Centre for London report finds local authorities in the capital can drive local economic development using procurement, property and pensions
PROCUREMENT, PROPERTY, AND PENSIONS: CENTRE FOR LONDON REPORT FINDS LOCAL AUTHORITIES IN THE CAPITAL CAN DRIVE LOCAL ECONOMIC DEVELOPMENT USING STRATEGIC ASSETS
A new report finds that local authorities can transform the communities they serve through collaborating with each other and with local residents.
A report out today from Centre for London proposes a bold approach to using assets that are owned and managed by local authorities to benefit local communities.
London’s local authorities spend billions of pounds each year procuring goods and services, managing properties and land, and investing in pension funds for the people they employ. This activity already provides huge value to the city, but strategic deployment of “community asset approaches” can increase their impact on the people and economies who stand to benefit most.
The report “Making the Most of Local Authority Assets” recommends a suite of actions for local authorities to take and identifies the barriers to doing so. Best practices for local authorities identified through the research are 1) prioritising and defining their social value aims and sharing them with their community, 2) identifying how their pensions, procurement and property can deliver social value, 3) working with local people to hone their approach to investment, and 4) collaborating with other local authorities and anchor institutions to share knowledge and reduce the barriers to community asset approaches.
Josh Cottell, Research Manager at Centre for London, said:
“The cost of living is rising, threatening the standard of living of people across the country. Local authorities will be doing everything they can to support their residents, but money remains tight.
By taking new approaches to managing the assets they already control – the money they spend, the property they manage, and their pension funds – our research finds that local authorities can get more for their money to drive local economic development.
Examples we’ve seen range from creating more and better local jobs to empowering local communities to have more of a say over how their community’s assets are used. Local authorities can learn from what’s worked elsewhere while deciding local priorities in conversation with local partners and residents.”
Focusing procuring services from local businesses, and especially from small- and medium-sized enterprises (SMEs), can help keep money circulating in the local economy. According to one estimate, a pound spent at an SME results in 63 pence being spent locally, versus 40 pence at larger firms. SMEs are also more likely to engage in activities such as employing local people, reinvesting profits locally, and build local supply chains.
London’s local authorities own approximately one-fifth of the land in the city. In an era of austerity, many councils have begun selling off the buildings, libraries, shops, and other properties they manage. However, using community asset transfers or other mechanisms like discounted rents can help civil society groups thrive in otherwise underutilised spaces and deliver stronger returns in the long run than the immediate monetary value of the property.
There is more than £44 billion under management by Local Government Pension Scheme (LGPS) funds in London. Pension funds are private capital rather than a public asset, but many pension funds and pensions savers are becoming interested in using this capital to generate social good as well as an economic return. Further work needs to be done to make this a more viable location for pension savings, but doing so could unlock billions in local investment.
This report is the culmination of a year of research at Centre for London on how local authorities can use the assets they manage to deliver value to local residents. In November they will publish a related report on private finance for social good: “In London and for London: place-based impact investment for the capital”.
