04Common challenges across all cities
The diversity of approaches to making better use of public assets outlined in the previous section reflects the diversity of economic contexts, as well as asset bases and public sector organisations in different places. Some cities are also further ahead than others in how they approach local public assets as a means of supporting economic growth and generating revenue.22
Nonetheless, there are common tensions and challenges that emerge from speaking with partners across cities, which shed light on the difficulties for all cities to be doing more with public sector assets:
- Difficulty in aligning objectives of different public sector owners through the lens of place. The ability for cities to maximise the contribution and value of public sector assets to the local economy requires strategic and joint working between public sector agencies and across boundaries. In many cases, however, there are different and competing priorities for different public sector partners (local and national) who own land or property in the areas, which can make it difficult to align strategies. The national drive to reduce the size of the public estate and drive down costs means that the priorities for Government is for departments and national public bodies to sell off assets, rather than be more strategic about the contribution to local economies. Partners from many cities speak about the challenges in aligning local authority and departmental, NHS or Network Rail priorities, for example. Cities need more ability to shape and control the strategy for nationally owned assets with strategic value to their local economy.
- Lack of cross-public sector and cross-boundary data and information to inform asset management and investment strategies. Many partners have recently or are currently undertaking asset reviews, which includes a mapping exercise in order to better identify opportunities. But there remains a lack of comprehensive information and data available at the cross-authority and cross-public level, which would help unlock more opportunities for productive use of assets in more areas. In order to improve the alignment of national and local objectives, as discussed above for instance, there needs to be the data available at the city-region wide level.
- Difficulty in adopting an entrepreneurial approach, working to commercial timescales and accepting risk. Partners interviewed say that a commercial culture was important in enabling a more proactive approach to maximise the value of public sector assets to support the local economy. Indeed, many feel that local government as an institution is not nimble enough to respond in commercial timescales to the market. A commercial outlook also requires local authorities to have a mentality that is more accepting of financial risk, and therefore the possibility of losing money. However, in the current system local government is naturally cautious, especially as budgets are stretched to breaking point to deliver even statutory services. This raises important questions about the ability and capacity of local authorities going from being primarily public sector delivery bodies to commercial developers.
- Tensions and trade-offs between short-term financial gain and long-term economic growth benefit. Reduced budgets and the impact of the economic downturn have created a sharper incentive for places to do more with publicly owned land and property. In many cases, the value of a publicly owned plot of land or building is both financial and strategic – with the two reinforcing over time. But in some places there is a tension for local government between revenue generation and the long-term strategic vision of supporting economic growth. For instance, the priority for ensuring the continued success of the city centre might require investing in relatively less lucrative office development over residential development. The longer-term approach might involve investing money to refurbish a building to release value in the long-term through rental income or using assets to prioritise office development to attract new jobs. This is good for growth but has little direct impact on council financing in the short-run given the current system.