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'Commercial activity will bolster revenues and safeguard services'

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Many have noted irony in ministers latterly urging caution about commercialism in local government.

These same ministers have not themselves been so cautious about the impact on local services as councils’ central funding has been halved this decade. In response to the slashing of resources, local government has had little choice but to look for new sources of revenue, including through trading services and by seeking to earn money through its extensive property holdings. Ministers are in effect being charged with criticising the inevitable impact of their own policies.

However, any ministerial opposition to local government’s commercialisation should not be overestimated. In an LGC interview last month, local government minister Rishi Sunak said there would not be a “general clampdown on councils being entrepreneurial, commercial or doing things pragmatically and sensibly that economically benefit their areas”.

The concern was more levelled at a “handful of people who are doing something quite significantly out of the norm”, presumably the small number of districts who have borrowed heavily to invest in property.

While there are legitimate worries, local government’s commercialisation will intensify in the coming years. A survey of senior officers undertaken as part of LGC’s research in conjunction with DWF shows that two-thirds believe their authority’s revenue from commercial activity will rise by between 0-25% over the next three years.

However, entrepreneurialism is not risk-free. It is only by employing those who have knowledge of the commercial world that councils can hope to profit. There are numerous legal, staffing and financial implications, not to mention ethical ones, such as whether councils could potentially have an unfair competitive advantage.

Nevertheless, commercialisation offers local government huge potential to provide revenue to improve or safeguard services or to improve local areas – and it can ensure other public or private bodies are well served with quality services. We hope our research, which will be released over the coming week, will inspire you.

Nick Golding, editor

Read LGC and DWF’s full report: Commercialisation: Safeguarding the future of local public service delivery

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