Show image

£100 off every council tax bill by 2020 predicts think-tank

25th March 2015

A report published today by the think-tank Localis predicts that growing commercial activity in local government could cut £100 off council tax bills by 2020.

The prediction comes from a survey of 150 key local government stakeholders – including chief executives, leaders, cabinet members and chief finance officers – who project that earnings from entrepreneurial activities will rise from comprising 6% of budgets today to 18% by 2020. This could generate up to £2bn of additional savings each year; a sum equivalent to cutting £100 off each 2019/20 council tax bill, or subsidising the construction of 80,000 homes across England.

The report, which explores how local government has responded to austerity in the past few years, finds that many councils across England are increasingly operating entrepreneurially, both acting like and partnering with the private sector. The report finds that:

  • More than half of councils (58%) own a trading company, and at the rate it is increasing, full coverage by 2020 is a possibility;
  • A majority of councils (57%) operate a joint venture with the private sector;
  • Without entrepreneurial activities, 8/10 councils say they would have to cut services and raise taxes.

The report contends that with austerity showing no sign of relenting whoever forms the next government, and with inexorable demographic change ahead, councils should further this entrepreneurial agenda. To facilitate this, Localis recommend that:

  • Councils and appropriate professional bodies increase the focus on commercial and financial skills as part of officers’ professional development;
  • Councils are given ‘Earn Back’ powers to stimulate local investment in a similar vein to Greater Manchester’s devolution deal;
  • The government use departmental underspends to fund a three year corporation tax holiday for new council owned trading companies to assist them in their start up;
  • The General Power of Competence is expanded to other parts of the public sector to enable councils to act more like businesses.

Commercial Councils will be formally launched on Wednesday 25th March at 1:30pm in the Ideas Space, Clutha House, 10 Storey’s Gate, London, SW1P 3AY. Speaking at the launch will be noted local government expert Prof. Tony Travers on ‘The strange death of local government’.

Councils have borne the brunt of austerity, but they have responded with striking innovation to minimise the impact of cuts on their residents. In particular, our research shows councils becoming ever more commercially savvy, bringing in money to support vital local services.

Alex Thomson

Chief executive of Localis

The report has attracted support from a range of cross-party figures:

Rob Whiteman, Chief Executive of CIPFA, the Chartered Institute of Public Finance and Accountancy
“This report successfully outlines how local government can secure its finances and boost local growth prospects by developing entrepreneurial approaches. Many councils are already doing an excellent job in exploring these commercial spheres to mitigate against the pressures, but this report recognises that more needs to be done.”

Bob Neill MP, Vice-Chairman of the Conservative Party 
“Given that an estimated 70 per cent of council income is now raised locally, all authorities must become more innovative, entrepreneurial and, when appropriate, business-facing to ensure they are firing on all cylinders.
This report is invaluable in showing the full potential of local government through this approach, encouraging us to reassess our expectations of the sector and to think big and bold in what we can achieve. A must read for anyone working in government, at any level.”

Councillor Keith Wakefield, Leader of Leeds City Council
“As this report shows local government has had a long history of enterprise, leadership and innovation.  We decided in the face of increasingly difficult financial challenges to aim to recapture the spirit of civic enterprise to help Leeds forge forward for the future.  Building on the success of existing services and developing a more flexible model gives us greater capacity to support local employers and create local jobs.  We must work creatively if we are to maintain services within our communities.”

Commercial Councils has been sponsored by Capita’s property and infrastructure business. For further information contact Christian Rogers here.

  • Share