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The Comprehensive Spending Review, delivered by the Chancellor yesterday, included a number of policies relating to public sector assets. Some of these relate to nationally held assets, with a number of Government departments agreeing to release land and property worth £4.5 billion between 2016-17 and 2020-21 (including up to £1 billion of estate sales by the Ministry of Defence).
But more interesting for us, many of the policies focused on the assets held by local government, estimated to be worth £225 billion in England. The announcements were aimed squarely at encouraging the sale of surplus assets and improving asset management. This is the topic of our latest report, Delivering change: Making the most of public assets, which explores the changing role of assets in the local economy, as well as the role of asset management within councils.
The report highlights the shift away from selling assets to generate one-off receipts, towards local authorities treating land and property assets as a means of generating revenue streams. This is motivated by the need to find new sources of funding, as local authority budgets are cut (more detail on which will be set out in the local government funding settlement next month) and as places struggle to fund services. Selling off an asset can generate a one-off cash receipt, but the money can only be used to fund capital expenditure, such as transport. Most places tell us that the real challenge is in funding local services, staff salaries and day to day running costs.
Yesterday the Chancellor announced that local authorities will now be able to keep 100 per cent of the receipts from asset sales to spend on public service ‘reform projects’, i.e. revenue spending. By providing an additional means for cash-strapped local government to generate revenue from public assets, the headline of this announcement is welcome. But the all-important implementation detail and conditions have yet to be set out.
Last year’s Autumn Statement already included provision for local authorities to bid for the use of £200 million from expected asset sales made between 2015 and 2017, specifically for the one-off cost of public service reforms, rather than public service delivery in the long-term. To be effective, the newly announced policy will need to go further and be simpler than previously announced measures. It needs to give localities genuine flexibility and control to spend the proceeds of local public asset sales, in addition to other revenue streams, in ways that support the economy and public services over the longer term.
The proposed strengthening of the Right to Contest, the commitment to improving the availability of asset data and providing an additional £31 million for the One Public Estate programme, are also welcome in light of some of the challenges the report identifies:
Many of these reforms and proposals will go unnoticed, dwarfed by some of the more headline grabbing figures on national growth or welfare and health spending. But the way in which local government is able to make the most of public assets is intrinsically linked to its ability to continue to deliver vital services such as social care, maintain local facilities and support economic growth and regeneration.
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