The current shortfall
Local government authorities across the UK require a significant increase in central funding. The amount needed is problematic: the Local Government Association (LGA) puts the funding gap at £6.2bn over the next two years.
This shortfall, says the LGA, is driven by rising costs and demand in the provision of adult social care, children’s services, and homelessness support. Other areas of immediate concern include a lack of social housing provision and the escalating cost of residential care.
In alignment with the LGA, recent research by the Institute for Fiscal Studies (IFS) finds that local authorities are now spending two-thirds of their budget on social care, compared with half in 2010. The research finds that housing spend has fallen by a third, and spending on youth services has fallen by nearly two thirds over the same period.
Catching up
While it may be true that funding for local councils has risen in real terms since 2019, this has not managed to offset previous cuts. As such, local authorities are playing catch-up, with little chance they will receive the levels of funding they need for the provision of key services.
A spending review is expected later this year, but local authorities are not holding out much hope. The LGA has warned that a ‘chasm will continue to grow between what communities need from their councils and what councils can deliver’ and has called on the new government to commit to a ‘sustained increase in funding for councils.’
Against this backdrop, local authorities have some tough decisions to make. Cuts to ‘non-essential’ services such as refuse collection and road maintenance have been commonplace in recent years and are likely to continue without rapid intervention. Meanwhile, half of all councils in England have said they will have to issue 114 notices within the next 5 years in the absence of additional funding.
Getting back on track
To get things moving in the right direction, the LGA has proposed a number of key reforms it wants central government to address. These include:
- Sufficient and sustained funding
- Equitable partnership between local and central government
- Increased powers for local government bodies to enact change
- A less prescriptive funding model
- A move from reactive to preventative health measures
- An end to bureaucratic reporting
- Exploiting the full potential of AI and other digital solutions
In addressing these proposals, the LGA says that much of the dialog will need to be focussed on cutting costs and driving efficiencies. This can be achieved though innovation, with efficient work practices that offer meaningful change. Local authorities should engage with each other to determine ‘what works’, fostering best practice across the board.
Critical to operational efficiency, local authorities will need to ensure they have the right digital systems in place. Digital transformation is now a necessity, and carried out properly, will drive cost savings and efficiencies in many areas, including finance, spend, procurement, field work operations, care management, and social housing provision.
Future proofing
We do not yet have a clear picture of how the new government will impact local councils in the UK. Powers of devolution, public service reform, and the levelling up agenda are matters of government policy, and are yet to be decided.
While digital solutions are by no means a magic bullet, they can certainly go some way to improving local authority management by streamlining work flows, speeding up processes, and driving cost savings. In this way, local authorities can be certain they are doing all they can to continue to deliver the services we all rely on.
Don’t miss your chance to attend the OneAdvanced Government Summit in London on September 18, 2024. Hear from public sector experts and leaders who share their strategies for overcoming the challenges associated with the cost of delivery crisis. This event is FREE to attend for public sector employees, but tickets are limited – reserve your place today to avoid disappointment!