1. Governance
January 5, 2016

Getting the most value from public assets shouldn't just mean selling them off

By Louise McGough

The autumn spending review, delivered by the chancellor last month, included a number of policies relating to public sector assets. Some of these relate to nationally held assets, with a number of government departments agreeing to release land and property worth £4.5bn between 2016-17 and 2020-21 – including up to £1bn of estate sales by the Ministry of Defence.

But more interesting for us, many of the policies focused on the assets held by local government, estimated to be worth £225bn in England. The announcements were aimed squarely at encouraging the sale of surplus assets and improving asset management.

This is the topic of our latest reportDelivering change: Making the most of public assets, which explores the changing role of assets in the local economy, as well as the role of asset management within councils. The report highlights the shift away from selling assets to generate one-off receipts, towards local authorities treating land and property assets as a means of generating revenue streams.

This is motivated by the need to find new sources of funding, as local authority budgets are cut, and as places struggle to fund services. Selling off an asset can generate a one-off cash receipt, but the money can only be used to fund capital expenditure, such as transport. Most places tell us that the real challenge is in funding local services, staff salaries and day to day running costs.

Asset management approaches and local government funding. Click to enlarge. Image: Centre for Cities.

In his statement last month, George Osborne announced that local authorities will now be able to keep 100 per cent of the receipts from asset sales to spend on public service “reform projects” – in other words, revenue spending. By providing an additional means for cash-strapped local government to generate revenue from public assets, the headline of this announcement is welcome. But the all-important implementation detail and conditions have yet to be set out.

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Last year’s Autumn Statement already included provision for local authorities to bid for the use of £200m from expected asset sales made between 2015 and 2017. This was specifically for the one-off cost of public service reforms, rather than public service delivery in the long-term. 

But to be effective, the newly announced policy will need to go further and be simpler than previously announced measures. It needs to give localities genuine flexibility and control to spend the proceeds of local public asset sales, in addition to other revenue streams, in ways that support the economy and public services over the longer term.

The proposed strengthening of the Right to Contest, the commitment to improving the availability of asset data and providing an additional £31m for the One Public Estate programme, are also welcome in light of some of the challenges the report identifies:

  • Local areas need more control over national asset disposal strategies. The Right to Contest allows businesses, residents and local authorities to challenge the ownership and use of a public asset. If it can significantly improve the ability of local authorities to influence how individual nationally held assets in their area can be used to support growth, this will be a positive development.
  • Data and local relationships are vital in supporting a more strategic approach to asset management. There is currently no comprehensive database of public assets, or good way of mapping them, both of which restrict the ability of local leaders to take a strategic approach to managing assets (at all levels of government) and to optimising the value of the combined public estate in one place.

Requiring local authorities to list their assets on the e-Pims register would provide better national coverage – although local practitioners say it doesn’t contain enough information to be useful in local decision-making. Programmes like One Public Estate have been a catalyst in some places, for places to gather data, as well as build relationships between different public sector bodies and across borders.

Many of these reforms and proposals will go unnoticed, dwarfed by some of the more headline grabbing figures on national growth or welfare and health spending. But the way in which local government is able to make the most of public assets is intrinsically linked to its ability to continue to deliver vital services such as social care, maintain local facilities and support economic growth and regeneration.

Louise McGough is a policy officer at the Centre for Cities. This article was first posted on the think tank’s blog.

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