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

'One size fits all' rules for the Government when it comes to planning committees

By Ian Miller | 20 April 2026

Setting 13 as the maximum size of planning committees might suit district councils, says Ian Miller. ‘But it means planning will be the preserve of only a sm...

NATIONAL AUDIT OFFICE

Fiscal devolution: A test of seriousness for government and places

By Mike Emmerich | 20 April 2026

If government and mayoral strategic authorities are willing to match fiscal responsibility and the retention of the proceeds of growth within agreed paramete...

NATIONAL AUDIT OFFICE

Does the public care about local government reorganisation?

By Michael Burton | 20 April 2026

So far, the public has been pretty disengaged from consultation over the future shape of LGR, but as the new councils are announced residents may rapidly cha...

NATIONAL AUDIT OFFICE

EXCLUSIVE: Essex steps back from reorganisation legal challenge

By Paul Marinko | 16 April 2026

Essex CC has stepped back from a legal challenge to the Government’s reorganisation plans but called for the process to consider ‘countywide arrangements’.

Popular articles by Simone Hines