Decision details
Commercial Opportunities
Decision Maker: Cabinet.
Decision status: Recommendations approved
Is Key decision?: Yes
Is subject to call in?: Yes
Purpose:
To consider ways in which the Coucnil can take
forward possible commercial activity to generate additional revenue
income and imporove sustainability
Decision:
1.
That the new opportunities for commercial activity
identified in the report of the Assistant Director of Environment
and Regulatory Services be agreed and put through the business
model process.
2.
That a similar business model process be used to
bring forward opportunities relating to existing commercial
activity.
3. That the Council’s fund of £500k, as agreed in the decision regarding Investment Opportunities to meet possible investment failure, be also used in the event that a commercial venture fails or does not meet the expected return.
Reasons for the decision:
The current economic climate is causing significant financial pressure on local authorities. Revenue provision through government grant is reducing and will continue to reduce. In order to achieve the Council’s strategic goals and indeed to maintain services, there is a need for the Council to be more business-like.
The Cabinet had already recognised this and a comprehensive review of fees and charges was undertaken last year with the aim of maximizing income. Further reviews will be undertaken as part of the budget setting process.
In
addition, with the aim to become more business-like, officers have
undertaken extensive research and identified the Council’s
areas of commercial strength and areas of business
opportunity. Existing commercial
activity has been reviewed and potential expansion identified where
appropriate.
Discussions with local business leaders had indicated that they
have no objection to the Council being a competitor, where
appropriate, but would expect that any commercial activity would be
undertaken using “a level playing field”.
However, any commercial activity has a potential risk and the
Council needs to be aware that some ventures may fail. In order to minimize the risk, every proposal will
need to the subject of a rigorous business development
appraisal. To assist in this process,
advice has been sought from business experts and entrepreneurs and
a detailed business development appraisal model has been identified
to ensure proposals are fit for purpose.
This
advice and appraisal system comes at a cost and budget from last
year’s underspend has been set aside to start the process
off.
It is
recognised that new commercial activity will require start up
budgets and this will be provided through the
invest to save fund.
Having
reviewed the main opportunities through a workshop and having in
mind the relative strengths of the services/activities, a short
list has been identified for those areas considered to have the
best commercial potential. These
are:-
· Commercial waste
· Venues and event management
· Professional services
· Print room
·
Temporary residential accommodation
Subject
to Cabinet approval, it is suggested that the business development
appraisal model be used to test the opportunities for a commercial
waste service, as a lot of background work has already been
completed. The author of the model will
be employed to provide guidance on the way the model is
implemented.
If this
proves beneficial, this will then be extended for the other
services on the short list.
Individual reports will then be provided to the appropriate cabinet member for approval to progress forward.
A
summary of the appraisal model is provided in Appendix A to the
report of the Assistant Director of Environment and Regulatory
Services.
As
mentioned earlier, a review of existing commercial activity has
been undertaken and existing services that could benefit from what
is called an “entrepreneurial” approach have been
identified. These are:
· Bereavement services
· Procurement
· Building Control
· Shared services in terms of the next steps
· Advertisements
· Grounds maintenance
It is
proposed to use this approach to review the opportunities for these
existing services and bring forward the business plans to the
relevant cabinet members.
It is recognised that this approach to business development is new and rigorous controls are necessary to minimise risks to the Council. Such new or extended ventures will need “start up” budgets. Clearly, it is difficult to identify how much additional income will be realised. Individual performance will be identified in the business plans presented to the cabinet members. Once established the performance of each venture will be assessed and monitored by means of the Council’s normal procedures including quarterly reporting of service delivery and financial performance.
Alternative options considered:
The
Cabinet could decide not to agree the proposals to test the
business case for commercial waste, but this was not recommended as
it would mean a potential opportunity to generate income would be
lost.
The
Cabinet could opt for a different service to test but the case for
a commercial waste service is well developed and is most suited to
going through the appraisal model in terms of timeliness.
The
Cabinet could decide to select other services for potential
business development activity; however, officers are satisfied that
having considered the strengths of the various services, those
identified provide the most likely ways to generate
income.
A decision could have been made not to proceed with any of the proposals and not agree the use of the business model process but this would mean no further commercial activity would be brought forward.
Wards Affected: (All Wards);
Details of the Committee: Report on Investment Opportunities dated 12/09/2012
Representations should be made by: contacting Steve Goulette
Other reasons / organisations consulted
Internal with specific teams/
departments
external with business agencies
Consultees
Internal as above
External as above
Contact: Zena Cooke, Director of Regeneration and Communities Email: zenacooke@maidstone.gov.uk or 01622 602217 Email: zenacooke@maidstone.gov.uk.
Report author: Steve Goulette
Publication date: 13/09/2012
Date of decision: 12/09/2012
Decided: 12/09/2012 - Cabinet.
Effective from: 21/09/2012
Accompanying Documents: