence skills to know how to help create value from the broad array of assets within your area.
And for the central politicians reading this who believe this is simply the realm of the private sector, then my challenge to you is to visit a modern council and recognise the private/public split is a thing of the past.
It is interesting, however, to think of Northamptonshire CC with a new school improvement team that has improved schools in measures from more than 30 to under 10 in recent years and yet we cannot ‘compete’ to be an academy sponsor in the county.
Of course when it comes to cost reduction then this may be achieved in many ways, but in reality it can be broken down into two core strategies - demand management and productivity improvement -regardless of whether the tactics to deliver these are through sharing, co-production and social capitalism, outsourcing, market making, hurdle raising or targeted prevention, to name but some.
The blunt truth is that in the continuing age of austerity, with the next spending review set to be as tough as the current, the modern local authority has to be market maker, prosperity catalyst and productive business partner simultaneously.
I wonder when they’ll open up the local government market to free competition?
Paul Blantern, chief executive, Northamptonshire CC
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