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

LGR pause and review: what councils need to know

By Christopher Kerr | 18 September 2026

Christopher Kerr looks at the immediate issues and future concerns councils need to address following the pause in local government reorganisation.

NATIONAL AUDIT OFFICE

Local government reorganisation: Assessing the financial impact of delay

By Tracy Bingham | 17 September 2026

Tracy Bingham looks at what the council reorganisation pause means for costs, savings, affordability and financial readiness.

NATIONAL AUDIT OFFICE

Madchesterism: Putting music at the heart of devolution

By Tom Kiehl | 17 September 2026

New research makes clear the next phase of devolution is an opportunity to treat music as part of the economic, social and physical part of local communities...

NATIONAL AUDIT OFFICE

Make prevention drive Budget decisions

By Mo Baines | 17 September 2026

A bold chancellor sees prevention may take years, but the long-term rewards of curbing welfare spend and improving public services through prevention is wort...

Popular articles by Simone Hines

-->