Discovering new income streams

23-10-2013

by Cliff Dalton, Head of Performance and Improvement, CIPFA

In his keynote speech, at this year’s Conservative Party Conference, Prime Minister David Cameron was bullish about the UK economy turning a corner. Cameron and Chancellor George Osborne also made clear their intention to move public finances into the black, once the economy strengthens, by promising to run a surplus budget in times of growth. Many political commentators interpreted this move as licence to further squeeze spending across government departments well beyond the current spending round.

If precedent is followed – and some departments remain protected from spending cuts through ring fenced budgets – then this protection will obviously be to the detriment of others. Indeed it could leave local government, in particular, taking a lion’s share of the austerity measures again. Town and county halls up and down the country remain at the front line of this fiscal challenge, and finance directors will be only too familiar with the challenges their councils face. These challenges include: maintaining a balanced budget, organisational restructure, unfilled vacancies, down sized service delivery or even a raid on reserves.

Yet, despite these tough times and limited options to bridge a widening funding gap, CIPFA’s qualitative research and feedback continues to show that many authorities are yet to exploit the many income generation (or cost reduction) powers and value for money options available to them. The tolls and options that a handful of authorities are now finding and utilising can not only make a real impact in plugging funding gaps, but can also bring more autonomy, independence and a reduced reliance on central government support.

Generating income is about transforming services to make use of assets, staff and trading, to ensure that public bodies can bring in income where possible, and mitigate the effect of the spending cuts on their revenue budgets.

There will always be those who criticise councils for making too much money in areas such as car parking. And there is no doubt a discussion to be had on greater clarity and transparency on what a ‘full cost recovery’ is in such discretionary service areas. But even outside of these types of revenue streams there remain many areas of cost reduction and income generation that authorities are hardly touching.  

Authorities need to discover the potential to generate cash or reduce costs and look at what they can do in all areas to bring about savings or increase revenue – before it’s too late.