Thursday 20 October 2011
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.