Civica - The Commercial Imperative

CIVICA - The commercial imperative

Summary

This report looks closely at how reduced central government funding has driven local government senior management teams to adopt commercial strategies and to identify alternative income streams, as they strive to become financially self-sufficient, on a sustainable, long term basis.

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CIPFA/Civica

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Another challenging government spending review has intensified local authorities’ focus on service commercialisation.

Following another tough financial settlement for local government whereby government grants have been cut by 25% and organisations are expected to be financially self-sufficient by 2020, local authorities are intensifying their endeavours beyond cost cutting to also commercialise certain services as part of a drive to increase revenues.

In addition, the Local Government Association (LGA) estimates that the funding gap created by social housing rent reductions will amount to £1 billion by 2020. It is all part of central government’s wider strategy to devolve fiscal responsibility for municipal services. And according to research from The Chartered Institute of Public Finance and Accountancy (CIPFA), local authority finance chiefs are less confident in their organisation’s ability to keep delivering higher quality universal services, and in the sustainability of their overall financial position. 

At a recent Leadership Forum, Civica brought together a group of local government and private sector leaders to understand more about these fiscal challenges, how local authorities have responded to this daunting climate, and what lessons they have learned along the way. We also conducted independent research across 45 local authority CEOs and CFOs with CIPFA, which equates to 10% of the market.

In our ‘Changing Landscape’ series of reports we highlighted the unprecedented nature of the pressures on all authorities and looked at some of the key responses.