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Making the most of your assets, by Lucy de Groot

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01 July 2005

As councils strive to achieve real improvements in their communities, success will depend on how well they manage their estates, argues Lucy de Groot

Local authorities in the UK own more than £80bn worth of property. Municipal pools, schools, libraries and offices are among the assets being used to provide everyday frontline services and enhance the quality of life in communities up and down the country.

But managing them is a complex and sophisticated business – the difference between a successful authority and a struggling one can be a clean and safe educational environment or a crumbling classroom.

'Improving life in local communities' is the theme of the Local Government Association's 2005 conference, being held in Harrogate on July 5–8. This important goal is at the forefront of councils' efforts to transform local services – and effective asset management has an essential, but often overlooked, role to play in this.

The business of asset management has changed considerably in the past five years, with the introduction of the single capital pot and the prudential borrowing regime. These, combined with the government's drive for greater efficiency, have put local authorities under increasing pressure to find innovative ways of managing their resources.

Councils at the forefront of this are forming partnerships with the voluntary and private sectors and integrating asset management and procurement into corporate policy. Five have been so successful they have been awarded Beacon status by the Office of the Deputy Prime Minister. Ashford Borough Council, Cambridgeshire and Hertfordshire county councils, Leeds City Council and Rotherham Metropolitan Borough Council have all demonstrated their commitment to involving their communities and using local partners to manage – and often transform – their assets for the benefit of residents. These councils treat their property portfolios as real resources, in the same way as funding and staff, and have a long-term vision to meet the changing needs of their communities.

Leeds City Council sees asset management as one of its biggest success stories. The council is working widely with other agencies and sectors to make it one of the regional centres of the North. It has already taken advantage of £29m in unsupported borrowing through the prudential code and has several Private Finance Initiative schemes and public-private partnerships on the go and in the pipeline.

Leeds has worked hard to consult residents on the best use of assets. Communities in Beeston Hill and Holbeck, one of the most deprived areas in the country and often the hardest to reach, were consulted through workshop events, exhibitions and visits to schools.

This is a neighbourhood renewal area and the council wanted to gauge views on housing needs and to assess support for a 3,000-bed student village. It is currently awaiting ODPM approval of a £115m PFI scheme for housing in the area, largely based on the comments of tenants. Under this, the council plans to upgrade 1,800 homes to bring them up to the decent homes standard, to be maintained by a private company over a 30-year contract. It also intends to demolish 40 dilapidated cottages and four blocks of multistorey flats that have become unpopular. Part of this land will be used to build 60 new homes for families and reduce the shortage of larger homes.

It will also create more of a mixed community, allowing a private developer to build market and rental properties. This scheme could also complement the Holbeck Urban Village, a recent regeneration project. Although the council did not manage this, it is a partner in the programme and has used its planning powers to ensure that the village fits into its plans for this run-down south side of the city.

Leeds has taken an overarching approach to asset management, ensuring its decisions are cohesive and communicated down to all levels. At the hub is the asset management working group, which reports to senior officers and the chief executive. Consisting of property managers across departments, it meets bi-monthly and checks that decisions on the use of resources fit into Leeds' corporate strategy up to 2011.

The group also ensures that there is an up-to-date asset register and sets internal performance indicators to monitor the council's progress in managing its property. Any department looking for new accommodation or property must approach the group so it can establish the most efficient use of resources. 

Unfortunately, the council's proposals for a student village were rejected by the city's two universities. But this resulted in significant consultation with residents across the city and led to the council agreeing a policy of 'housing restraint' around Headingley, the traditional student area. This will ensure that new developments are placed in regeneration areas and not concentrated in one part of Leeds.

Meanwhile, over in Kent, Ashford Borough Council  faces a particular asset management challenge. It has been chosen as one of the government's four areas for new housing development, with an extra 30,000 homes planned. This will add considerably to Ashford's size, population and demand for services.

The borough already has a good record of using its section 106 planning powers to ensure that contributions from private developers, such as new facilities, form part of its asset management plan. It will now need to ensure that future developments are both affordable and sustainable for existing residents.

Officers and senior managers at Ashford work across all departments to ensure the council takes a comprehensive view of asset management. Its staff in corporate property and financial services work particularly closely together, and this has led to several initiatives. One is a £200,000 annual reserve for repairs and renewals, which can be used to maintain the asset portfolio and upgrade equipment. The council has also set up several leisure trusts to run its facilities. The savings from these are ploughed back into the reserve.

To maintain some of its larger property holdings, Ashford displays an entrepreneurial spirit, sharing costs with partner organisations such as other service providers and the voluntary sector, applying for grants or generating additional income to recoup spending.

This approach allowed Ashford to upgrade its Stour Centre leisure facility. The centre was 30 years old with dwindling customers and rising maintenance costs. The council wanted to improve it for the local community and increase its income potential by adding a swimming pool, health and fitness suite and other facilities. It divided the project into two phases. The first it funded itself with the help of £1m from the ODPM. For the second phase, it has applied for a full grant from the ODPM's growth area fund.

After consulting with sporting groups and local residents, the council decided to move the centre's indoor bowling facility to another venue. This project cost £1.2m and was completed in nine months. It houses six indoor rinks and is run by a limited company of bowlers. They have paid £55,000 of the cost, and will repay the remainder from income during the lease.

The Stour Centre itself will be completed by next May, when an operating trust will take over its day-to-day management.

The major challenge for all local authorities is to help improve the lives of their residents and these Beacons demonstrate that progress is being made.

Cambridgeshire has shown how local authorities can work in partnership with other sectors to cut costs and develop integrated services. Its joint project with South Cambridgeshire Primary Care Trust has resulted in a joint base for adult social services staff and PCT workers, while it uses a citizens' panel to help keep it informed of residents' needs.

Hertfordshire has a comments database to analyse feedback from residents and a rolling five-year programme to generate £30m a year in capital receipts from its surplus property. This extra funding goes straight back into its estate.

These examples show what can be achieved with a little innovation and flair, but there is still much work to be done. With combined assets worth more than £80bn, all councils must ensure they are managing their estates to achieve lasting improvements to life in their communities.

Lucy de Groot is executive director of the Improvement and Development Agency

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