Local State We’re In 2015: Councils Still Under Pressure

Only one in ten council Chief Executives are confident their council can protect frontline services in the face of continued austerity over the next five years, according to PwC’s annual survey of local government leadership.

PwC’s fifth, annual survey, ‘Local State We’re In’ 2015, asked over 100 Chief Executives and Leaders  of local authorities around Great Britain about the challenges facing local government and their responses to them.  While seven out of ten remain relatively confident of their ability to manage savings in the short term, this drops dramatically in the longer term to only one in ten.  

• The spectre of financial failure across the sector looms large, with nine out of ten Chief Executives believing that some local authorities will get into serious financial difficulties in the next five years.
• 80% of our respondents believe that some local authorities will fail to be able to afford to deliver the essential services residents require in the next five years.
• Public attitudes to further cuts are hardening, with only 35% of the public accepting the need to make reductions in services, down from 47% in 2011.
• Repair of roads and pavements, street lighting, refuse collection and libraries are the areas the public are most concerned about the impact of future cuts.

Five years on from our original ‘Local State We’re In’ survey, councils have been successful in managing the significant cuts to date. But local authorities are now facing challenges on all fronts: financial pressures continue while demand and public expectations grow with the way ahead being challenging, but full of opportunity that the sector has the confidence to tackle and face.

Chief Executives and Leaders have recognised the need to do things differently, looking beyond their organisational boundaries and taking a place-based, whole systems approach to solving the challenges of growth and reform in their areas.

As the realisation grows that councils cannot operate in isolation, partnership working has also risen up the agenda.  Nearly half (47%) of Leaders and Chief Executives believe their council will be part of a combined authority by 2020. But despite the apparent momentum behind decentralisation, only a fifth (22%) agree that their council will have significantly more powers and responsibilities by 2020.

Three quarters of respondents also agree their focus should be on outcomes, rather than service delivery, but less than half know how to make this a reality in practice.

Embracing the potential of digital and data analytics to transform services will be critical over the five years of the next parliament as will grasping the opportunities offered by decentralisation.

Chris Buttress, PwC partner and local government leader comments:

“It is clear, speaking with Council Leaders and their Chief Executives, that Councils are now considering more radical options – from rethinking relationships with customers and communities and better use of digital technologies, to deeper collaboration with partners. The business model of the public sector is changing rapidly as decision makers are considering what is the role of the public sector within a local area.”

Data analytics and business intelligence will be critical for councils in the next five years: intelligent analysis of their data will help them form new priorities, smarter interventions as well as better, more informed choices and efficient ways of working. Although half of our survey respondents are already using data analytics to underpin their decision making and strategy, there is further to go with only 37% of Chief Executives confident that their council has the capability it needs in terms of data analytics.

There also continues to be a wide gap between council expectations and the public view: while 66% of Leaders agree their council is confidently embracing the opportunities new technology offers, only 28% of the public agrees.

Economic growth is another key priority for local authorities, with many leaders and chief executives identifying the local economy as their number one priority for the next five years.77% of Chief Executives and Leaders agreed that LEPs are key partners for growth which is up from 50% in 2013 suggesting local authorities increasingly recognise the important role played by Local Enterprise Partnerships.

Chris Buttress added:  “Local authorities have largely responded well to the budget gap of the last four years.  They are now anticipating having to do the same again, with less and less certainty of how to achieve this.  We have no doubt that the future business model for public services will change significantly in the next four years – and those leading the sector in localities will be the ones who will deliver this new model – changes won’t all necessarily be centrally driven.”

Proving they have the local capacity, capability and accountability to deliver on decentralised powers will be critical for councils in 2015 and beyond.