Local government must change, new report says

Councils will have to change the way they operate if they are to cope with the challenges and risks facing them and the communities they serve, a new report says.

The report, published by the Social Market Foundation (SMF) think tank and supported by public sector insurer Zurich Municipal, identifies six key challenges that will be presented to the local government over the next two decades. These include that an ageing population will put increasing pressure on health and social services, that more fragmented families will live in more dispersed communities and will have higher expectations of service quality as a result of prosperity, and that localised environmental risks around flooding and air pollution will become heightened.

Huge opportunities because of technological advances will also mean jobs are disrupted, and there will be risks around the resilience of councils’ local tax bases, the report warns.

The findings of the report, called Local public services 2040, show that employment in local government has fallen by 800,000 between the start of 2010 and 2017. Meanwhile, local government net borrowing has been increasing since 2013/14.

The report comes as the Local Government Association says that councils face a £5.8 billion funding gap by the end of the decade, and that they believe central funding is to be cut by 75 per cent by 2020.

The report recommends five different models that councils could potentially adopt in order to deal with the findings. These include ‘industrial councils’, ‘ofcouncils’, ‘tech opportunists’, ‘the commissioning council revisited’ and ‘community councils’.

It also recommends further actions councils can take to succeed, including taking on new responsibilities beyond statutory duties to help their co,,unities, acting as a ‘market maker’ to bolster their local economies, and evolving new organisational competencies such as around industrial policy, regulation and commissioning.

Nigel Keohane, research director at SMF, said: “Councils look set to be squeezed into the 2020s and beyond with continued funding constraints, growing demand from an older population and the need to respond to new environmental risks. We should expect significant innovation in how councils respond, whether this is looking to regulation, to industrial policy, to new technologies, or to communities themselves and the resources within them.”

Andrew Jepp, managing director at Zurich Municipal, said: “Devolution is central to the future of public service provision in the UK. Power is flowing from Whitehall to Town Halls and City Halls across the country and citizens are demanding more from their local authorities. Councils are having to respond to these rising expectations whilst dealing with an incredibly challenging funding environment.

“In these circumstances, it can be easy to become preoccupied with the short to medium term risks and challenges. The local government sector must put in place robust plans to minimise and mitigate the risks and threats that will materialise over the long term and at Zurich Municipal we will do all we can to support them in this task."

“We hope today’s report – with its recommendations and warnings – will become required reading for Council leaders up and down the country as they begin to plan today for the risk landscape of public services in 2040.”