An alternative FTSE – OLASE; why Odgers Interim has created an index comparing local authorities to listed UK companies
The scale and breadth of local government often goes unsung. Jes Ladva, Odgers Interim’s Managing Partner and Head of Practice for Local and Central Government, unveils research looking at Councils in the context of FTSE-350 businesses.
Myths still abound about what Local Government is to the public at large and also to big business. Many hold the view that there is not much more to local government than emptying bins and filling potholes. Nothing could be further from the truth.
Local authorities are complicated organisations responsible for delivering a mind-boggling array of services, every day taking a key role in global issues: the pandemic, energy, the cost of living crisis… Over the years, successive pieces of legislation have led to the accumulation of a mountain of statutory duties. A review conducted back in 2011 identified a staggering 1,294 statutory duties placed on local authorities by central government. No one seems entirely sure how many there are today. A lot, if you would care for the glib answer.
What is clear is that local government has an impact on everyone’s life. Its functions run the gamut from social care to schools, housing, planning, licensing, business support, registrar services and pest control. And plenty more besides, including the aforementioned waste collection and upkeep of local roads.
According to the Local Government Association, more than one million people work in local government across a range of different types of authorities in England, providing over 800 different services to local communities. Over a quarter of a million more are employed in Scotland.
Anong their ranks, and those of Councils in Wales and Northern Ireland, are countless talented and highly qualified people delivering amazing work in service of their communities. And leadership teams skilled at managing organisations with a spread of activities so vast as to be unimaginable to counterparts in more tightly focused private sector businesses.
The scale and breadth of local government often goes unheralded, so we at Odgers Interim decided we should shine a spotlight on the sector by making income comparisons with the UK’s largest listed companies.
We analysed the 2021-22 statement of accounts for over 100 English Councils and found that 46 of them had income of over £1 billion. There is no doubt that these are major organisations, but where do they stand in relation to the UK’s largest quoted companies, those that comprise the FTSE-350 index?
To answer the question, we have created our own ‘alternative FTSE’, although we can’t call it that, given that FTSE is trademarked term. Instead, we have opted for the Odgers Local Authority Stock Exchange index (OLASE, pronounced ‘oh-laze’ – which while it may sound a bit like a skin care range, has a memorable ring to it). The OLASE index spans both the UK’s biggest listed companies and biggest Councils, ranked by income.
Birmingham City Council is the highest ranked local authority. Its income of almost £3.7bn is larger than even a few constituents of the blue-chip FTSE-100. In the OLASE, it sits between pest control and hygiene giant Rentokil Initial and construction and infrastructure group Morgan Sindall.
Five other authorities (Lancashire, Leeds, Essex, Surrey and Hertfordshire) all recorded income above £2bn. Manchester (£1.9bn) and Norfolk (£1.75bn) were not that far behind. All seven of these local government organisations rank higher on our inaugural OLASE table than high profile businesses such as Tate & Lyle, JD Wetherspoon and Virgin Money, which each generated around £1.7bn in income.
Of course, to a degree we are comparing apples and pears. Yet regardless, there is merit in the exercise because local government deserves to be recognised for its sophistication and scale, characteristics which still all too often fly under the radar. In truth, there should be far more shouting from the rooftops about the essential work local government does and the huge positive impact it makes.
Next month we will be making comparisons between central government departments and the UK’s leading listed companies, once again to highlight the reach and impact of the public sector, and the complex challenges these organisations meet in serving the UK population. In the meantime, if you would like to find out more about the OLASE or interim talent in the local government sector in general, please get in touch.