Lack of senior experience undermining commercialisation agenda: report

More than 40% of local authority chief executives see greater commercialisation as a key strategy for dealing with self-sufficiency from 2020, yet only 4% of chief executives and chief financial officers have significant commercial experience, a research report has found.

The work by software firm Civica and the Chartered Institute of Public Finance and Accountancy (Cipfa) found that among 45 respondents, 36% said they lacked understanding of market needs and 56% of the risks involved.

The report, ‘The Commercial Imperative’, looked at how councils sought to commercialise their services to earn income as part of their work towards becoming self-sufficient by 2020 when business rate retention will replace the grant system.

Cipfa chief executive Rob Whiteman said: “Commercialisation is going to be one of the most important priorities for local authorities over the next decade. If they haven’t already, council leaders and chief financial officers must start thinking about short, medium and long term strategies for generating their own income. Reappraising their appetite for risk is vital to making these endeavours successful.

“Not every attempt will make money and as public bodies using the public purse, it’s a difficult position to be in. But a thorough review of risk management, cost and modelling systems, together with open conversation at a board level can make it easier.”

A forum hosted by Civica saw senior local authorities choose to focus on four potential ways to make money from commercial ventures: trading directly with communities; make the most of existing assets to boost the local economy; share and sell services amongst peers; use digital services to create efficiencies and new revenue streams.

Civica chief executive Wayne Story said: “Local authorities are juggling a wide-range of transformational activities. While adding commercialisation to the mix may seem daunting, with no sign of financial and service demand pressures abating – it’s essential.”