History: Helping local government create new revenue streams through entrepreneurial activities

Dr Richard Carr

Since 2010, English local government has faced a perfect storm. The combination of austerity – in the form of falling central Government grant – and rising demand, in particular from ageing local populations, has brought to the fore questions about the long-term viability of the services councils provide.

Richard Carr’s work on commercialisation in local government and the role of Local Enterprise Partnerships (LEPs) in business regeneration has led to significant changes in policy to address the financial challenges that councils face.

Dr Richard Carr

Richard is Senior Lecturer in History and Politics at ARU, and a member of our Labour History Research Unit.

Find out more about Dr Richard Carr Explore ARU researchers' original work via our open access repository, ARRO

Research summary

With intense demands on budgets and revenue, councils have been eager to seek out new activities to generate revenue and make savings.

Dr Carr has drawn on historical research and trends – the balance between central and local government, the impact of austerity, and the creative use of financial mechanisms – to identify ways that local councils and other regional bodies can navigate the recent economic difficulties.

Policy suggestions include forming new trading companies (arms’ length businesses owned by a council but operationally independent), joint ventures (jointly owned projects with private or third sector sources), and selling in-house provision to other parts of the public or private sectors.

Dr Carr’s work has resulted in the generation of significant income from commercialisation to keep council services open.

Dr Carr’s research has led to two key impact strands:

  • increased use of commercial activities by English local authorities to manage their immediate financial position and deliver/improve services
  • handing down of powers and funds from Whitehall to councils and other arms’ length bodies which can deliver long-term, strategic investment.

The case for the first approach was made in a report, Commercial Councils, for the think tank Localis. Drawing on stakeholder interviews and central departmental statistics, the report called for ‘Councils and appropriate professional bodies [to] increase the focus on commercial and financial skills as part of officers’ professional development.’ It further argued for councils to establish trading companies to generate revenue in areas from legal services to waste management and housing.

In the book One Nation Britain, Dr Carr had already outlined the historic balance between central government, local economies outside London, and the former’s willingness to hand power to non-Whitehall institutions to drive investment.

This research was further disseminated in another report for Localis, The Next LEPs, which argued for greater devolution of budgets to Local Enterprise Partnerships. There are 38 LEPs in England, sub-regional bodies set up by the 2010-15 Coalition government to coordinate local growth. It also made the case for greater diversity among LEP board members and increased public accountability.

Elsewhere, Dr Carr’s research has explored the adverse consequences of rapid budget cuts, and the related consequences of reduced economic growth.

These reports have proved influential in changing attitudes and perspectives in local government towards commercialisation.

Since publication, English local councils have implemented strategies recommended in the reports, creating growth in commercial income and/or producing savings. Crucially, the strategies have helped councils to avoid cuts and continue to run public services.

Four people meeting in an office

Summary of the impact

  • Citing Dr Carr's research, many councils in England have moved towards more entrepreneurial, medium-term financial strategies
  • Public and professional bodies have supported the move to a more commercial culture, and referred to Dr Carr's work in presentations
  • Councils have acknowledged the need staff training and development, as a more commercial culture takes root
  • Dr Carr's report on Local Enterprise Partnerships has helped to define their purpose andcomposition

Impact

Influenced local council strategies and created financial benefit

At least 19 local authorities have cited the findings in Dr Carr’s Commercial Councils report as influencing their move towards more entrepreneurial, medium-term financial strategies.

The report’s emphasis on the creation of trading companies (arms’ length businesses owned by a council but operationally independent), has struck a real chord. Hounslow’s Executive Director of Finance & Corporate Resources noted the report was ‘influential in our commercial strategies, and... is a document that Elected Members in particular refer back to when the council reflect on trading company performance and consider options for future strategy and growth.’

In 2019 the Managing Director of Lampton360 (a trading company owned by Hounslow Council) noted that the company has ‘saved [Hounslow council] in excess of £1,000,000 p.a. on a new service contract over the first 14 months of operation’.

Hounslow’s Executive Director went on to state that ‘Commercial Councils has helped change minds and, in concrete terms, allowed the council to offset… a tight financial picture.’ It has been ‘a key influence on a strategy that is generating new money that the council can use to reinvest [in] services’.

Hounslow is no fluke. Citing Carr’s research, Lewisham Council allocated £200,000 to ‘fund strategic procurement and commercial services work’; Cambridgeshire County Council drew on it in devising their Commercialisation Strategy; and a member of East Hertfordshire Council noted that Commercial Councils influences his approach in ‘seeking to increase the entrepreneurial ethos and techniques towards commercial generation of revenue’.

About more about local council strategies and benefits.

Impacted key bodies in the sector

Key bodies such as the Chartered Institute of Public Finances and Accountancy (CIPFA) and Association for Public Sector Excellence (APSE) have been influenced by Carr’s work.

CIPFA cited Commercial Councils in presentations to councils on the use of a commercial approach. Their Policy Manager for Local Government stated that ‘local authorities are taking seriously the skills needed to develop commercially, and staff are now being trained to support this agenda’. APSE drew on Dr Carr’s report when discussing the management of commercial risk by councils.

Meanwhile, the Information Commissioner’s Office cited Dr Carr’s work in a 2019 Report to Parliament when making the case for making changes to access to information.

Supported training and development for local council staff

In the Commercial Councils report, Dr Carr identified a need for cultural change among councils, and training and development to support a move toward commercialisation.

A number of councils refer to Commercial Councils. Lewisham Council noted the need for support and training to ‘develop a widespread commercial culture’, while Merton Council cited it as evidence that ‘officers must be willing to expand their traditional way of doing things [and] not regard profit making as a role purely for the private sector’.

Influenced reforms to Local Enterprise Partnerships’ purpose and leadership

Dr Carr’s report The Next LEPs was widely cited in the media and has proven to be influential.

Its conclusions on aligning local labour markets’ supply and demand has led to take-up from The Association of Colleges in its lobbying materials, and the Royal Town Planning Institute has stated that ‘accountability…continues to be central to debates on the on-going developments of LEPs’.

Central government policy has also been influenced. Dr Carr’s report highlighted the lack of diversity on LEP boards, a point included in the 2018 Ministry of Housing, Communities, and Local Government report Strengthened Local Enterprise Partnerships.

United Nations Sustainable Development Goals

We have mapped our REF 2021 impact case studies against the United Nations' Sustainable Development Goals (SDGs).

The 17 SDGs, adopted by all UN Member States in 2015, are an urgent call for action. They recognise that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests.

This case study is mapped to SDG 17: Strengthen the means of implementation and revitalize the global partnership for sustainable development, target 17.17.

See also

Read the full REF 2021 impact case study for Helping local government create new revenue streams through entrepreneurial activities

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