After more than a decade of austerity and rising demand for services, Ross Murray argues that there is a need for change in the way local authorities are funded and radical reform to how services are delivered.
Local authorities are responsible for delivering a wide range of services that impact our daily lives and are visible when you leave your front door.
However, over the last decade, their budgets have fallen by more than 10%. Several factors have contributed to this decline.
Historically, councils received most of their money through central government grants. But following the austerity measures of the 2010s have come to rely more and more on council tax and business rates.
At the same time, demand for services has risen substantially. Adult and children’s social care costs threaten to overwhelm many council budgets. Blackpool, for example, allocated nearly half of their entire budget to children’s social care in 2022/23 and research shows one in every 52 children in the area is in care.
The mismatch between resources, responsibilities and needs of local authorities is taking a heavy toll on areas. An alarming 12 local authorities have issued a Section 114 notice since 2018 – effectively declaring bankruptcy. The consequences are severe and directly impact the lives of residents. For example, Thurrock and Slough approved major cuts to services and a fire sale of assets, whilst also raising council tax. Half of all councils warn that they may have to issue a Section 114 within the next five years if things don’t change.
Radical reform of local authority funding
This situation is unsustainable needs reform. So what should happen?
Central and local government, as well as the public need to engage in a national dialogue to define the role, responsibilities and appropriate funding for local services.
Central government grants use outdated population data, failing to fully account for current demographics and needs across different areas. A new formula is needed based on more up-to-date statistics and levels of need within communities. The settlement for local government must be muti-year, moving away from single year budgets that prevent effective planning.
As part of any change, a debate on where money comes from is also required. The potential of ‘local sources’ of funding – particularly council tax and business rates – varies greatly based on economic conditions and demographics, meaning areas with the highest need for services are often less able to bring in revenue. The lessons from trials of business rates retention from recent years need to be applied in a judicious way to balance encouraging growth with putting money where it is most needed.
Radical reform of the way local services are designed and delivered
But local authority funding is only part of the problem. I recently had the pleasure of attending the Changing Futures Northumbria’s conference on Liberating Public Services where a central theme for the day was the need for urgent reform of how public services are designed and delivered at the local level.
At the conference, delegates spoke of how demand for local services is on an upward trajectory and local government doesn’t have the money to continue doing the same, let alone more of the same. Additionally, it feels unlikely that there is going to be a large injection of cash after the next election. Therefore, local government needs to find a new way of working.
Mutual Venture’s Non-Executive Director, and speaker at the conference, Professor Donna Hall, has described public servants increasingly frustrated about the “managed decline” of their services.
She has written how centralised initiatives and bureaucracy have created a siloed system disconnected from reality in communities. Senior local leaders need to step back from bureaucracy and top-down targets, to instead develop shared principles and local outcomes that enable frontline teams to get on with the real work of improving lives.
At the Liberating Public Services conference there were mentions of a ‘radical rebellion’, to buck these trends. As an alternative, local leaders need to start reshaping public services, so they are focused on human relationships and local realities. In this vein, Donna Hall has argued “now is the time for a radical rebel alliance!”.
The need for change is obvious. As the conference showed, a rebellion is brewing - with a different vision for public services.
If you're interested in human-centered, relationship-focused public services, we'd love to discuss further contact ross.murray@mutualventures.co.uk.
If you would like to hear more, you can catch up on our Radical Reformers podcast, including an episode featuring Changing Futures Northumbria’s Mark Smith and MV's