Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

'Council commercial approaches hinge on core questions'

  • Comment

Our roundtable discussion showed that each local authority has its own unique commercial objectives, means and methods of delivery. These objectives are often a product of the authority’s history and strengths.

For example, Wirral MBC is keen to exploit its physical assets through the formation of an enterprise zone. Meanwhile Hertsmere BC’s acquisition of Elstree Studios in 1996 has allowed it to create a unique and successful income source, and other authorities have commercialised their strongest service areas, including energy, legal and adult social care.

No one size fits all and that is why we always listen carefully to clients’ commercial objectives before setting out how they can be delivered, both in accordance with the law and internal governance structures.

While it was evident from the roundtable that a tailored approach is vital when it comes to commercial strategies, there were several core legal questions that needed to be dealt with.

First, can the authority do what it wants to do and what powers can be relied on to achieve the commercial objective?

Second, what must an authority do to comply with any legal or procedural requirements? These can include consultation regarding a change in service provision, equalities impact assessment, state aid compliance, business case approval by elected members, avoiding procurement regulations through a regulation 12 arrangement and Companies House requirements.

Third, what legal structure and agreements are needed to document the new commercial activities? We find it often helps to draw the structure on a single sheet (setting out the parties,

the ownerships and financial contributions) and simply list the agreements needed to put it into practice (including a brief description of each agreement’s purpose and heads of terms).

Once this is completed, the authority can move on to deliver its implementation plan against agreed dates.

Fourth, what governance arrangements are appropriate to support the delivery of the new commercial activities? These can take some time to agree and document but it is time well spent.

Fifth, do the commercial activities have an impact on employees’ terms and conditions and pension benefits? Will it involve a TUPE transfer from day one, and what policy will be adopted on new joiners in due course?

Sixth, has the authority adopted a tax-efficient legal structure and have tax considerations (for the local authority, customers and companies) been included in the business case?

And finally, are there any insurance implications arising from the commercial activities?

It is important that the legal issues complement a thorough, realistic and stress-tested business plan. In our experience, the business plan is fundamentally important to the success (or otherwise) of any commercial activities. This is sometimes a legal requirement, and even when not formally required it makes sound commercial sense to sign off a detailed business plan.

Colin Murray, partner, head of local government, DWF

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

  • Comment

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions.

Links may be included in your comments but HTML is not permitted.