commercial break

Capita Symonds’ Director of Business Transformation Neil McLocklin looks at how local authorities can learn from the commercial property sector…

Local authorities are used to cutting costs. That is just as well. The imminent Comprehensive Spending Review will ratchet up the pressure on them to do so even further.

But savings are not the whole answer. The government must put more pressure on the public sector to raise money too. This thinking is the lifeblood of the private property industry, but there is little pressure on the public sector to generate income.

It will be hard for the government to change, but change it must: the public sector is missing too many opportunities. These range from the obvious, such as ensuring vacant property is let, to the more innovative.

In August, environment secretary Chris Huhne gave local authorities the option to sell energy through feed-in tariffs. It was a good move, but this was just one possible area to address. The government should send a stronger message to the public sector that it is OK to be commercial.

Some forward-thinking local authorities, such as Lewisham and Southampton, have wisely taken minority stakes in their shopping centres, and will benefit from this income stream as it grows. But this is passive investment.

The diversity of assets within local authorities is immense, and this is part of the problem. Town halls and civic chambers are being rented out by some authorities for weddings and events, but the commercial promotion and marketing of these venues is often poor, so these fantastic assets are under-used.
Car parks and park-and-ride schemes may be operationally well managed, but there should also be kiosks to sell customers newspapers and coffee. Any good private sector property manager would be thinking along these lines.

Towns and cities attract events such as festivals, exhibitions and shows. But there is no proactive asset management that maximises revenue opportunities that surround these events. In the south, authorities should be considering the potential value for photo-voltaic cells on school roofs and landfill sites. Markets in streets and squares are often administered by local authorities, but in a passive way.

Of course, income generation has to be balanced with political and economic desires to stimulate the local economy – that and the all-too-common letter to the leader of the council from a local business, complaining about its audacity in increasing rent after five years.

We live in a new world. And politicians need to support their officers in taking a more commercial approach. If not, they miss opportunities to mitigate the pressure on public services.

Neil McLocklin is head of business transformation at Capita Symonds

Capita Symonds is a lead sponsor of Public Property Summit 2010.