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Local authorities are ‘worlds apart’

  • New report from Zurich Municipal highlights significant polarisation between local authorities around the UK

  • A number of councils concerned about community cohesion in tough times

  • Council CEOs view bold calculated risk as the new ‘default position’

The local government landscape is becoming increasingly polarised and can be characterised as the ‘haves and have nots’, a new report by Zurich Municipal has found.

'Worlds Apart: The 2016 Senior Managers’ Risk Report' was launched today at the SOLACE Summit in Newcastle Gateshead and is based on in-depth interviews with cumulatively 60 council CEOs across the United Kingdom over the last four years.

The report identified significant variations in the fortunes, aspirations and challenges facing Britain’s councils. While many local authorities are becoming bold commercial entities and driving forward their communities, some are facing serious funding black holes, which they claim is putting social cohesion at risk. One council CEO claimed that “society as we know it may start to break down”.

Much of the polarisation is being driven by years of austerity. Britain’s councils have made £10 billion in savings over the last six years, and must save another £10 billion. Some councils are optimistic on being able to rise to the challenge of making further significant savings, with one CEO saying “We will grow our way out of austerity.”

Others however, are not as confident. One CEO explained that their council was “not financially sustainable”, while another claimed that “people haven’t seen the impact of cuts yet, but they will”. At least one council suggested that it would not be able to fund mandatory obligations in the next 18 months.

Britain’s decision to leave the European Union (EU) could add further pressures on councils. With local authorities dependent on economic growth to continue to deliver essential services, council chiefs will be keeping a close eye on the shape of the economy once the UK formally leaves the EU.

Despite the stark differences between some local authorities, the report found that most council chiefs recognised a need for fundamental change. CEOs interviewed by Zurich Municipal said that risk-taking is now not just widespread but the default position. CEOs are increasingly accepting considerably greater risks in hopes of reaping higher rewards.

Other key trends revealed in the report include:

  • Some local authorities will be completely dependent on money generated from council tax and business rates by 2020 and, for some CEOs, this is an ‘impossible dream’

  • Councils are increasingly focussing attention on prevention of issues across all public services. Many CEOs have recognised that early intervention means fundamentally changing their model from providing for residents to working alongside them

  • There is an increasing trend towards whole system working to escape the confines of governance systems in public services that are no longer fit for purpose

  • A 4% increase in NHS demand combined with just a 0.9% increase in funding is forcing local authorities to look for partnership models in health and social care

  • While combined authorities are springing up across the country as authorities look to benefit from devolution, other CEOs view devolution as an unnecessary distraction

  • Climate change has taken a back seat to short-term economic priorities, but some local authorities are again starting to plan for flooding and other associated risks, following the devastating floods in 2015

Speaking at the SOLACE Summit, Andrew Jepp, Managing Director, Zurich Municipal, said:

“We are increasingly in a situation where local authorities are worlds apart. Some are reaping massive benefits, investing in growth and seeing that work for them. At the same time, there are some saying that are likely to run out of money in the next year and a half, putting their community sustainability at risk.

“Another key finding of this report and our conversations with CEOs is that risk avoidance has become risk taking for many councils, and that many are considering fundamental shifts in their relationship with citizens. In this unremitting financial and political environment, this is unavoidable.”