By Christopher Green, CIPFA Head of Information Services
In this period of prolonged austerity, it is essential for local authorities to take advantage of the various income generation streams available to them if they wish to raise additional revenue as a means of providing funding for services.
During 2012/13, income generating activities contributed £11.3bn to local government funding across England, 7% of their overall spend nationwide. However, this contribution varies significantly by authority, from just 2%, to more than 50%.
Surprisingly, many authorities are hardly scratching the surface in exploring the many income generation powers and options available to them. Options some authorities are now finding can not only make a real impact in generating additional funds, but can also bring more autonomy, independence and a reduced reliance on central government support.
In response to requests from authorities wishing to better understand their comparative financial position as relates to the generation of income, CIPFA’s new Income Generation Profiles were developed. The profiles use the latest sales, fees and charges data taken from the Department for Communities and Local Government (DCLG) Revenue Outturn return, bringing it into simple and easy to read charts that help to build a detailed view of how income generated within any given authority compares to their peers.
Our profiles provide analysis and statistics on income as a proportion of overall expenditure, income per head of population, by service area and income generation comparisons to the previous year.
CIPFA profiles will help councils to better understand the services they provide, and identify potential areas for generating additional income, by comparing councils with other neighbouring authorities.
Each local authority is unique, from its social and physical characteristics to its distinctive traditions and practices. The CIPFA Nearest Neighbours Model adopts a scientific approach to measuring the similarity between authorities, taking many of these issues into account. Applied across both local and central government, the model has been used extensively in council assessments.
As austerity continues, many authorities will have to find new ways of generating income streams to help sustain public services and to lessen the impact of budget cuts and rising consumer demand. CIPFA’s Income Generation Profiles aim to help councils as they seek to find new ways of generating that income and ensure their financial stability through these challenging times and well into peers the future.