What role will local government play in the future delivery of public services? Transformation experts Simon Fletcher and Mark Suddaby explore.
Local government is changing; successive spending reviews and finance settlements have continued the direction of travel, with less and less centralised funding and a fairly aggressive push towards self-sufficiency. Of course, the whole of the public sector has been at a turning point in its evolution for more than ten years, with large parts of the sector recognising that change is now the norm. ‘Change ready’, agile and commercially focussed public service organisations are required.
The final Local Government Finance Settlement 2017/18 had few surprises. Apart from the £2 billion for adult social care, there is no new funding for councils in 2017/18. “Cuts to new homes bonus funding will leave two thirds of councils having to find millions more in savings than expected to plug funding gaps…”, said the Chairman of the Local Government Association, Lord Porter, in the LGA’s response to the settlement.
It is well known that alongside its changing funding landscape, local government is experiencing unprecedented changes in the needs, behaviours and expectations of residents and citizens that use the services – and must expect this to continue. A well-documented increase in the volume of demand for council services, with growth in demographic-led demand for services by young and old people alike, has led to disproportionate levels of spend required for a small number of people with high needs, which only adds to an already high-pressure situation.
But, local government does have a track record of responding positively (albeit sometimes reluctantly) to new challenges and clearly parts of the sector is now doing things both differently and doing different things, embracing opportunities to be more ‘business-like’.
Grant Thornton’s ‘CFO Insights tool’ proves the point – revealing an (overall) increase of English local authorities’ income generation by over 4%, between 2013/14 and 2015/16. Then there is the story of England’s first financially self-sufficient council, Sevenoaks District Council. Its self-sufficiency was achieved through the development of a property investment portfolio – a strategy more and more councils seem to be adopting – to generate the same amount of new revenue they are losing through reductions to their revenue support grant.
Yes, it’s not all rosy. A BBC Panorama investigation identified how ‘lack of money’ in the public sector is prompting care firms to end council contracts, an example of a series of articles setting out how the Government has got its funding approach for the sector wrong, and why it needs to rethink or change it. Sir Vince Cable, in his Guardian piece ‘Bankruptcy risk as desperate councils play the property market’, recently warned of the risks that financially stripped councils are having to take.
But the Sevenoaks example, and other examples of councils implementing transformation strategies, planning for and generating significant new revenue streams, proves it can be done by councils at all tiers.
It is only right that councils periodically ask themselves what their role going forward will be – will it be to provide services, which in the modern context requires a particular mix of commercialism and an ability to reduce costs and provide value for money? Or will their role now focus on governing, in which case the mix will be different, not about just buying, but much more about leveraging, influencing, (true) strategic commissioning, market stimulation and enabling others - be they public or private sector partners - to provide services.
Either way, it will be fascinating to watch local government evolve further over the next ten years – recognising of course that we all have a stake in wanting it to be a success. What is clear is that new, financially focussed priorities are emerging, while public protection and place shaping responsibilities remain.
So, how ‘commercial’ can commercial councils become? Will we ever see successful councils taking on, or rather ‘taking-over’, weaker neighbouring services? How deep will the partnership between the public and private sectors in the provision of, and funding for, services become? Will we see a greater collaboration of local authorities with social investment organisations and major charities as much as the private sector?
Will a completely new kind of council emerge?
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Simon Fletcher and Mark Suddaby are both digital transformation consultants for Agilisys. Simon is an experienced public sector senior manager with nearly 15 years’ experience. He is an advocate for public service reform with a keen interest in the future structures of local government.
Mark’s career spans 35 years across diverse sectors such as local government, policing, finance and healthcare. Mark straddles strategic and operational areas of digital transformation to ensure day-to-day activities align with the bigger picture.