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

Seizing the opportunity of local government reorganisation

By Cllr Richard Wright | 19 June 2026

Rather than recreating existing structures, councils should use reorganisation to transform services, strengthen local accountability and improve outcomes fo...

NATIONAL AUDIT OFFICE

The social value 'black hole': ensuring the evidence follows the public sector promise

By Steve Butterworth | 17 June 2026

If we want social value to carry the weight it now commands in procurement, we must design for delivery and measurement from day one, says Steve Butterworth.

NATIONAL AUDIT OFFICE

Moving on from political limbo: Dealing with no overall control in English councils

By Neil Merrick | 17 June 2026

With more than half the country’s councils now in no overall control, chief executives are having to play an even more pivotal role at the heart of many loca...

NATIONAL AUDIT OFFICE

Don't freeze regen after the elections

By Sir Michael Lyons | 17 June 2026

If we want regeneration to deliver at scale, momentum cannot pause every time leadership changes, explains Sir Michael Lyons.

Popular articles by Simone Hines