How close is local government to the cliff edge?

04 July 2017

This article originally appeared in The Municipal Journal on 29 June.

The past year has been one of uncertainty and change for local government: from the outcome of the

EU referendum, to the emergence of a new cohort of Metro Mayors and most recently the General Election.  This, also accompanied by the new context provided by the Grenfell Tower tragedy increases the pressure on the leadership of the sector.

Our latest ‘Local State We’re In’ survey shows that councils have coped well in the face of this uncertainty in the short term, but concerns about the longer term remain high and the scale of the

challenge ahead is significant. For example, half (54%) of our local authority survey respondents believe some councils will get into serious financial difficulty in the next year, while 88% expect that to happen inside the next five years.

The Chancellor’s announcement in the 2017 Budget of an extra £2bn cash boost for social care was welcome. However the reality is that quick fixes will not be a substitute for the long-term solutions needed to address the financial pressures faced by local government.

Austere financial times continue therefore to be the backdrop as councils grapple with digital disruption, embracing the potential of data and analytics and developing resilience. Beyond organisational priorities, there is a growing focus on partnership working in order to deliver place based growth and public service reform.

With finances under pressure and social care dominating spending, the cliff edge somehow feels closer this year. Councils need to think radically with their partners about their future strategy and service models. In addition, the consequences of Brexit on local economies is starting to loom larger, with over half of our respondents expecting the greatest impacts on their revenue from business rates and other local taxes.

Beyond austerity, cyber threats are proving to be causing councils just as much of a headache as they see other public sector organisations, like NHS trusts and Parliament itself, suffer from cyber threats. Yet only just over half (53%) of the local authorities we surveyed across the UK are prepared to deal with a cyber attack; indeed, only a third (35%) of local authority leaders are confident that their staff are well equipped to deal with cyber threats.

With new regulatory requirements imminent, including the General Data Protection Regulation (GDPR), councils need to ensure they have the capabilities to respond to new demands when it comes to information governance. Cyber security must be embedded into an organisation to work effectively - it’s far more than just building security controls, it’s about changing an organisation and making it secure.

So how should local government respond to these challenges? Focusing on costs can only go so far; there needs a similar focus on driving place based inclusive growth. However, significant barriers remain: about eight in ten of our respondents identify lack of investment in infrastructure as a key barrier to growth, and around seven in ten cite a lack of affordable or suitable housing and a lack of influence over skills.

Could devolution help? Confidence in further momentum from central government appears to be dropping significantly. However,with a new cohort of Metro Mayors now in place, devolution may yet get a jump start as their collective impact starts to be felt.

Local authorities also need to work across places and secure the right public service reforms to underpin the delivery of key outcomes. Against an uncertain financial context, councils also need to build organisational resilience although our survey reveals gaps in areas such as supply chain management and talent management. Investing in these capabilities will be important in building council resilience and developing the commercial acumen that will be essential for success in future.

In addition, councils can make more out of data, investing in an analytics capability which can improve decision-making, drive smarter, earlier interventions and, as a result, reduce risk and cost. But only a third of respondents appear confident that their council is using data analytics effectively to inform decision-making and strategy. Allied to data analytics, emergent digital technologies need to be harnessed to change traditional ways of working and create new value, experience and insight. Indeed, the proportion of our respondents who believe that digital will allow them to engage in new ways with communities and residents has grown from 54% in 2016 to 83% in 2017.

However, if councils are to engage in new ways with the public, they need to find ways to do so on the public’s terms. Alongside the survey of local council leaders and Chief Executives, our polling of 2,000 members of the public shows the extent of this challenge. Just over a quarter of members of the public questioned felt they were well informed about the needs for closures or services reductions, and less than one in five agreed that local services had either become more effective or efficient.

Councils have proved before their ability to deal with significant challenges before. But as they look to the future, they will need to find new ways to adapt and be innovative in the face of uncertainty.

Jonathan House | Partner
Profile Email | +44 ( 0)117 928 1047





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