According to the Local Government Association, councils are now on the event horizon of an £8bn funding black hole.
With the recent Budget, many in local government were hoping for good news, especially after Theresa May’s declaration that “austerity is over”.
Reality was colder, with LGA chairman Lord Porter commenting that additional funding “falls short of what we need in the long term”. Many people have rallied against the apparent failure to support sustainable public services, arguing that austerity is eroding local government’s capabilities.
Some councils are ‘salamislicing’ services or digging into cash reserves to make it through one spending review after another. Those lobbying for more funding are right to say these short-term fixes aren’t sustainable: many organisations are no longer cutting away fat, they’re cutting away meat and bone.
We’ve seen some councils fare better than others under austerity, even to the point of becoming financially independent. You might argue these organisations simply had greater cash reserves and could thus better withstand the impact of austerity, but that’s not the whole story.
Some local authorities have approached austerity as an opportunity to rethink their purpose and how best to support and interact with citizens in the 21st century. Their mindset didn’t focus on getting by in the present, but on building a better future and asking how things can be done differently.
With some local authorities showing they can cope better with austerity, can we argue the underlying issue may not just be one of funding, but rather of not having enough of the right skills in the sector?
Local government has traditionally been oriented to spend money wisely and well. This careful stewardship of public funding is deeply ingrained, as are the skills it requires. The question is, do these traditional skills meet today’s needs?
Changing demographics, rising demand and complexity of need, emerging technologies and everincreasing budget pressures all make a stronger commercial mindset in local government essential. But the sector is still developing its business management expertise, plugging funding gaps by reducing services instead of generating new income streams.
By attracting a new blend of people and skills into the sector, local government could spot and explore fresh opportunities and make better long-term decisions.
One thing is certain: councils that try to get by with existing skills and cost-cutting will whittle down their options each year. Eventually, they will find themselves with no more salami to slice.
Simon Fletcher, head of strategic advisory practice, Agilisys
Column sponsored and supplied by Agilisys