Profit with a purpose

As funding shrinks, we have seen an increased focus on income generation and efficiency savings in local government. But as councils innovate in this area, it is critical that they position social value at the heart of their commercial strategies.

Recent changes to statutory investment guidance and minimum revenue provision guidance mean councils need to continue  to be clear about the purpose behind  their profit.

Manchester and Plymouth City Councils are among those leading the way when it comes to the social value in their commercial practice. Each council has its own specific challenges and, equally, its own unique assets and opportunities.

Manchester’s commercial activities are having a successful impact on local jobs, housing, skills and growth. A key aspect of its success is its ability to identify opportunities early and react quickly to markets, using a robust, yet supportive, governance model.

Rather than view commercial projects in isolation, the council’s ambition is to develop Manchester as a world-class city. One example is Manchester City Football Club’s deal with Abu Dhabi United Group to invest in the regeneration of east Manchester. This resulted in the Manchester Institute of Health and Performance, which helped victims of the Manchester Arena terrorist attack to recover.

councils need to continue  to be clear about the purpose behind  their profit

In addition, the city council’s joint venture, Manchester Life, has enabled the building of 1,200 housing units and provided apprenticeships in leisure, construction, and health innovation for local people.

The Manchester Christmas markets bring in huge visitor numbers, increasing spend in the local area and driving economic growth. And the council’s Town Hall project is safeguarding, repairing and partially restoring Manchester’s Grade I listed town hall (pictured). It is working with contractors to maximise the local jobs, investment and apprenticeships created through the project.

Plymouth is a developing city. It is the third biggest port in the world and has the biggest naval base in western Europe. The council has replaced 123 strategies with just one, which has a clear social value focus in that it will only invest in the local area.

The council’s key driver is economic growth and to increase the numbers of businesses locally – but it must be inclusive growth, which benefits all residents.

The council’s growth and municipal enterprise programme aims to achieve  £1.8 million per year. Two examples of this are its cooperative trading company, CATERed, which is jointly owned with local schools, and Delt, a shared service with the local clinical commissioning group, realising savings through scale and resilience.

It is also able to step in where there is market failure, for example in direct developments where the council is prepared to take on greater risk than private developers. Developments include a local business park, a Next fashion, home and garden store, and investment in an existing industrial estate. The council has released 33 council-owned sites, using its planning system to develop 5,000 homes between 2016 and 2021, with the possibility to increase this further.

The two city councils are sharing their experiences to support sector-led improvement. Manchester’s Chief Executive Joanne Roney OBE and Plymouth’s Chief Executive Tracey Lee addressed the LGA’s annual conference in July, at a packed workshop on commercialisation that I chaired. The LGA has also been pulling together resources and guidance for councils and councillors, which you can access at www.local.gov.uk/commercialisation

If you would like to develop your commercial skills, find out about the LGA’s free one-day ‘Commercial skills for councillors’ masterclass at www.local.gov.uk/commercialisation

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