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30 October 2018
The economic difficulties faced by Local Government have never been far from the headlines this year. The withdrawal of central funding has resulted in Local Authorities dipping into their own reserves, with the National Audit Office estimating that at the current rate one in ten will have no more reserves left in just three years' time.
Steps are being taken; from increasing funding received from tax-payers, to restricting the provision of frontline local services. But with every increased car parking fee or cancelled bin collection comes further scrutiny on Local Government. Here are some of the strategic measures that may be available to find savings.
There are certain services, social care for example, that Local Authorities are statutorily obliged to provide. There are however other services that many Local Authorities provide voluntarily. These services may provide Local Authorities with an opportunity to find savings and even additional sources of income. For example, we are advising Newcastle City Council, on its pathfinder scheme to transfer the management of its parks to a charitable trust.
Many Local Authorities have also sought savings through outsourcing the provision of leisure services. This is a particularly effective strategy where existing leisure facilities are loss making. By outsourcing the provision of leisure services Local Authorities can reduce the subsidy provided to each facility (ideally to zero) or even (as we have seen on a number of projects) provide a source of income for the Local Authority.
Central Government is encouraging the public sector to look at potential savings in operational long term contracts. Potential areas for savings include:
As perhaps a Local Authority's most valuable asset, there are a number of approaches that can be taken to maximise savings and generate income from land. Possible options include:
We recently advised a private sector partner on structuring and implementing a JV model that will bring surplus Local Authority sites in to use, whilst achieving regeneration objectives, and optimising the value and return on those sites. In this case, ownership of the assets remains at all times with the Local Authority, with the JV just taking its development profit.
A heat network can help a Local Authority to mitigate the impact of energy cost increases, create new revenue streams and encourage local development, all whilst reducing greenhouse gas emissions.
There are a number of funding options available to Local Authorities, including the £320m Heat Networks Investment Project capital investment programme that is expected to support up to 200 projects in the next few years, and leverage in up to £1bn of wider investment. In order to assist Local Authorities the Department for Business, Energy and Industrial Strategy has also commissioned us to produce guidance on procuring finance for heat networks.
For further information on this topic please contact Iain Greenshields, Andrew Hirst or George Matthew at Womble Bond Dickinson (UK) LLP by telephone (+44 191 279 9000) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The Womble Bond Dickinson (UK) LLP website can be accessed at www.womblebonddickinson.com.
This article has been reproduced in its original format from Lexology – www.Lexology.com.
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