Now that we are over halfway through the financial year, more and more councils are revisiting plans they have made to generate efficiency savings to see if they will stack up and achieve their desired outcome for this year and beyond.

At APSE, we have noticed an upsurge in enquiries about how you make remaining services more commercially viable by either reducing costs or generating additional revenue to offset budget cuts. This suggests that councils are concerned they may fail to meet existing targets and are attempting a ‘take two’.

With outsourcing too lengthy a process to deal with the immediacy of the financial pressures, many are looking at internal resources to see how they can make what they have go further or how they can generate a return from existing services.

The Audit Commission study ‘Positively Charged’, back in 2008, identified that local authorities in England and Wales generated over £11b in charges per annum. I must stress that nobody is suggesting we should try to soak the public for further revenue in the current economy. However, senior officers are recognising that some of the services they currently provide and assets used could raise revenue from the wider public sector and beyond.

Some of the thinking behind this is driven by the Open Public Services approach and there are those who add two and two together and come up with putting services at arm’s length to ‘free’ them to compete in wider markets. But decision-makers should remember that much of the perceived opportunities of this approach can be achieved with existing in-house services. And you certainly don’t need to mould services into a new type of model to pursue alternative work streams.

Local government already has many existing powers that allow it to provide services for other organisations. When you add the powers to charge for cost recovery and to trade for profit contained within the 2003 Local Government Act, you have quite a range of options available.

Some may decide to go for it and trade for profit on a larger scale, although I suspect the vast majority will test their competitiveness by expanding their charged-for services and perhaps trading commercially on a small scale at the outset.

As budgets continue to fall and corporate directors scan the horizon for opportunities to balance the books, I suspect many more will turn to developing income generation strategies for their authorities.

As if councils didn’t already have enough to contend with, they are now facing a barrage of criticism over charging.

Previously, the Government indicated that local authorities should further explore opportunities to generate income so long as this was not exploiting the public. Faced with unprecedented cuts in resources, many authorities have done exactly that. Indeed, only a couple of months ago communities and local government secretary Eric Pickles cited APSE’s examples of local authority MOT stations providing a service to the public and undertaking tree inspections for private businesses for insurance purposes on national radio and flagged up a link to our web pages on the topic.

Yet ministers are now accusing councils of treating residents as ‘cash cows’ in the media and linking charges for services with so-called ‘fat cat’ chief executives’ salaries (The MJ, 13/1/11 p.3).

While no-one is suggesting for a minute that councils should ruthlessly introduce fees that could see prices hiked for service users, there are certainly activities that could be provided on a charged-for basis to ensure their survival and generate surpluses to invest in others. Examples include local authorities hiring out expensive plant and equipment to neighbouring authorities to help to offset their capital outlay. New regulations also allow them to charge prisons and hospitals to collect their trade waste.

This is about underpinning rather than squeezing the local economy and councils must ensure that local businesses are not affected. In fact, EU competition law requires them to be mindful of the impact on the marketplace.

In APSE’s view, focusing on efficiency, income generation and innovation is the only hope for surviving the cuts. Trading and charging can be a way of achieving all three. It must be done in a carefully considered, strategic way however. An Audit Commission report back in 2008, showed local authorities in England and Wales were generating £11b in charges, my view is this is likely to increase in future years. It also recommended that every council should have a clear corporate charging strategy in place.

Charging and trading must be properly thought through. We have developed a seven stage approach; identify legal powers; integrate it into your community strategy; establish a need; develop a business plan; undertake market analysis; carry out risk assessment; and ensure it links to well-being powers.

Public opinion is an important factor to consider. And ministerial criticism, after previously supporting charging, does not help local businesses and residents understand what they are paying for and why. Or – more to the point – that with local government in such dire straights, the alternative might be to lose services they value altogether.