Title

NATIONAL AUDIT OFFICE

It makes good sense to diversify income

Some of the commentary on commerciality implies councils are going into these investments recklessly, and that is simply not the case, says Simone Hines. Continuing to be creative and innovative with council finances is going to be vital, she adds.

The commercialism debate rumbles on with the publication of the National Audit Office's (NAO) recent report and the Public Accounts Committee hearings in May. The reasons for councils making commercial investments are well rehearsed. We've long been encouraged to be more self-sufficient. Many district councils no longer receive Revenue Support Grants and have looked for new income streams.

These investments enable the risks to be managed at a local level and provide some protection from the shocks of reduced Government funding. The current pandemic has shown there is an over reliance on the main sources of income, and it makes good financial sense to diversify income. It should also be remembered that this is not new to us. Local authorities have invested in property for many years and there are legal powers.

S151 officers have a legal and professional duty to ensure the necessary due diligence has been undertaken prior to making a commercial investment – or any investment for that matter. Some of the commentary on commerciality implies councils are going into them recklessly, and that is simply not the case.

The current PWLB consultation muddies the waters even further by proposing that any authority undertaking commercial investment will not have access to PWLB. This risks undermining the prudential framework and local decision making. It may force s151s toward using riskier finance sources.

The NAO report referred to £6bn of commercial property acquisitions, but there may be wider reasons for these – such as town centre regeneration.

A handful of councils may have pushed the current prudential framework to its limits, but the arbitrary interventions being suggested are the proverbial hammer to crack a nut. Continuing to be creative and innovative with our finances is going to be vital – let's not make it any harder than it is already going to be.

Simone Hines is president of the Society of District Council Treasurers and executive director of resources at Nuneaton & Bedworth BC

NATIONAL AUDIT OFFICE

Fair Funding Review 2.0 and the road to reorganisation

By Tracy Bingham | 10 September 2025

Councils will have to grapple with risks, resilience and reform as they balance the fallout from fair funding with the challenge of reorganisation, writes Tr...

NATIONAL AUDIT OFFICE

From national ambition to local delivery

By Tom Newman-Taylor | 10 September 2025

Tom Newman-Taylor says the East Midlands Freeport is driving clean growth, investment and job creation as local government, the Mayor and national partners a...

NATIONAL AUDIT OFFICE

How to be a successful council chief

By Frazer Thouard | 10 September 2025

In advance of The MJ’s Future Forum Midlands, recruitment specialist GatenbySanderson crunch the data in a bid to find the answer to achieving successful loc...

NATIONAL AUDIT OFFICE

Understanding the Golden Triangle

By Graeme McDonald | 10 September 2025

Graeme McDonald explores a report that outlines the vital responsibilities of local government’s three highest profile statutory roles and the key part they ...

Popular articles by Simone Hines