Counterproductive tax and planning policies are stopping local authorities from making the most of public assets in their area, according to a new report by the think tank Centre for Cities, supported by global programme management consultancy Turner & Townsend.
Published a day after the Comprehensive Spending Review – in which the Government announced that local leaders will be allowed to retain 100 per cent of receipts from the sale of assets – the report, ‘Delivering Change: making the most of public assets’, showcases the diverse approaches that local authorities are taking to maximise the value of public assets, in the context of the challenges posed by cuts to local government funding.
However, it also highlights a number of major policy issues that are creating significant disincentives and barriers to local authorities in making the best possible use of public assets. The report makes a series of recommendations on how national policy-makers can support local authorities to use assets in their area to shape and encourage economic growth and development:
Alexandra Jones, Chief Executive of Centre for Cities said:
“This report shows that in a climate of continued austerity, local authorities are finding inventive and creative ways of using their public assets to improve their local economies and to spur on growth. However, it’s also clear that local leaders are being constrained by restrictive and counterproductive policies that are preventing them from making the most of their assets.
“It’s makes no sense, for example, that if local authorities want to create a public property company to manage all the public assets from different local bodies across a wider area, stamp duty is charged when they transfer those assets to the property company, and then again if those assets are sold off. Scrapping that tax in the first instance would enable local authorities to take a more strategic approach in working with other public organisations to get the best value from their assets.
“With councils facing increasingly tough budget cuts, it’s crucial that national policy-makers ensure that local authorities have the powers, tools and incentives they need to maximise the value of their assets. Local leaders also need to learn from each other by looking at how colleagues in other parts of the country are using their assets, and considering how they can take a more proactive approach in using their own assets to boost local economic growth and public services.”
Jon White, UK Managing Director at Turner & Townsend, added
“The reality is that for many local authorities, austerity has become the new normal – and as a result no single policy change can ever be a panacea.
“But there are a number of concrete steps that councils – and the new wave of combined authorities – can take to help themselves. Those that take a more strategic approach, and focus on the use of their assets as a part of a programme rather than a series of disparate projects, are the most likely to thrive in the current testing environment.
“But a programme of asset optimisation is nothing without knowledge. It is essential that those making the key decisions do so with the right data and intelligence at their fingertips. The most successful authorities are already taking a highly commercial approach to their decision-making, and basing their strategy on robust and comprehensive data analysis.
“Across the UK, the assets and opportunities available to local authorities vary enormously – but the need for a well-informed, strategic approach is universal.”
How local authorities are making the most of public assets
The report highlights a ways in which local authorities are seeking to maximise the value of public assets – including taking a commercially-driven investment approach to asset management, using assets to lead development, and working with other partners to shape development across a region.
Eastleigh Borough Council – taking an investment approach
In 2011 Eastleigh Borough Council launched an asset acquisition strategy to support city centre regeneration and create jobs, taking advantage of the low property value and low interest rates. By identifying assets that could generate the best economic and financial benefits and acting proactively in the market, Eastleigh built up a commercial portfolio worth over £2.5 million a year in income, which they say more than covers borrowing costs.
Bristol – shaping development through collaboration with other public sector partners
In Bristol, public sector organisations came together to form the Bristol Property Board (BPB), which provides strategic guidance on asset management and investment for public land and property owners (including blue light services and the NHS), helping to bring previously unviable sites in to the market. Since it was launched in 2013, the BPB has successfully unlocked a number of difficult developments, including a site which has been derelict for over 20 years due to lack of access and planning constraints.
Camden, London – using assets to develop more affordable housing
Driven by concerns that people on lower and medium incomes are being priced out of the borough, local leaders in Camden are using publicly owned land and property to provide more affordable housing. The council has launched a 15-year asset investment plan aimed at building new homes (many of which are for shared-ownership), funded by selling parts of those new developments. The council identified outdated assets that were put on sale to generate capital receipts, which were then used alongside prudential borrowing to redevelop existing estates and to build new properties – enabling the council to develop the first new council housing in the borough in 30 years.
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Notes to editor:
Centre for Cities
T 0207 803 4316
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Centre for Cities is a research and policy institute, dedicated to improving the economic success of UK cities. We are a charity that works with cities, business and Whitehall to develop and implement policy that supports the performance of urban economies. We do this through impartial research and knowledge exchange. For more information, please visit centreforcities.org
Turner & Townsend is an independent professional services company specialising in programme management, project management, cost management and consulting across the property, infrastructure and natural resources sectors.
With 90 offices in 38 countries and over 4,000 employees, we draw on our extensive global and industry experience to manage risk while maximising value and performance during the construction and operation of our clients’ assets.
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