Montagu Evans advises… in local authority decision making

Local Government has been one of the greatest bearers of the last decade’s austerity measures. The Local Government Association (LGA) estimates that councils have faced real funding cuts of 60% over the period, and that’s without taking into account the effects of Covid-19.

Councils, whether two-tier or unitary, have statutory duties to deliver a range of services to tax payers. In addition, they are increasingly being expected to take on additional services to help support the communities they serve. Demand for all of these services has increased even as funding has been materially reduced.

Councils are run more leanly than ever and, alongside austerity measures, they are encouraged to commercialise in order to generate their own revenue streams. There is an ideal in some quarters of Central Government that Local Government can become genuinely self-sufficient. For many councils property has been an important aspect of a diverse investment strategy to help keep pace with the costs of serving their communities.

Local authority property investment activity tends to be grouped together as a whole but should be viewed as two distinct strands, each with contrasting drivers and outputs. But there are distinct strands within it. Broadly, these strands comprise regeneration-based activity and investment for yield. The former tends to be in-borough and focused on regeneration and housing delivery. The latter has the has the primary aim of generating a return to help fund local service delivery and can be both in and out of borough.

The drivers for regeneration-led investment are comparable to any public sector intervention. They are about safe-guarding communities and local economies by addressing market failure, they protect and enhance jobs, they facilitate or directly deliver housing, they provide healthier, better connected places and, crucially, create and deliver the social value that is inherently challenging for the private sector to provide. The return profiles are long term, complex and about positive outcomes for local communities.

Where councils are investing for yield alone, this is usually an active decision taken because the local economy is either too small or too rural to have a robust internal investment market, so they go further afield and recycle returns through the local economy to support those same outcomes and deliver on social value imperatives.

We help councils with their decision making process as well as advising on delivery. Our approach is about sharing information, providing new skills and giving the expertise where it is required. We help our councils reflect on the decisions that they are making, put in place long term strategies, and ensure that there is a robust governance structure in place. As well as working directly with councils we support knowledge sharing and learning through training and events with the LGA and Chartered Institute of Public Finance and Accountancy (CIPFA) for Officer and Member groups all with the aim of bringing specialist property expertise to a wider public sector audience.

We provide expert, specialist support to local authorities covering portfolio advice, investment brokerage, valuation, property and place management, asset management and development consultancy. We feed in market knowledge and additional appropriate service lines to support where it’s needed in areas such as planning, rating and strategic workplace and asset strategy. We do not directly invest local authorities’ money but we can help councils identify additional input they may need, for example legal, finance and treasury advice, and we work alongside them, long term, to help them achieve their objectives in a measured, well-governed manner.

While Local drivers, decision-making processes and the level of specialist support required differ between councils as each works to a different set of circumstances and requirements, our approach makes collaboration, expertise, risk management, forward planning and robust governance central to property decisions. Ultimately, we help councils make better informed decisions and support them in the outstanding work that they do.

For further information contact Alan Harris or Kevin White, Partners in Development Consultancy.