In conversation with Felicity Mercer: generating income and growing commercial services
Local authority services are currently being delivered with 50% less central government funding than in 2010. In your view, how have councils been able to manage with less money and rising demand?
I think the main reason we have managed is that local government as a sector is incredibly resilient and innovative. Looking back now, it was relatively straightforward in the first few years to deliver savings without impacting on front-line services through tried and tested methods such as procurement savings, reduction in non-staffing budgets and management restructures. But the pace and scale of reductions in government funding has forced local government to come up with more and more creative solutions and commercialisation has been a big part of that. Generating income is a positive response that reduces dependency on Government grants and enables local authorities to take control of their own destiny in a way that other savings options don’t. It can result in growing a service, creating jobs, delivering wider community benefits and developing our workforce as opposed to closing community facilities, making redundancies and losing skills and experience.
In your view, what do you see as the biggest obstacle in the way of local authorities operating more commercially and why?
In my experience the biggest challenge is getting a balanced attitude to risk as part of an entrepreneurial culture. There are the more traditional managers in local government who tend to be at the more risk-averse end of the spectrum and then there are a growing group of managers who want to deliver results quickly and see risk assessment as unnecessary bureaucracy. The challenge is getting both these groups into the centre ground where they are comfortable in taking calculated risks. The most successful ventures combine taking risks with robust planning!
If any, what income generation strategies has Telford implemented?
Our approach has started with a strong focus on retaining our existing customers, as it is always more cost effective to do this than to gain new ones. We have then looked at increasing our customer base for our existing commercial services, for example selling services to out of borough schools and local businesses. The final element of our strategy has been to develop new commercial services and ventures, starting with expanding our offer where we have an established reputation in the market, for example the development of our Leisure Services offer to include new family leisure attractions, such as a High Ropes Course. We have also taken forward a number of larger-scale new commercial ventures, such as energy generation and building houses for market rent, which have been prioritised based on net income/return on investment, risk, organisational fit and the legal position around trading.
What advice would you give to local authorities before they begin to design a commercial strategy to support public services?
I think a number of things are important in designing a successful commercial strategy. Like any change where you want to get some momentum going, it is critical to get the support of the senior management team and members. To help gain political support, it’s useful to centre your strategy around ventures that are a good organisational fit and have non-financial benefits as well as a solid return on investment. It’s also worth considering investing in some dedicated project management capacity to research and develop new ideas and work alongside services to implement them, as managers do not always have the space or time to do this without support. And finally I would say that it is important to do as well as plan, as the best way to build confidence, commercial acumen and effect a culture change is for people to experience the practical reality of operating successful commercial ventures.
Felicity Mercer is the Assistant Director of Commercial Services at Telford & Wrekin Council, and will be speaking about embracing commercial approaches to service delivery, at the Public Sector Solutions Expo on 20 November. To register or find out more, please click here.