Almost all the Councils we speak to are struggling with their operational property. This is despite many of them operating a Corporate Landlord model – the best practice recommended model for Councils to manage their property portfolios. So, in the face of ever-increasing maintenance backlogs, and decreasing Council budgets, is the model still sustainable?
When contemplating that question, I couldn’t help but see similarities with the situation at Blackburn Rovers… (bear with me!).
Anyone who knows me well knows that I am an avid football fan, and for my sins, I support Blackburn Rovers. I don’t even have the satisfaction of being old enough to remember the glory days of the 94/95 season. Whilst you’d be forgiven for not being aware of the current state of play at Blackburn, it’s one which has just seen us get a last-day reprieve from relegation to League 1 (witnessed by yours truly), and that requires our owners to cover losses of £15-20m per annum. So, on the surface, not too rosy! However, we have just sold several players for healthy sums and, if used wisely, I still have hope we can yet become a sustainable club.
Not unlike Blackburn, many Councils are struggling to sustainably manage their property portfolios even when operating a Corporate Landlord, so why is that? Whilst each Council is different, we often find similar issues which primarily relate to the non-delivery of ‘second phase’ savings. These savings are built in as a key part of the business case when implementing a Corporate Landlord.
The first phase relates to introducing a consistent delivery model with a specification informed by the strategic plan for each asset and its importance to the Council. This may include the consolidation of contracts, the removal of any over-specified services, ensuring oversight of activity by property professionals, and removing duplication of resource.
Typically, when working with Councils, we find that they have been successful in delivering the principles of the model. They have centralised staff, budgets and oversight against these assets, and delivered savings in the process. However, this alone is insufficient, and repairs budgets are again being put under pressure.
Critical, therefore, are the ‘second phase’ savings that should be delivered once the Corporate Landlord model becomes embedded as a concept. These savings are often significantly higher than those delivered in the first phase. So, what is this ‘second phase’?
A key function of a Corporate Landlord is to set the strategy for the Council’s whole operational portfolio, through consultation with frontline services (Adults, Children’s, Libraries etc.). This should inform both the prioritisation of Planned Maintenance activity, and the strategy for specific operational assets. This is where decisions should be made about whether to retain, refurbish, repurpose, or divest. Crucial, however, is that any revenue or capital savings are not simply cashed, but are at least partially reinvested into the retained estate. Whether through topping up stretched repairs budgets, or investing in retained assets, resources are needed to reduce backlogs and to ensure the estate remains fit for purpose. This second phase necessarily takes longer to implement and will be delivered over several years, meaning it can often be lost sight of, or superseded by short term issues. From our work with Councils, we can see that it is imperative that the implementation of Corporate Landlord is viewed in this way, and that a long-term view on the sustainability of the model is taken. Without this it would be easy to lose faith in its benefits when faced with consistently over-spending property budgets.
Which brings me back to Blackburn. Whilst I am less than enthralled with our performance both financially, and on the pitch, I’m not losing the faith just yet. With a strong summer with savvy investments, we may get back to the glory years of 94-95 yet…