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Capita Symonds’ Director of Business Transformation Neil McLocklin looks at how local authorities can learn from the commercial property sector…

Local authorities are used to cutting costs. That is just as well. The imminent Comprehensive Spending Review will ratchet up the pressure on them to do so even further.

But savings are not the whole answer. The government must put more pressure on the public sector to raise money too. This thinking is the lifeblood of the private property industry, but there is little pressure on the public sector to generate income.


It will be hard for the government to change, but change it must: the public sector is missing too many opportunities. These range from the obvious, such as ensuring vacant property is let, to the more innovative.

In August, environment secretary Chris Huhne gave local authorities the option to sell energy through feed-in tariffs. It was a good move, but this was just one possible area to address. The government should send a stronger message to the public sector that it is OK to be commercial.

Some forward-thinking local authorities, such as Lewisham and Southampton, have wisely taken minority stakes in their shopping centres, and will benefit from this income stream as it grows. But this is passive investment.

The diversity of assets within local authorities is immense, and this is part of the problem. Town halls and civic chambers are being rented out by some authorities for weddings and events, but the commercial promotion and marketing of these venues is often poor, so these fantastic assets are under-used.

Car parks and park-and-ride schemes may be operationally well managed, but there should also be kiosks to sell customers newspapers and coffee. Any good private sector property manager would be thinking along these lines.

Towns and cities attract events such as festivals, exhibitions and shows. But there is no proactive asset management that maximises revenue opportunities that surround these events. In the south, authorities should be considering the potential value for photo-voltaic cells on school roofs and landfill sites. Markets in streets and squares are often administered by local authorities, but in a passive way.

Of course, income generation has to be balanced with political and economic desires to stimulate the local economy – that and the all-too-common letter to the leader of the council from a local business, complaining about its audacity in increasing rent after five years.

We live in a new world. And politicians need to support their officers in taking a more commercial approach. If not, they miss opportunities to mitigate the pressure on public services.

Neil McLocklin is head of business transformation at Capita Symonds
Capita Symonds is a lead sponsor of Public Property Summit 2010.

Property efficiency? This time it's for real

Mark Norris, Executive Director, Capita Symonds comments on the Local Government Chronicle (LGC) / Capita Symonds survey on public sector estates rationalisation.

"The results of today’s LGC/Capita Symonds survey are fascinating. Although the progress is limited, there is clearly a serious drive from local authority chief executives to unlock the savings available from their property estates and services. More importantly, there is also a greater willingness to work with the private sector in developing new property solutions in innovative partnerships.

Our survey shows that the top three issues in terms of property are serious ones: that buildings are not suited to modern service delivery, they are costly to maintain and cannot meet sustainability targets.

Surprisingly, given the unprecedented level of public sector debt, more than half of respondents indicated that their estate remained largely unchanged from that analysed in the most recent Audit Commission report on local authority property in 2009.

There also appears to be a mismatch in the available resources for the rationalisation of property portfolios (approximately 70% of chiefs indicated that the required strategies, finance, and expertise exist in-house) and the progress made to date.

Nevertheless, the tightening of central government funding has undoubtedly brought the capital that is tied up in local authority assets into sharp relief. For example, 84% of respondents said estate rationalisation was vital, and all respondents were looking to find ways of reducing the operational cost of the estate.
But how can efficiencies be realised? Most chiefs indicated that the key lies in relocating out of redundant space and consolidating into modern and efficient property while introducing new ways of working (with potential savings of up to 40%). As a result, a willingness to ‘de-silo-ise’ historically separate organisations is increasing – 73% of local authority respondents indicated that public service convergence and co-location was on their immediate agenda.

The survey also reiterates that effective estates rationalisation using new delivery models is key – stand-alone sale and leaseback of assets by local authorities is not considered a viable solution under the current local government funding regime, whereas the release and sale of surplus nonoperational assets in combination with property services outsourcing certainly is.
Overall, it looks as though, after umpteen reports on public sector property efficiency, this time it’s for real."
This survey was carried out by LGC and was commissioned and sponsored by Capita Symonds. The report on the results was independently written by LGC and published on 08 July 2010. Visit the LGC website here.