Title

NATIONAL AUDIT OFFICE

It makes good sense to diversify income

Some of the commentary on commerciality implies councils are going into these investments recklessly, and that is simply not the case, says Simone Hines. Continuing to be creative and innovative with council finances is going to be vital, she adds.

The commercialism debate rumbles on with the publication of the National Audit Office's (NAO) recent report and the Public Accounts Committee hearings in May. The reasons for councils making commercial investments are well rehearsed. We've long been encouraged to be more self-sufficient. Many district councils no longer receive Revenue Support Grants and have looked for new income streams.

These investments enable the risks to be managed at a local level and provide some protection from the shocks of reduced Government funding. The current pandemic has shown there is an over reliance on the main sources of income, and it makes good financial sense to diversify income. It should also be remembered that this is not new to us. Local authorities have invested in property for many years and there are legal powers.

S151 officers have a legal and professional duty to ensure the necessary due diligence has been undertaken prior to making a commercial investment – or any investment for that matter. Some of the commentary on commerciality implies councils are going into them recklessly, and that is simply not the case.

The current PWLB consultation muddies the waters even further by proposing that any authority undertaking commercial investment will not have access to PWLB. This risks undermining the prudential framework and local decision making. It may force s151s toward using riskier finance sources.

The NAO report referred to £6bn of commercial property acquisitions, but there may be wider reasons for these – such as town centre regeneration.

A handful of councils may have pushed the current prudential framework to its limits, but the arbitrary interventions being suggested are the proverbial hammer to crack a nut. Continuing to be creative and innovative with our finances is going to be vital – let's not make it any harder than it is already going to be.

Simone Hines is president of the Society of District Council Treasurers and executive director of resources at Nuneaton & Bedworth BC

NATIONAL AUDIT OFFICE

Will Burnham be the hero in history?

By Michael Burton | 16 July 2026

Andy Burnham has the chance to offer hope and opportunity to a sullen population disillusioned with politicians and fed up with decline. He might want to see...

NATIONAL AUDIT OFFICE

Are we looking for finance experience ...and missing leadership potential?

By Andrew Tromans | 16 July 2026

Penna’s Andrew Tromans shares his insights into finance leadership recruitment.

NATIONAL AUDIT OFFICE

Legal shadow looms over reorganisation decision day

By Dan Peters | 15 July 2026

Several councils due to receive ministerial decisions on their local government reorganisation proposals tomorrow have been preparing for potential legal cha...

NATIONAL AUDIT OFFICE

Stop chasing talent – grow it!

By Tim Jones | 15 July 2026

Local government must stop poaching talent and invest in building the next generation of finance leaders, says Tim Jones

Popular articles by Simone Hines