Collaboration the key to district recovery post-pandemic
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Regeneration and economic growth will depend on districts’ ability to secure funding and work with public and private partners, argues Sanjiv Kohli.
Covid hit us in March 2020 and immediately had a big impact on our profession and personal lives. Finance officers working in district councils, in particular, have done incredibly well in supporting local businesses through swift administration of government funded business grants.
However, more testing times will follow as government support comes to an end by the middle of this financial year. How we respond to these challenges will shape the future of our councils and our places.
The financial challenges are numerous as central decisions on local government financing, such as the outcome of the fair funding review, the impact of base line reset, council tax reform, and business rates reform are augmented by local uncertainties over recovery of income from sales, fees and charges.
There will be other uncertainties, not least the timing of the chancellor’s actions to address the budget deficit ( government borrowing, according to the Office for Budget Repsonsibility is currently at £355bn). In his budget in February, the chancellor, understandably, started to gently re-dress the deficit by fiscal measures such as increases in corporation tax and freezing of personal allowances. There can be no doubt that he will look to reduce public spending at some point; more probably from 2022-23. The burden of the cuts is likely to fall most heavily on district councils.
Links
Changes in local government finance were already afoot pre-Covid and—while the pandemic has delayed some of these changes—the move to self-financing will no doubt accelerate from 2022-23 onwards.
District council funding will be closely linked to the speed of recovery and future success of our business communities. District councils will also need to play a massive role in the recovery of our local economies and build upon the closer and stronger relationships that have developed during the Pandemic.
Districts will need to continue providing advisory and financial support to businesses to ensure they prosper; with our own funding intrinsically linked to their success.
The pace of recovery and the speed with which our own finances recover also depend on our ambition, ability and drive to deliver significant regeneration and economic growth projects, in collaboration with our public and private sector partners.
Collaboration—often an over used word in local government—will likely play a critical part in the recovery of our places and our own finances. In Nottinghamshire, the template for collaborative working was well established pre-Covid, and has been further strengthened by the joint working between districts, county and city councils, together with police and fire and rescue, in jointly implementing county-wide Covid-related support schemes.
Furthermore, the levelling up fund, community renewal fund and community ownership fund, announced by the chancellor in his February budget have, as an essential prerequisite, the need to collaborate with community groups, parish councils, upper tier authorities, and local MPs.
Partners
We will also need to have open and honest collaboration with private sector land owners, developers and funders to understand and accept their end game. We will need to use the strength of our covenant and ability to secure funding, through grants and prudential borrowing, to provide stimulus to our economies, and thereby have a positive impact on our own finances through increased council tax base, retention of business rates growth, and income from fees and charges.
At Newark and Sherwood District Council (NSDC), the council recognised the need to intervene before Covid and we have continued with the delivery of plans using the same determination and doggedness of our private and public sector partners.
For example, a main gateway site, owned by a private developer, had been mothballed for over 18 years due to planning constraints and previous abortive developments. The site had become a blight on the town which the council wanted rectifying and sought to deliver a town centre hotel, for which a need had been identified.
The developer’s end game was to exit from holding the site. To make the scheme happen, the council entered in a joint venture with the developer prior to Covid-19. The build programme continued during the pandemic and completed last month; delivering a 66-bedroom hotel with 10,000 square feet of commercial space. A back-to-back “wrapper” deal returned the council’s initial investment and provided an exit for the private land owner. The scheme will provide net revenue return to the council and contribute a significant amount of business rates to the Nottinghamshire business rates pool.
Similarly, the council, prior to the coronavirus, purchased a town centre building vacated by Marks and Spencer and has begun development of apartments and commercial units. This scheme responds to an identified shortage of town centre accommodation.
NSDC is now working with the Towns Board, to use £25m allocated from the towns fund to deliver a visionary programme of regeneration and development costed at around £165m. The balance of funding will be leveraged from other public sector partners and through joint ventures with private sector funders. The schemes included will deliver the objectives of providing employment, training, re-skilling, green travel, accommodation and increased economic vibrancy.
In conclusion, there are many challenges ahead for our profession and the councils that we serve. Chief finance officers will need to understand the holistic funding picture and have the conviction to provide financial guidance and leadership to their councils.
The extent of our success in doing this will be a key determinant of our places and the future sustainability of our councils.
Sanjiv Kohli is deputy chief executive, director of resources & section 151 officer at Newark and Sherwood District Council.
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