Human Engine is proud to launch our latest report Commercial Edge: Renewing the case for the local investment state developed in partnership with leading think tank Localis. The executive summary is available here.
According to the Institute for Fiscal Studies, the coronavirus pandemic created a “perfect storm for councils, simultaneously increasing spending and reducing revenue-raising capacity”. Local authorities have developed their 2021-22 budgets in the context of great uncertainty about how much to expect from central government and where other means of income generation are going to lie going forward. This presents an increasing need for commercial activity to be pursued strategically with caution, meticulousness, accountability and risk management embedded into respective agendas – as well as making effective commercial use of all potential assets at a council’s disposal.
At the same time, we have reached a low watermark for political support for councils investing resources in assets or activities that deliver revenue streams to fund vital local public services. By latching onto ‘bad apple’ examples, this media-fuelled narrative depicts council commercial activity as something inherently risky and to be avoided. This is short-sighted and wrong.
Our report has highlights four distinct challenges facing commercialism in local government.
Defining commercialism
Aligning commercial activity to public value
Commercial governance and risk management
Facilitating a commercial culture within the local authority
The report argues that when carried out with diligence, professionalism and conviction, commercialism can unlock latent place potential, deliver conspicuous and inconspicuous benefits to councils and the communities they serve and, ultimately, galvanise local economic and social recovery and renewal. A strong, place-based commercial edge is becoming increasingly necessary.
Local authorities are advised to apply and demonstrate five commonly identified themes of commercial maturity when engaging with such practice:
Strategy and Alignment
Supply
Demand
Market Intelligence
Organisational Culture
The report concludes with support and advocacy for well-managed, place-based commercialism as well as a defence of a council’s right to do so when appropriate, with distinct recommendations for local government leaderships, Elected Members in scrutiny roles and central government partners.
Want to read more? Find the full report here:
Full Report - https://www.human-engine.co.uk/commercialedge
Jonathon Noble, Managing Director, Human Engine: “Commercialism in the public sector is a multi-faceted issue. Too often, it is reduced to a binary debate over whether councils should or shouldn’t generate income through commercial means, underscored by cautionary tales of high profile failures.
“The reality is more complex than this. The truth is that it is impossible to deliver modern public services without commercial acumen – whether developing a deep understanding of the key markets with which you do business, negotiating better value for the public or redesigning services with customers in mind. These are all hallmarks of a mature commercial approach.
“Through our research and discourse with councils nationally, this report seeks to reframe the discussion to a more rounded view of commerciality, fundamentally aligning commercial activity to an organisation’s strategic objectives and the creation of public value.”
Localis Chief Executive, Jonathan Werran: “Councils have historically always been involved with commercial activity in some shape or form in creating revenue streams that improve residents’ lives and deliver better local services. This is a golden thread and is one worth preserving into the future.
“To maintain this tradition of strong self-government built on local investment and use this agenda to continue to deliver innovative public servicers into the future will require a shared language and understanding of how commercialism should work in practice across local and central government.
“Renewing the agenda will also rightly require a fresh approach to local scrutiny and governance and the immense rewards of capturing greater public and social value should be measured to encourage best practice across the sector.”
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