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'Necessity' drives city to take higher commercial risk

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Peterborough City Council is to take on new higher-risk commercial activity as part of a drive to save £20m over the next three years.

Investment in land and property development, rental property and renewable energy schemes are among the options being considered as part of the authority’s proposed commercial strategy over the next three years, as well as the generation of external income from sponsorship, business investors and philanthropists.

In the short term, the council is examining the renegotiation of contracts, the extension of joint commissioning and an “entrepreneurial” approach to procurement.

A paper to council leaders putting forward the new strategy this morning warned that a higher level of risk was inherent in a more ambitious commercial portfolio, which was intended to make a “significant contribution” to the council’s budget.

“We accept that the council may need to take more risk than in recent times in order to achieve its ambitions and commercial success,” it said.

“Governance, management and performance of new commercial enterprises, partnerships and contracts will continue to be robust to ensure that the council adheres to its statutory responsibilities and that public money continues to be appropriately used and accounted for.”

Due to the financial pressure of reduced funding and increased demand for services, Peterborough had been “driven by necessity” to enter a “new phase of enterprise, investment and commercial growth”, it said.

“It has been identified that commercial opportunities and associated income generation provide significant scope for alleviating financial pressures and creating commercial returns which underpin the delivery of crucial frontline services,” it said.

Among the strategy’s “aspirational targets” are the creation of £5m in new revenue income and £4m in capital receipts by the end of March next year, as well as a 2 per cent annual saving on contracts for the lifetime of the strategy. Over the next five to ten years, it aims to deliver £15m - £20m of new revenue income to the authority.  

“The commercial strategy will contribute positively towards the achievement of savings targets and enable continued delivery of and investment in crucial front line services whilst achieving a balanced budget,” it said.

Peterborough had already gained experience in using commercial opportunities to supplement its income, the paper added.

However, the situation now faced by the council required “a more fundamental shift” in the way these activities were identified, implemented and monitored.

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