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          Cash shortfalls push local authorities to commercialise

          Colin Murray, partner and Head of Local Government at DWF, comments on two new reports from the Institute for Fiscal Studies and the Chartered Institute of Public Finance and Accountancy, which shine a spotlight on the finances of local authorities. 

          Date: 30/05/2019

          Colin Murray, Partner and Head of Local Government at DWF, said:

          "The IFS reports that council spending on local services has fallen by more than a fifth since 2010. Meanwhile, CIPFA's findings have revealed that 11 out of 152 may be at risk of running out of cash reserves in the next four years if they continue current spending patterns and don’t top them up.

          "These findings correlate with our own research with over 150 local authorities from earlier this year, which also found a sector in financial distress. Around a third (34%) of survey respondents in our 2019 report said they were expecting to issue a section 114 notice within the next four years.

          "Political uncertainty and austerity measures have piled pressure on local authorities and they are responding with increased commercialisation. It's inevitable that to combat decreasing funding from Central Government (and to an extent, the EU) and in a bid to safeguard public services, commercialisation will intensify in the coming years. It has to.

           

          "We expect to see significant growth in commercial activity as the UK's public sector seeks to be more inventive in generating new revenue streams – we are already seeing this through trading services, buying assets, disposing of land and (for example) increasing car parking revenue. However, while this provides huge potential for organisations to generate revenue, it is not risk free and a clear commercial strategy is key."

           

          Read more on DWF's report to assess the commercial challenges, models and strategies being adopted by local authorities and other public bodies across the UK: www.dwf.law/commercialisation

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