Councils embracing commercialisation, says survey

2 Nov 17

Commercialisation has become the most talked about topic in councils this year, with some seeing turnover equivalent to a FTSE 250 company, according to research gathered by Zurich Municipal.

The insurer conducted in-depth interviews with 22 council chiefs across England and Scotland gathering findings into the Why are we here? The 2017 Senior Managers’ Risk Report.

This revealed that many councils are embracing the opportunity to become commercial entities with one council chief interviewed by Zurich admitted to turnover of £1.5bn.

“Commercial income generating projects are the new norm for local government, with some competing against one another to buy and build hotels, harbours, piers, cinemas, university campuses, and science and research parks,” the report – released at the Solace Summit in Manchester yesterday - stated.

Many see the potential for commercially generated revenue to be re-invested in local communities, however, some spoke of the need not to stray to much into private sector disciplines, while others said it should not be pursued at any cost.

However, austerity is still seen as an ongoing challenge, with some councils saying that services cannot be cut any further.

Funding issues are also harming relations with central government, the research revealed.

One council chief executive said: “We need a frank discussion with government. We can’t carry on doing everything we do.”

Rod Penman, head of public services at Zurich Municipal said: “Councils are facing challenges from all sides, and many are employing commercial ventures to mitigate some of the lasting effects of austerity.

“This approach is not without its challenges, however. There is the growing potential for moral and commercial dilemmas at almost every turn, and it is clear that council chiefs are concerned about the long-term relationship between national and local government.”

Another theme to emerge from the study is the perception of councils following the Grenfell fire.

Council chiefs said they felt the tragedy marked a watershed in how local government’s purpose and remit is viewed.

One commented: “The Grenfell Tower disaster means we will take more consideration of community discussions.”

Penman added that councils needed to “improve the narrative” about the choices they take, especially in a more commercial environment.

“Framing decisions in a purely commercial light simply isn’t an option when the social value of public bodies and services has to be factored in,” he said.

  • Vivienne Russell

    Vivienne Russell is managing editor of Public Finance magazine and

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