C.Co MD Richard Harrison reflects on this week’s LGA conference and the launch of the LGA’s ‘Profit with a Purpose’ guidance – a research piece conducted in partnership with C.Co.
When the LGA asked us to lead on the research for Profit with a Purpose we were delighted to get involved, as we feel it’s time that the inspiring initiatives, we regularly see across the sector are recognised. Our research took us across the country, speaking with councils to develop an understanding of how they are pushing ahead with their commercial agendas; what’s working well, but also what can be improved.
So, what did I learn from the project?
- I think the first point is the sheer scale of commercial activity taking place. I think it’s fair to say enterprising activity is now a mainstay of local government.
- Commercialism means very different things to different councils. Focusing on the broadest definition of commercialism – almost every council I spoke to described how they are focusing on becoming smarter and more business savvy; both, in terms of how they buy and deliver services. For them, commercialism means adopting more professional approaches to ensure continuous improvement in the things they’ve always done.
- On the income side of things, local government earns over £11billion in fees and charges alone and councils are constantly looking at how they can deliver better outcomes whilst protecting these revenue streams.
- The majority of councils now own a trading company. There are now over 600 hundred local government corporate entities in England and almost every council has either created one or is considering it. Interestingly, some have gone full circle and are being brought back in house which for me demonstrates the complexity of the issue and the importance of rigorous scoping and planning.
- The number of shared services have increased to over 550, (94% of local authorities share services with another council) delivering over £840 million savings.
- Councils are using commercial approaches to kick start local regeneration, stimulate new sectors, create jobs and grow their local tax base.
All in all, the scale is phenomenal, and the breadth of services being delivered is staggering. More enterprising approaches are now being adopted across every service a council provides; from back office services such as legal, finance and HR, to front line services including adult social care, schools traded services and environmental services.
Without these enterprising activities, eight out of ten councils say they would have to cut services or raise taxes.
One thing that pleasantly surprised me was that every council I spoke to said the reason they were embarking on enterprising activity was to drive social benefits. Profits were always mentioned as a by-product.
And this is one of the key points of the research; the councils who are pulling ahead, are the ones which clearly understand the social outcomes they are trying to achieve.
Some excellent examples of social purpose were cited during our discussions. One council explained how they had built affordable homes to design out anti-social behaviour in their area, another told us how they were building leisure centres to address market failure and improve the quality of life for residents living in deprived areas.
We saw how some councils are creating social enterprises to reduce the emerging ghettoization of care and how others are using legal structures to empower communities, giving decision making responsibility to staff and service users.
Most importantly, councils were keen to highlight how they see embarking on enterprising approaches as an essential means of protecting services that residents cherish.
Regardless of form, social purpose was the main driver for every council we spoke to. Whether it was to improve outcomes, create jobs, stimulate new sectors or address market failures, profit was always a result of delivering social value, not the other way around.
When I asked councils what advice they would give to other local authorities embarking on establishing an enterprising approach there were some common themes:
- Get into it for the right reasons – make sure the core purpose is to improve outcomes for local residents.
- Define what you mean by commercialism – make sure there is a common definition and make sure it reflects what is right for your council.
- Understand the risks – make sure they are proportionate and proactively manage them.
- Have a plan – make sure you have a strong business plan, the correct capabilities to deliver it and get the governance right.
- Focus on social value – be clear on the outcomes you’re trying to achieve, get the right measures in place and make sure that any data you gather is used to your advantage.
- It’s not a short-term fix – it requires time, energy and perseverance.
I believe that building upon these insights will become increasingly important as commercialism increases in the sector. The question clearly isn’t ‘can it work’ but ‘how much can we achieve’?
Speak to us today to find out how we can help you drive social benefit through enterprising activity speaktous@wearec.co
About the report
‘Profit with a purpose’ focuses on some of the practicalities of how councils can deliver social value through their commercial activity.
Through a set of key questions, the guidance supports you to face the challenges of developing commercial activity and achieve greater value for the public purse in ways that better meet society’s needs.
In addition, the publication features a number of short case studies highlighting some of the innovative commercial practice already achieving results for communities.
You can read the full guidance ‘Profit with a purpose – delivering social value through commercial activity’ here
