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

What England can learn from Japan's approach to local government finance

By Naoki Fujiwara | 04 June 2026

Consideration of Japan’s approach to local government funding suggests possibilities for doing things differently in England and opens up space to think abou...

NATIONAL AUDIT OFFICE

Governing through uncertainty – what happens next?

By Tim Farr | 04 June 2026

In an era of permanent uncertainty, Tim Farr assesses the challenges many local authorities, chief executives and senior leadership teams are now navigating ...

NATIONAL AUDIT OFFICE

Keeping reorganisation on track: Preparing East and West Surrey for vesting day

By Terence Herbert | 03 June 2026

Ahead of the launch of East Surrey and West Surrey councils in April 2027, local government reorganisation is moving into a new phase with the implementation...

NATIONAL AUDIT OFFICE

Finding a NEET solution

By Tom Stannard | 02 June 2026

The interim report of the Milburn Review revealed the stark reality of youth unemployment. Tom Stannard explains how Manchester is supporting people into emp...

Popular articles by Simone Hines