Top economists call for Local Authorities to “get social” when valuing community assets

Power to Change and Pro Bono Economics publish pioneering framework to help local authorities, community businesses and the social sector unlock local assets worth an estimated £7 billion in England alone

Vidhya Alakeson, Chief Executive of Power to Change, says:

“At a time when many parts of the country face cuts, neglect and social problems, Power to Change wants to make sure local areas survive and stay vibrant”

Community asset transfer (CAT): the context

Whether it’s the pub or the post office, the playground or the local pool, the chances are that one or more of the neighbourhood facilities we value most is being run by a community business.

Over 7,000 of these businesses are now woven into the fabric of our community, employing over 36,000 staff, engaging nearly 200,000 volunteers and generating more than £1 billion of income each year in a wide range of sectors.

However, many community businesses – even those with substantial funds – are struggling to survive and thrive. Often, councils are reluctant to consider them as viable long-term partners to run public facilities, and this hinders the long-term sustainability of their business.

Some 60% of councils have instituted a community asset transfer (CAT) policy, which allows public bodies (usually local authorities) to transfer the management and or/ownership of public land and buildings to community businesses. Yet just 33% of councils actively consider social value when procuring and commissioning. Only limited guidance is available on the issue, so many councils are not in a position to assess the potential long-term local impact, both economic and social, of running these assets as community businesses. Instead, they choose to minimise financial risk by leaving buildings and land unused, or by selling them to the highest bidder, thus gaining an immediate cash injection that is often directed towards social care.

Power to Change’s new framework for CAT

Addressing this imbalance for the first time, professional economists volunteering through Pro Bono Economics have now come together to establish a robust method for assessing the economic and social impact of community asset transfers (CATs). Based on economic evidence gathered by economists who work in five government departments, a new report, The Economics of Community Asset Transfers, defines a framework for developing, appraising, implementing and evaluating CATs.  It shows public bodies how to unlock local assets for the benefit of their communities. Most commonly these assets are community centres, swimming pools, town halls, libraries and parks.

The report, commissioned by Power to Change, the independent trust supporting community businesses in England, was prepared by expert economists volunteering through the charity Pro Bono Economics. Now local authorities, commissioning bodies, community businesses and policy-makers will have an economically sound decision-making process for assessing community business and CAT projects, with specific guidance on how to define and measure social value.

Sir Alan Budd, founder of the Office for Budget Responsibility and a patron of Pro Bono Economics, conducted the independent review of the report and said: “Community businesses are relying more and more on CATs; their business models often driven by the assumption that community assets can be accessed to build their business. I am extremely excited about the practical application of the findings of this report. This pioneering framework will enable local authorities to unlock the potential of local assets.”

Vidhya Alakeson, Chief Executive of Power to Change, commented: “At a time when many parts of the country face cuts, neglect and social problems, Power to Change wants to make sure local areas survive and stay vibrant. This report will help local communities to grow and flourish, even in a rapidly changing economic climate. It is time for them to stimulate activity, regeneration and growth by harnessing the value of assets that might otherwise be left empty or unused.

“Local authorities such as Leeds, Bristol and Oldham are increasingly seeing CATs as a way of both reducing the cost of public assets and of protecting assets for the future. While sustaining service delivery, they can pursue wider goals such as regeneration, community development and inclusion.

“We hope that this excellent framework will encourage more local authorities to engage with CAT, and promote best practice among those that already do. It will also prove invaluable for community businesses which are hoping to take on assets, since it provides crucial insights into a local authority’s options and processes when considering community asset transfer. Community businesses can use it to build a compelling case.”

 

 Notes:

  1. For a copy of the report or more information please contact:penny@sensocommunications.com or lisam@powertochange.org.uk
  2. Power to Change is an independent trust, whose funding is used to strengthen community businesses across England. At a time when many parts of the UK face cuts, neglect and social problems, we are helping local people come together to take control, and make sure their local areas survive and stay vibrant. www.powertochange.org.uk/ @peoplesbiz
  3. Pro Bono Economics (PBE) is a charity that helps charities and social enterprises understand and improve their impact and value using the skills of professional economist volunteers. The charity was founded by Andy Haldane (Bank of England) and Martin Brookes (Tomorrow’s People). Julia Grant leads the executive team and Lord Gus O’Donnell leads the board.
  4. Community asset transfers are the transfer of the ownership or long-term management of publicly owned assets to community-based organisations for less than market value.
  5. The five government departments involved in the report were the Department for Work and Pensions, Department of Health, Office for National Statistics, Cabinet Office and the Valuation Office Agency