Comment

30.06.17

Commit to thinking differently

Source: PSE Jun/Jul 17

The drive to cut costs has invoked an efficient and sustainable entrepreneurial spirit at Birmingham City Council (BCC) that is now set to play a major part in the local authority’s future, writes Ken Lyon, its head of commercialism.

Funding cuts to local authorities and particularly those serving large cities are well documented, and an environment of service cuts and ongoing budget reviews have become an accepted and unfortunate part of the landscape for local councils. However, the drive to reduce costs and the need to do things differently has provided a context for the rise of an entrepreneurial spirit within councils, which has seen the development of a range of new approaches to addressing the funding gap. 

At BCC, as Europe’s largest local authority, we have developed a multi-pronged strategy to our commercial journey. Underpinning our approach is a confidence in our ability to deliver and a recognition that embracing change and innovation is key to adapting to the needs of a commercial market. Commercialism is strongly led at both a political and officer level within the organisation, with Cllr Majid Mahmood, cabinet member for value for money and efficiency, a particular champion: “Commercialism demonstrates our commitment to our citizens to do everything possible to protect and invest in services to our city.” 

As officer lead and chair of the officer/member commercialism board, chief operating officer Angela Probert believes that “commercialism is central to our ability to be effective as an authority and is ever more important in our ability to set a balanced budget”. 

The Birmingham approach builds on four key pillars of our organisation, which are: 

  • Established services and natural economies of scale – e.g. traded services
  • Assets that we own and have commercial potential – e.g. advertising portfolio
  • Influence, partnerships and role in the market – e.g. shared services
  • Effective, risk-based investment, leading to revenue and capital benefits – e.g. investment and property portfolio 

Although we are still near the beginning of our commercial journey, we have already achieved some significant successes across each of these elements.  

For example, our catering organisation, CityServe, recently won national acclaim and awards for its innovative ‘social commercialism’ approach to the schools catering market. Previously the council had been set to withdraw the service, but Cllr Mahmood thought differently: “I could see there was a real opportunity to develop a strong commercial service with social values and opportunities that provided a unique selling point to our customers.” 

CityServe’s ‘It’s all about the kids’ approach has not only seen the service move from an operating deficit of £0.6m to a £2.3m surplus, it has also provided a platform for the organisation to enable city children to engage differently with food, champion healthy eating and to counter ‘holiday hunger’. By investing in our ‘City Kitchen’ facility, we have enabled children from our 280 school customers to play an active part in setting and developing menus and engage in the services we provide in a new and unique way. As an organisation, we very much see this as phase 1 of our approach – with a move to become more of a player in the regional market, our next step and the development of a broader catering brand. 

Our commercial approach is not all about ‘going it alone’ though, we have also developed partnerships across the public and private sectors to where this will help us best achieve financial returns. For example, we have established a strong commercial relationship with an industry specialist to help us maximise the value of our advertising assets across the city – our unique and diverse range of platforms has led to us generating over £2.5m per annum surplus to date and to the further development of new assets. 

Further examples of commercial thinking in Birmingham include the development of the ‘InReach’ housing company – delivering high-quality new homes to the city while delivering a financial return – and also rebalancing and reviewing the investment property portfolio, enabling us to act with more agility and success. 

To achieve this in a sustained, replicable and meaningful way we need to become more commercially agile. Developing a pragmatic corporate approach to internal ‘blanket’ processes and controls around disciplines such as finance, legal, procurement, IT and HR frameworks is vital in ensuring that we are able to compete successfully on a commercial playing field. 

Moving forward 

Commercialism is very much part of the future for us as a council and for the sector as a whole, where the diversity across authorities will lead to many and varied approaches. However, the core ingredients remain the same – creating an environment where change can flourish and an underlying confidence in our ability – and above all a commitment to thinking differently to enable us to deliver the best services possible to our citizens.

FOR MORE INFORMATION

W: www.birmingham.gov.uk

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