Councils turning to commercialisation to avoid austerity

A new report has argued that local authorities are increasingly turning to commercialisation to drive forward their communities and look beyond current austerity measures.

Despite some councils still cutting services to fit government funding in the short-term, the report found that many are breaking free from the inertia of austerity and are employing new business models, investing to grow or commercialising their fiscal futures. This is contributing towards further commercialism in councils, with one council leader admitting to a £1.5 billion annual turnover.

Why are we here? The 2017 Senior Managers’ Risk Report, published by Zurich Municipal, interviewed 22 council chiefs across England and Scotland and found that there are significant variations in the approaches being taken by Britain’s local authorities.

While a number of councils are embracing the opportunity to become commercial entities, others are facing serious funding challenges, which they claim is exacerbating tensions with central government.

Rod Penman, head of Public Services at Zurich Municipal, said: “Councils are facing challenges from all sides, and many are employing commercial ventures to mitigate some of the lasting effects of austerity. This approach is not without its challenges, however. There is the growing potential for moral and commercial dilemmas at almost every turn, and it is clear that council chiefs are concerned about the long-term relationship between national and local government.

“Britain faces a ticking demographic time bomb and local government has no choice but to work towards developing income streams to match existing and future demand. Councils must therefore improve the narrative around the choices they are having to take – framing decisions in a purely commercial light simply isn’t an option when the social value of public bodies and services has to be factored in.”