Councils must upskill be bold and embrace commercial opportunities that tackle the funding gap

14-07-2016

Independent research spanning 45 local authorities found that:

  • 40% of local authority leaders say commercialisation plays some part in their current strategy,  however, only 4% of public sector CEOs and CFOs say they have significant commercial expertise
  • positive progress is being held back by a lack of understanding of what the market needs (36%) and concerns about the risks involved (56%)
  • a restrictive culture (40%) and discomfort about new models (56%) is also having an impact
  • those with a commercial strategy say commercialisation gives them more control over developments in the community, builds closer relationships with the people they serve and supports the creation of new jobs.

The Commercial Imperative, a report published today by Civica, in partnership with CIPFA, the Chartered Institute of Public Finance and Accountancy, outlines the need for councils to improve their commercial skills and seek new income streams in order to close the current funding gap. The report explores the role of commercialisation as a way for authorities to tackle current financial challenges, become self-sufficient and provides step-by-step guidance on how to find the right path to achieve a sustainable commercial model

Following increased financial uncertainty and another tough financial settlement for councils in England, where government grants have been cut by 25% and organisations are expected to be financially self-sufficient by 2020, local authorities are looking beyond service reduction towards commercialising services. While commercialised approaches and options are plentiful, finding the right strategy that delivers genuine returns is a task that few local authorities have found easy.

 Rob Whiteman, CIPFA Chief Executive, commented:

“Commercialisation is going to be one of the most important priorities for local authorities over the next decade.

If they haven’t already, council leaders and CFOs must start thinking about short, medium and long term strategies for generating their own income. Reappraising their appetite for risk is vital to making these endeavours successful.

Not every attempt will make money and as public bodies using the public purse, it’s a difficult position to be in. But a thorough review of risk management, cost and modelling systems, together with open conversation at a board level can make it easier.”

 Wayne Story, Group CEO of Civica:

“Local authorities are juggling a wide-range of transformational activities. While adding commercialisation to the mix may seem daunting, with no sign of financial and service demand pressures abating – it’s essential.

As always, those who make the journey with the most passion, commitment to success and flexibility will be the ones who see the best results. And ultimately will be the ones who most improve the lives of the communities in which they operate.”

 The Commercial Imperative outlines critical success factors influencing commercial journeys, four ways to generate revenue and six practical steps to help local authority leaders build a sustainable commercial model.

 It is the fourth instalment in Civica’s Changing Landscapes report series.

 

ENDS

 

About CIPFA:

CIPFA (www.cipfa.org), the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance. Its 14,000 members work throughout the public services, in national audit agencies, in major accountancy firms, and in other bodies where public money needs to be effectively and efficiently managed.

About Civica:

Civica (www.civica.co.uk) is a market-leading specialist in software, technology and outsourcing services that help teams and organisations around the world to transform the way they work. Combining exceptional customer focus, experience and commitment, Civica supplies more than 2,000 major customers in 10 countries around the world.