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The Treasury’s limited view of the value of public assets is crippling local authorities’ ability to drive local growth and meet deficit targets. A new NLGN report, More Light, More Power: Reimagining Public Asset Management, sponsored by May Gurney, has found that failure to generate commercial returns from local government’s assets could cost £50bn in lost revenue over the next decade.
The report highlights how revenues from England’s £385bn portfolio of public assets, a sum fifteen times the value of Tesco’s assets and £10bn more than the current cost of quantitative easing, could drive the delivery of green energy, improve infrastructure and fund regeneration.
A conservatively estimated commercial return of just 1-2% from the £250bn local government asset portfolio could provide a revenue stream worth £50bn over the next ten years. The chance to make use of intangible assets, like advertising space on public infrastructure, pushes that figure even higher.
Some leading authorities are already realising these returns. Birmingham City Council’s New Street Station redevelopment, Oxfordshire County Council’s leasing of historical sites and Woking Borough Council local energy generation all demonstrate the revenue generating and regeneration potential of asset innovation.
In addition, the report indicates that HMT‘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 per cent above the book value of these assets. This would equate to an additional £35.7bn on the value of local authority assets.
Simon Parker, Director, NLGN said: “It’s crucial that we unlock the power of local government’s assets to drive growth and create jobs. At a time when the property market is flat, councils shouldn’t be selling off the family silver but using it to generate returns for the public purse. A more commercial approach could unlock billions of new investment.”