Sheffield City Council: Polishing the family silver The challenge Sheffield sits within a region that has seen its economy undermined by the decline of the manufacturing industries that once thrived here. While the city’s economy is growing and diversifying, there are some deprived areas with unemployment levels above the regional average. Sheffield City Council, like other local authorities, has been looking at how to address the reduction in grant funding and protect services by maximising economic efficiency. The council believes that the local authorities best placed to attract investment will be those that are able to make the best offer to businesses.
The family silver An audit of the council’s assets revealed it owned properties that were now in the wrong place or being under-used, with the potential to release surplus property through asset rationalisation. Rationalisation can reduce premises costs, generate capital receipts for reinvestment and allow the delivery of more integrated services. It can enable councils to improve the most important buildings and fund the work through the release of surplus assets. Sheffield has been exploring the idea that rather than conducting ‘fire sales’ of spare assets, councils may be better off using them to generate sustainable income and improve run-down areas – delivering on key outcomes for the city. It’s about not simply ‘selling off the family silver’ but polishing it up and using it in a more productive way.
Growth and employment The council joined the capital and asset programme run by the Local Government Association (LGA), which helps councils to use their assets to improve services, save resources and encourage growth. Sheffield decided to turn these under-used assets into drivers for local economic growth – selling where necessary to create the capital for reinvestment in the right places, and along the way creating employment opportunities for local people. Another benefit is that the project has freed up land for new housing projects (21 hectares for private and affordable housing use). The council has been working with other public sector agencies in the area to ensure that everyone can benefit from the asset improvement approach. A joint asset board, chaired by Sheffield’s chief executive, has been set up as a platform where each organisation can work together to maximise the potential of joint and independently owned assets. Nalin Seneviratne, Director of Capital and Major Projects at Sheffield City Council, explains: “Where the Sheffield approach differs from others is the attention given to asset enhancement – enhancing the value of the original assets and their saleability. Then, rather than using the enhanced receipts generated to plug short-term gaps in spending, we are using the funding in conjunction with private sector leverage to create a revolving Sheffield Investment Fund for investment in local infrastructure and economic growth projects.”
Cost savings The city council and its partners have developed a clear strategy for substantial savings from the public sector estate, looking to make between £155 million and £310 million revenue savings over 10 years. The council has reduced the amount of office accommodation used by its own staff through better use of redundant space, along with the opportunity to share with central government services based in the region. This integrated workplace strategy has reduced the amount of space used by 200,000 square meters or 40 per cent – down to four core buildings from 25. It has reduced the carbon footprint for council accommodation by 50 per cent and decreased running costs by £3 million a year.
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A 10 per cent saving on the revenue costs of the whole public estate could deliver a saving of £31 million a year for reinvestment in public services. For the infrastructure investment potential of the Sheffield Investment Fund, a seed investment of £30 million could be invested in projects which otherwise would not happen. The fund might invest one third of the total project capital, with the remainder coming from private sector sources or finance. So £90 million of investment would be achieved overall. If the fund recycles its capital three times over a 10-year period, £270 million of investment will be achieved.
Into the future Sheffield believes that investment in infrastructure sends a clear message to businesses looking to start up or relocate about the seriousness of the council’s intent to support economic growth. Nalin Seneviratne says: “By moving from a commonly adopted short-term approach of just balancing the budgets in a year through the sale of assets, Sheffield will be committing the ‘family silver’ not to a quick sale but retaining it to vigorously drive new business, create new jobs, increase efficiency and competitiveness and provide the means to maintain all this for many years to come.” For further information please contact Nalin Seneviratne, Director of Capital & Major Projects, Sheffield City Council: nalin.seneviratne@sheffield.gov.uk.
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© Local Government Association June 2011
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