Mark Whitehead 24 December 2018

What will 2019 bring for local government?

What will 2019 bring for local government? image

The year ahead promises a time of great challenges – or opportunities, depending on how you look at it. Either way, it will be a time for some radical thinking. Councils will be increasingly forced to ask why they exist and what they are supposed to do.

If money makes the world go round, it promises to be a difficult time, with central Government funding dwindling to nothing in many places. Almost half of all councils, according to the Local Government Association (LGA), will no longer receive any this revenue support grant funding in 2019.

It means the financial viability of some councils is under threat. More crises like that faced in 2018 by Northamptonshire, which literally ran out of money, seem likely. So they will need to look at ways to raise funds – from tried and tested methods such as increasing council taxes or charging for services to more recent innovations including partnerships with the private sector.

However, financial crises are likely to be lower key than some that caused headlines in 2018 as councillors realise their hopes for providing more than the minimum services required by law are no longer realistic.

In a revealing comment made by a senior civil servant at the public affairs committee of the House of Commons this summer revealed, Government thinking is that councils can continue to provide statutory services – but that's all. If local authorities want to provide more than the legal minimum, they will have to raise the money themselves.

It is a bleak prospect for councils which see themselves as responsible for more than bin collecting and street cleaning, but they may have to get used to the idea. Providing good quality care for elderly and vulnerable people, protecting children, helping to boost economic growth, building much needed low-cost homes, providing well-stocked and welcoming public libraries – all these are set to become things of the past for many councils.

For local government workers, the prospects for the year ahead are not promising. Private sector pay far outstripped that of the public sector in 2018 and with most employees tied into two-year deals at a time of rising inflation, continuing cuts in real income are likely.

In the senior ranks, recruiters warn that the depression in public sector pay is making it harder to attract talent when commercial experience and skills are needed more than ever.

Meanwhile the digital revolution proceeds apace in the world at large and local government is no exception. Putting forms on a council website or enabling basic services online is now the norm and many councils will be looking at various options for full digital efficiency. Smart buildings are one of the most obvious next steps, especially as specialist firms are offering ways to pay for transforming existing assets so that energy usage, communications, climate control, lighting and other systems are integrated into a single platform.

Local government reorganisation is set to continue remoulding councils into unitaries, sharing back office systems, forming combined authorities and finding other ways to rationalise the provision of services to the public. Joint health and social care commissioning roles in particular seem likely to increase as demand for services increases and central Government funding dwindles.

The last year has seen some dramatic shifts in the relationship between councils and the private sector. Record spending on supermarkets and other property, typically as a way of raising income, led to the Government warning it will take steps to rein in increasing commercialisation. And the business of outsourcing took a severe knock with the collapse of Carillion.

It remains to be seen how this will play out in 2019 but with a fragile market place and with Whitehall eyes watching the big outsourcers for fear of further embarrassing failures, this will continue to be a contentious area.

The divide between those who see collaboration between public bodies and the private sector as a way of providing welcomed expertise and innovation, and those who see it as mere exploitation by commercial interests will grow more intense. A possible compromise between the two views could see the end of huge outsourcing deals and a rise in more targeted, specialist use of private sector skills.

Like any other sector, local government operates within a wider political context and as 2018 draws to an end instability is on the rise. The ability to plan ahead is being severely compromised by one overwhelmingly important issue: Brexit.

Most councils are unlikely to be directly affected by whatever arrangement is finally agreed upon among the many options ranging from holding a further referendum to leaving the EU without a deal. But the knock-on effects could make a difference when it comes to prices for goods and services, recruitment and potential community problems if, for example, unemployment were to increase.

Those in favour of Brexit argue it will present huge opportunities for the UK on the world stage, while opponents warn of disruption and economic damage. Whatever the outcome, local authorities will need to watch events carefully to deal with the consequences, good or bad.

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