Saturday, 13 December 2014

Knowle relocation project: "We’re digging into the opportunities to release assets and invest in assets to increase revenue streams."

Is the Knowle relocation project simply about the District Council 'extracting best value' from its 'assets' as it seeks to 'access new income streams' ...?
Futures Forum: Knowle relocation project: getting the figures straight
Futures Forum: Knowle relocation project ... and 'asset renovation'
Futures Forum: Knowle relocation project: analysis of the Deputy CEO's 'Office Relocation Update'
Futures Forum: Knowle: refurbishment vs redevelopment

The EDA blog has spotted this revealing piece from two years ago:
Deputy CEO Richard Cohen’s vision for EDDC in a 2012 interview | East Devon Alliance

The piece was an interview from the Room 151 website - and because it is primarily interested in local government finance, the very first question was: 

'Is East Devon doing a lot to access new income streams for the council?'

To which the answer was: 

'The council is reviewing its asset base to identify whether we’re extracting best value. 
We’ve got a variety of assets ranging from car parks and industrial estates to beach huts, a couple of cinemas. 
Some make money and some cost money and we’re digging into the opportunities to release assets and invest in assets to increase revenue streams.'

Richard Cohen, East Devon’s Deputy CEO on opportunities & innovation | Room 151

There has been considerable concern of late about the management of assets at the District Council:
If EDDC’s Asset Management Forum has no minutes how does it communicate with the Cabinet | East Devon Alliance
Asset renovation better than newbuild.. implications for Knowle | East Devon Alliance
Budleigh Salterton Car Park – questions needing answers | East Devon Alliance

This last example of 'asset management' throws up some basic questions:


July 6th, 2014

… Mr Pickles is also urging Town Halls to “turn idle assets into money” to protect front line services. The government is allowing councils to use money raised from the sale of assets, such as empty buildings and redundant brownfield land, to help pay for the costs of improving local services and to keep Council Tax down.

New fund to help councils fight fraud - Press releases - GOV.UK

Does our council leadership see a new HQ on the edge if Exeter as an “improvement” that income from the car park could fund?

Budleigh parking: should we blame Eric Pickles? | East Devon Alliance

There are several issues at stake here, according to a recent report from the Local Government Association:

Management of assets

The book value of the entire public estate is about £354 billion, of which £230 billion worth is owned by local authorities. The capital asset pathfinder programme initiated by the LGA suggests that local authorities could save up to £4 billion across a total asset base of over £20 billion over a ten year period. If this kind of saving was to occur throughout the public sector estate, including central government owned assets, the savings would be sizable. 
Such improved management would assist in the Government’s top priority of reducing the deficit and promoting growth.
It would free up land and property for more productive, locally appropriate, uses and thus help to create conditions that support growth. 
Most local authorities have begun to rationalise their assets, however coordination with other public sector asset holders (mostly central government and its agencies) is patchy. 
The pace of change is slow as the landscape is complex with national and local organisations often working in isolation with different priorities. 
Local authorities, working with other locally based organisations, are best placed to carry out this task. 
Because of their economic development role, councils are the only public body with a vested interest in removing blight and unlocking development and are thus key partners in driving economic growth.

Local government’s role in  promoting economic growth: Removing unnecessary barriers to success

'Promoting economic growth' is one thing - although 'sustainable growth' might be considered an oxymoron by many:
Futures Forum: The semantics of sustainability: 'sustainable development'... or 'sustainable growth' ... or 'sustained economic growth'... or 'development for sustainability'...

But there are a lot of unspoken assumptions about the role of local government:

The District Council's Deputy CEO talks about the need to 'make money', 'release assets' and 'increase revenue streams'.

The LGA report says local government should 'free up land and property' and 'rationalise assets'.

Leaving aside the promises of considering 'locally appropriate uses' and 'working with other locally based organisations', it is the emphasis on making use of 'assets' which is regarded as a legitimate activity of local government.

There is of course the ideological argument over whether government is in itself 'good' or 'bad':
Government is Good - The Case FOR Bureaucracy
Center for a Stateless Society » “Government Is The Things We Do Together”: Perhaps the Stupidest Thing Ever Said

Fundamentally, however, is the belief that (local) government should be in the business of 'making money'. This piece is from the Forbes business magazine:

Why Government Should Not Be Run Like A Business

October 5th, 2012

The idea that government should be run like a business is a popular one with both Republicans and, albeit to a lesser extent, Democrats. But this betrays a basic misunderstanding of the roles of the private and public sector. We should no more want the government to be run like a business than a business to be run like the government.

Those popularizing this notion feel this way because they see business as more efficient. This must be the case, so the logic goes, or the entity in question would lose market share and go bankrupt. Only the fit survive. Meanwhile, government agencies face no backlash. This is why we have long lines to get driver’s licenses, poorly maintained VA hospitals, inferior returns on investment from Social Security, etc., etc. Were there a choice on where to be licensed to drive, then such offices would forced to make the customer’s experience a positive one or they would go elsewhere.

There are, of course, many businesses that also make the customer’s life very unpleasant because simply being in the private sector does not guarantee effective competition. The American Medical Association has, for example, argued for years that very few people actually have much choice when it comes to health care. It is a very concentrated industry, meaning that they can demand payment while giving only a vague idea of coverage (which may well change over time and with little to no notice) and they can delay reimbursement. And there are government agencies, like police and fire departments, where their dedication to duty has nothing to do with profit. They put their lives on the line every day because they think it’s the right thing to do.

But while we might all grant that there are exceptions, the general question still stands: does it make sense to run government like a business? The short answer is no. Bear in mind, first, that “efficiency” in the private sector means profit. Hence, to ask that the government be run like a business is tantamount to asking that the government turn a profit. The problem in a nutshell, is that not everything that is profitable is of social value and not everything of social value is profitable. Reality TV, pornography, fashion, sports, and gambling are all of questionable social value, but each is quite profitable and exists in the private sector. Meanwhile, few would argue that the Army, Navy, Air Force, Marine Corps, Coast Guard, police department, fire department, libraries, parks, and public schools are of no social value, and yet they could not exist if they were required to be profitable. Imagine maintaining a standing military by selling subscriptions door-to-door: “Hello, my name is Captain Johnson, and I represent the US Army. Are you afraid of foreigners? Would you like guaranteed protection against invasion, pillaging, enslavement, and more? Please see our brochure for our three levels of service.” There would, of course, be a few subscribers, but nothing approaching the level necessary to truly protect the United States from attack.

To reiterate, the key issue is this: not everything that is profitable is of social value and not everything of social value is profitable. The proper role of government is the latter. Those arguing for a business model for government must necessarily be ready to shut down all government functions that do not earn a profit, regardless of their contribution to our well being. And, if the public sector is being run properly, that should mean every single one. If it’s profitable, they shouldn’t have been doing it in the first place. There is no need for the government to start a chain of hamburger stands, hardware stores, or coffee shops. Rather, they run child protective services, the National Park Service, and the Air Force. Profit is the realm of business, while unprofitable but socially useful tasks is the responsibility of government.

This is not to say that every government agency is actually performing a useful public service or that it is not wasting resources (by whatever standard). Nor am I arguing that there are not many private sector activities that add greatly to our well being. The point, however, is that saying that government is inefficient because it does not turn a profit is the equivalent of saying that Peyton Manning is a poor quarterback because he doesn’t hit enough home runs. He’s not supposed to.

Why Government Should Not Be Run Like A Business

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