An ageing population, fragmented families and housing affordability are among the challenges the local government sector will face over the next two decades, report says.

A new study from the Social Market Foundation (SMF) identifies and explores six changes that are likely to dramatically impact the demand for, and supply of, local public services in 2040.

It also noted these changes are occurring against the backdrop of a fall in local government employment by a quarter or 800,000 employees between 2010 and 2017, and an increase in net borrowing (£8.6bn in 2016/17).

Supported by Zurich Municipal, the report warns an ageing population will put increasing pressure on social care and health services.

The pension-age population is forecast to rise by close to a third (34%) and the number of over-75s in the population is set to grow by 89%.

‘This points towards a surge in demand for health and social care services unless health in old age improves dramatically,’ the report states.

The breakdown of the nuclear family is also going to prove challenging for local authorities.

The report warns more fragmented families ‘could translate into greater demand for public services’ as care roles traditionally carried out by family members are left to the state or private providers.

The fact that family members will be more widely dispersed will also impact on housing quality and affordability.

SMF’s research also suggested increasing prosperity in the future will drive higher expectations of public service quality and convenience. It also noted growing disparities across regions and across generations where public services are concerned will ‘demand an adequate response’.

There will be ‘huge opportunities’ to apply innovations in technology and big data to improve the productivity of public services, the report states. But it cautions this will lead to disruption in jobs that will need to be managed.

Localised environmental risks around flooding and air pollution are expected to heighten, says the public service report.

Finally, greater fiscal devolution will present ‘huge opportunities’ to councils to ‘control their destiny’ as well as risks around the resilience of their local tax bases.