Chief execs fear councils heading into serious financial trouble within one year

Some 86% of council chief executives fear that some local authorities will get into serious financial trouble over the next three years, while 56% expect that to happen within one year, research has suggested.

The Local State We’re In 2016, business advisory group PwC’s sixth such survey, asked nearly 100 chief executives and local authority leaders about the challenges facing them.

It found 81% expected some local authorities would fail to deliver essential services over the next three years.

Only 64% of chief executives were confident of making necessary financial savings over the next year without seriously affecting the quality of service delivery – and just 13% thought this performance could be sustained over the next five years.

Fewer than half of councils were prepared for the shift to full business rates retention, though council leaders were slightly more confident about this than chief executives.

PwC’s local government leader Chris Buttress said: “There is real shift in emphasis this year – a focus away from delivering ‘cuts’ towards making interventions that underpin regional economic ‘growth’ and public sector reform. However, leaders and chief executives also recognise the magnitude of the financial struggle and the necessity to find solutions, as the shift continues from grant reliance to self-sufficiency.”

Despite the Government heralding a ‘devolution revolution’, the survey found optimism about progress on this had waned, with only 20% confident of gaining more powers by 2020 against 33% a year earlier.

Although 69% of respondents expected to be part of a combined authority by 2020, only 36% believed this would be overseen by an elected mayor, despite the Government’s enthusiasm for this model.

Jonathan House, PwC’s local government leader in the north, said: “The ‘devolution revolution’ is becoming more ‘evolution’ as the pace and depth varies greatly across the country.”

There was scepticism over the financial benefits of the long sought integration of health and social care, with 84% of chief executives expecting this would improve health outcomes for their local population, while only 34% expected it to deliver savings for their council.

House said most respondents saw this integration as having a major impact in the next three years, but those taking a back seat in the process “will find their organisations reacting to a health sector driven transformation which impacts upon their core delivery”.

The survey also looked at the public’s view of local government and found that only 31% of respondents accepted the need for closures and reductions to service or facilities.

PwC said this showed diminishing confidence in councils as 47% had accepted this need in 2011.

Mark Smulian

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Team @ AberdareOnline

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