02 November 2007
John Healey has hit back at local government leaders for complaining about the recent Comprehensive Spending Review settlement, saying councils must be more commercial and not look to the government for handouts.
The local government minister told a conference on November 1, hosted by the New Local Government Network, that authorities must boost their finances by exploiting their powers to sell their services. The sector received a CSR settlement of a 1% average real-terms increase per year.
Healey cited research by Birmingham University, which has found that just one in four councils had any plans to generate profits that could be ploughed back into services or used to hold down council tax.
'When businesses need to balance their books they look for innovative ways of increasing trade and sales… councils can and should be exploiting their expertise and market potential to provide a better offer to their constituents,' Healey said.
The Birmingham study has also found that fewer than half of councils advertise their services or respond to tenders.
Healey also told the conference that authorities must be more ambitious and imaginative in using the finance options open to them.
But the Local Government Association, which has been vocal in its criticism of the sector's CSR settlement, dismissed Healey's comments as 'puzzling' in view of the constraints authorities face.
A spokesman told Public Finance: 'Any charging can only cover costs and not produce a profit. Ministers should review this legal issue so that councils could make surpluses that could allow greater investment in local area needs.'
PFnov2007
