06Conclusions and policy recommendations
The role of assets and asset management varies across localities, informed and shaped by the historical legacy of public assets (or liabilities) in each individual place, as well the mix of specific cultural, political and financial contexts in different local authorities. But there are common themes that apply across all places:
Market conditions shape the approach taken by different cities to maximising the contribution of public sector assets to economic growth. The nature and purpose of public sector intervention in order to support economic growth differs according to market conditions in each place. In some cities, the market is too weak to deliver physical development and regeneration without public sector intervention and funding. Here, partners are investing in and acquiring assets purchasing to pump-prime a weak private sector property market, in order to achieve their growth and regeneration activities. In others, the role of the public sector is to guide and shape the specific type of development, often in stronger economies, that would not have been delivered by the market alone.
Austerity has been a catalyst for better making use of assets – from a place-shaping and strategic perspective as well as a means of securing revenue streams. The recession caused speculative property development in many cities to dry up, creating a stronger role for local government in supporting physical development and regeneration in many city centres, with public land and property an important strategic asset in doing so. Meanwhile, shrinking budgets – for public service delivery, day to day spending and to fund investment – have created an incentive for all local authorities to both reduce outgoings and costs associated with maintaining buildings, as well as look to their assets as a means of generating revenue streams.
Local authorities face different priorities and incentives in managing public sector assets than central Government, driven by the need to create revenue streams rather than capital receipts. With shrinking budgets, the priority for local government is to move public sector assets into more productive uses that can support economic growth as well as deliver sources of revenue funding to fund public services. The sale of an asset (or liability) might sometimes be an appropriate response, but there is a shift away from focusing on cost-reduction and disposal above all else. The appropriate responses to managing public land and property assets should be assessed through the lens of place and the contribution an asset can play in the local economy, rather than a silo-led approach to disposing of assets by sale on a case by case basis as standard.
Thinking about the role of public sector assets and the extent to which cities are able to maximise the contribution of the public asset base for the local economy raises broader questions about the place-shaping role and ability of cities in the current policy context. One of the rewards or incentives for investing in and managing public assets in such a way as to support economic growth is the improved revenue from business rates that local authorities stand to receive. The recent announcement of full devolution of business rates in 2020, replacing the current 50 per cent retention, will sharpen this incentive. At the same time, diminishing budgets will increase the appetite from local places to make their assets work as sources of revenue, as well as supporting economic and business growth.
Devolution provides an opportunity to align incentives at local level and support more productive and strategic use of public assets. With more budgetary control at local level, there is an increased incentive to intervene in one area which might deliver savings in another. In Manchester, for example the devolution of NHS health budgets to the Greater Manchester combined authority create much sharper incentives for city partners to do more with public land and property.25
The evidence from interviews with partners in cities suggests that there are four important elements in supporting local authorities to put public assets to more productive use. Localities should focus on developing:
- A more strategic approach to managing assets. For example, by developing city-wide or city-region property boards and land commissions, with support from Government, in order to improve coordination and investment between organisations and across local authority borders.
- The data and information required to inform a city-wide and cross-public sector strategic approach to asset management.
- Strong local relationships between places, between public sector organisations, as well as with the private sector, in order to capitalise on the opportunities that public assets present.
- A more entrepreneurial organisational and political culture, which can support a more commercial role for local government to engage with private sector partners and which is more accepting of risk.
While many places are doing this, there are constraints on the ability of local authorities to take a fully strategic approach to public sector assets because of the fragmented ownership of different assets, the lack of comprehensive and accessible data on assets across the public sector, competing incentives between places and public sector bodies and too little influence to shape how assets are utilised.
In order to support localities to put public assets to more productive use – to support local economic growth and develop funding streams, as well as deliver more efficient public services and reduce wasteful expenditure on assets – national policymakers should focus on:
- Improve intra-public sector cooperation by abolishing stamp duty on asset transfers between local bodies. The stamp duty charged on transfers of assets between public sector organisations acts as a significant disincentive to places taking more strategic approaches to managing public assets. The tax is currently charged on the transfer of an asset from a local authority to a city-region public sector property company set up to improve strategic use of public sector assets, for example. Policy should encourage local authorities and the public sector to bring their assets together across a locality, in order to package sites and create more attractive development opportunities to the market.
- Give local areas more control over national level asset disposal strategies for land and property in their area. In many cases, however, there are different and competing priorities for different public sector partners (local and national) who own land or property in an area, which can make it difficult to align strategies. National organisations, such as the HCA and other land-owning bodies and departments, should be required to be members of city-region property boards or land commissions, in order to facilitate and speed up the release of sites that are of strategic importance to localities.
- Reform national permitted development rights policy in order to provide more flexibility and control for local areas to shape the type and balance of development that needs to take place to support economic growth.