Developing business skills to fight austerity

  • The funding gap facing councils is expected to reach £14.4 billion by 2020
  • Austerity and increased demand have led to councils searching for new ways to raise and save money
  • Many councils have entered successful commercial partnerships and cut costs using new technology
  • We are helping councils develop business skills and expand their use of technology

Local councils face what has been described by think-tank Localis as a “perfect storm” of austerity and increased demand – which is forcing them to find innovative ways of raising revenue.

The Local Government Association predicts the funding gap facing councils will have reached £14.4 billion by 2020. Here, we consider how, by developing commercial awareness and embracing new technologies, organisations can adapt and survive.

Building business skills

A recent New Local Government Network roundtable event concluded that local political leaders of the future would be natural risk takers, equipped with the skills to recognise and exploit business opportunities.

It is clear many councils are already successfully embarking on commercial ventures. In a report published in March, Localis found that more than half (58%) of councils own a trading company, and the majority (57%) operate a joint venture with the private sector.

The report shows that between 2008 and 2013, the local government sector’s combined profits from externally traded services totalled £1.5 billion – more than the likes of John Lewis (£885 million) and JD Wetherspoons (£353 million) over the same period.

However, it also found that some challenges remain for local councils seeking to exploit commercial opportunities – in particular the up-skilling and re-skilling of staff.

Developing staff skills

Councils need staff who are particularly skilled in: identifying opportunities for raising revenue and saving costs; working with public sector and commercial partners; and negotiating and scrutinising contracts to ensure the best deal for their residents.

There are some practical steps councils can take to ensure they have the commercial skills required, including sending staff on short-term business courses. Nine out of ten of those surveyed for Localis’s report said improving in-house skill sets was crucial to developing a more entrepreneurial approach.

However, the same survey found that, on average, council workers were given less than one day for off-the-job training in 2012/13.

The need to take advantage of digital innovations has never been greater

Peter Fleming, chair of the Local Government Association’s Improvement and Innovation Board

Showing existing staff and potential recruits that your council offers real opportunities for career development is also important if you are to ward off competition from the private sector.

In order to ensure your organisations make the most of valuable opportunities, council leaders need to change the mindset that balancing the books is the only requirement when taking budgetary and strategic decisions; organisations should also acknowledge that innovation and risk can reap rewards.

Utilising technological advances

While commercial skills can help councils find new ways of raising money, technology can also play an important role in helping you save money – and time.

Online applications for school places and cashless parking payments are two digital tools that help service users, while route-planning tools and video-conferencing are technological advances that can make more efficient use of staff time.

In a report published last year, the Local Government Association (LGA) highlighted some technological success stories, including the London Borough of Barking and Dagenham, which saved £617,000 with its online benefit claims service, and Forest Heath District Council, which saved £300,000 a year using GPS mapping technology to improve waste collections.

The challenge ahead

Peter Fleming, chair of the LGA’s Improvement and Innovation Board, says budgetary pressures mean “the need to take advantage of such digital innovations has never been greater.”

The challenge for local authorities is to continue to expand digital services while meeting the needs of service users who cannot use or access this technology. It is clear, however, that with austerity likely to continue until at least the end of this parliament, commercial skills and technological advances will play a crucial role in helping authorities save money while continuing to deliver and develop services.

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