The report, More Light, More Power: Reimagining Public Asset Management, sponsored by May Gurney, found that this failure, combined with a lack of drive to generate commercial returns from local government assets, could cost £50bn in lost revenue over the next decade.
A conservatively estimated commercial return of just 1-2% from the £250bn local government land and property portfolio could provide a revenue stream worth £50bn over the next 10 years. The chance to make use of intangible assets, like advertising space on public infrastructure, pushes that figure even higher.
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Furthermore, the report indicates that the Treasury's narrow focus on the book value of property assets risks seriously undervaluing local government’s estate. The Regional Development Agencies achieved a net profit of £3.7m through property and land sales in 2011, or 7% above the book value of these assets. This would equate to an additional £35.7bn on the value of local authority assets, which could drive the delivery of green energy, improve infrastructure and fund regeneration.
Some leading authorities are already realising these returns. Birmingham City Council’s New Street Station redevelopment, Oxfordshire County Counci'’s leasing of historical sites and Northamptonshire County Council's 'whole-life cost' approach, all demonstrate the revenue generating and regeneration potential of asset innovation.
Greg Michael, strategy and business development director, May Gurney said: "Unlocking the potential in their vast asset base makes sense and is a logical extension to outsourcing services. Some councils are already pioneering this approach and the Government should do everything it can to free local authorities to follow this model, otherwise service cuts will be the inevitable consequence as funding becomes more squeezed."
(CD)
