A recent study by the LGA suggested that local authorities will face a funding shortfall of £16.5bn by 2020 as they struggle to square the circle of making further spending cuts while also having to meet growing demand for services, particularly in social care.
The Office for Budget Responsibility has also warned (in its Fiscal Responsibility report) that the UK needs to make an extra £50bn of spending cuts to keep public finances in check.
All this on the back of deep cuts of around 27%, already made by local authorities, makes for depressing reading and councils could be forgiven for wondering how on earth they address this challenge?
The austerity fatigue that local authorities are feeling is also shared by the wider population. The Institute of Fiscal Studies has estimated that average incomes fell by 5.7% in 2012, so even if councils were willing to risk the political fall-out from raising funds through higher council taxes, it seems unlikely this is a viable option. In addition, as consumer incomes continue to be squeezed, councils face the double-whammy of more people becoming more reliant on local authority services.
Plugging the funding gap
So against this bleak backdrop, can Localism and the Big Society still be a realistic route to plug the funding gap and help councils deliver services without an uplift in income?
For councils looking to safeguard service lines, transferring assets to community groups and empowering them to provide local services in their neighbourhood can seem tempting
The LGA report stated that areas such as libraries and leisure services were the most likely target for cuts but these are also areas in which community groups and volunteers have shown themselves to be willing to help.
For councils looking to safeguard service lines, transferring assets to community groups and empowering them to provide local services in their neighbourhood can seem tempting.
While life in austerity Britain may be tough, many people are willing to help out, arguably united by a desire to pull together and safeguard community services in the face of the global economic storm.
New consumer research commissioned by May Gurney found that more than half (58%) of Britons say they are proud to live in their community, with more than one in five (22%) of people saying they are willing to volunteer to help run community facilities and services, compared to 15% who said the same thing in a similar study conducted last year.
While there is an obvious willingness for people to help safeguard and run services in their neighbourhoods, councils tread a constant tightrope between empowering local people to take charge of funds and to run services, and being accused of failing to deliver services that local people expect to be provided for the council tax they pay.
However, while there may be a willingness today to volunteer and help out, as the economy picks-up and communities are no longer bound by a sense of collective action to beat the recession, this could change. If it does, councils risk facing the wrath of an electorate, who will be paying no less council tax but will have seen services cut, while at the same time being invited to help run community schemes that many will have traditionally viewed as being part of the council tax funded services they expect to revive.
This may seem like tomorrow’s problem but austerity fatigue is already setting in, it won’t take long before scepticism about the Big Society leads to a less willing participation in local services.
Outgoing Archbishop of Canterbury, Rowan Williams, has already reflected this mood when he made headlines by describing the Big Society as ‘aspirational waffle’ and a ‘deeply damaging withdrawal of the state from its responsibilities to the most vulnerable’.
Which leaves local authorities facing a somewhat stark choice, and one which puts the need to ‘get more for less’ into stark contrast. With further spending cuts an inevitability, and more of council budgets going on social and welfare services, together with a likely withdrawal of willing volunteer help as the economy recovers, councils have to make every penny work harder.
Achieving this will require them to partner with private sector contractors, social enterprises, charities and other experts who can help them find new, more cost effective ways to deliver services.
Doing so will require local authorities to be highly flexible and adopt radical new ways of thinking about their responsibilities and their place in society. Ways that could include running services to generate revenue, that can be used to fund service provision in other areas.
The days when the local authority was seen as the ultimate community provider and social safety net cannot continue in the face of the coming budget constraints and growing demand for services. Change has to come but councils are well placed to lead this but they need to reach beyond volunteers and embrace new ways of working with business, charities and the third sector to develop new place-based solutions to the funding crisis.
Greg Michael, group strategy and business development director, May Gurney