Local councils could face financial crisis in the next year

New research from PwC has revealed that more than nine in 10 council leaders believe some local authorities will get into serious financial difficulties within the next three years.

PwC’s eighth annual survey, The Local State We’re In, surveyed the views of 81 local authority chief executives, finance directors and elected council leaders across the UK as well polling 2,000 members of the public on their experience of local government performance. Worryingly, fewer than 20 per cent believe they can deliver continued savings over the next five years without impacting the quality of service delivery.

Furthermore, 74 per cent of respondents expect that some councils will get into serious financial crisis in the next year, up from 54 per cent who held that view last year.

While PwC’s survey finds that 72 per cent of council respondents have coped well in the face of austerity and the uncertainty of Brexit without impacting on quality of service delivery, 33 per cent express fears that they can’t deliver savings and maintain service delivery over the next three years - this figure increases significantly to 81 per cent when considering this over the next five years.

Jonathan House, local government and health leader, PwC, said: “This year’s survey shows the significant step up in the challenge for local government leadership in securing the future for their councils, as well as ensuring they are financially sustainable. While local councils have done well against an ongoing course of challenges, the cliff edge for some is getting ever closer. With another Spending Review next year, as well as the UK’s formal exit from the EU, the landscape will become incredibly tough - the resilience they have shown so far will be tested to the max.”

Also in the survey, PwC have reported that those perceiving their authorities as vulnerable to cyber attack has risen from 53 per cent to 58 per cent, with only 41 per cent confident that their employees exhibit robust cyber security behaviours at work, highlighting a continuing potential area of vulnerability for councils.

There are also ongoing challenges to deliver digital innovation with just three in 10 survey respondents feeling that their council is confidently embracing new technologies like AI and robotics. It finds that more needs to be done to shift behaviours to enable people to get the most from the available technology, including moving more of the public online. Almost two thirds (62 per cent) of the public polled had not interacted with their council digitally in the past month and 20 per cent are not aware of any council services being available digitally.