Profit with a purpose

Throughout the history of the public sector, local government has always used commercial approaches to meet local challenges head on.

During the 19th and 20th centuries, councils invested in commercial activity across local areas to create jobs, improve living standards, and generate income to reinvest back into local services. For example, back in the 1800s, Manchester Police and Manchester Council opened the city’s first gas works, enabling the rollout of street lights and making the city safer.

Fast forward to today, and we can see this commercial activity is still alive and well. After years of reductions in government grants, many councils are exploring how they can adopt commercial activity to stimulate local economies, increase jobs and deliver social value for their residents.

In our ‘Enterprising councils’ report, we explored how councils are increasingly developing innovative commercial solutions to increase income while improving outcomes for local residents.

Following positive feedback, we have now developed our latest guidance, ‘Profit with a purpose’, which focuses on how councils can deliver social value through their commercial activity.

The guidance is structured to take you through a considered approach to ensuring commercial activity drives social value. It supports you to face the challenge of how to undertake commercial activity and achieve greater value for the public purse in ways that better meet society’s needs and improve outcomes for people and communities.

A number of short case studies are detailed to highlight some of the innovative commercial practice already achieving results for communities, by embedding social value in their contracts, targets and practices.

For example, the City of Wolverhampton’s WV Living house building company aims to tackle housing sites that the private sale and rental market were not delivering on.

To ensure the company’s value goes beyond the bricks and mortar, the firm builds into its contracts that selected suppliers must employ local people and take on apprentices, to build up skills within the construction trades and provide economic growth and jobs for local communities.

Cityserve, Birmingham City Council’s schools trading service, puts local children at the heart of the business. For example, Cityserve’s catering offer has intended outcomes relating to reducing obesity and promoting healthy eating.

This means it not only delivers a school catering service, which provides around 50,000 school meals to around 220 schools a day, it also engages with children over menu design and what foods they wish to eat.

It also delivers prevention activities via interactive ‘life’ skills training, such as cooking classes where children cook healthy recipes as well as learning about healthy food choices, which helps children gain transferable skills to be taken home and shared with their families.

The report also has specific chapters on embedding social value in governance of alternative service delivery vehicles, the role of procurement in contracting services that deliver social value, and how to contract and performance manage social value through your service providers.

We hope ‘Profit with a purpose’ will help your council generate much needed income to protect vital frontline services, while also contributing to social value – jobs, skills and growth – in your area.

Please visit www.local.gov.uk/publications to download ‘Profit with a purpose’. A workshop with the same title will be taking place on Tuesday 2 July in Bournemouth, at the LGA’s annual conference. See www.local.gov.uk/conference for more information, and to book your place

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