By Mark Gannon, Director of Client Solutions at Netcall
Meeting increased demand for services is nothing new for local governments, but for the last 14 years, this has been particularly challenging as they have been forced to manage with significantly less funding from central government. Inevitably, this combination has led to the present day situation local government now finds itself in – having to navigate unprecedented financial crisis and pressure.
The fallout of the pandemic and the cost of living crisis has significantly increased pressure on local authorities when it comes to statutory services, as funding from central government lessens. First up is social care. The number of over-65s in England increased by more than 400,000 in the last five years, and the older people get, the more likely they are to need care[1]. There has also been a surge in the need for children’s services, with more than 20,000 extra referrals between 2020-22, compared with a decrease of 1,400 year-on-year between 2018-19[2].
Lastly, there is housing. The number of households living in temporary accommodation – a cost incurred by local councils – reached a record high of nearly 100,000 as of 2023[3]. The cocktail of hardships local authorities are facing is sure to result in more councils struggling to meet financial budgets and potentially declaring bankruptcy.
It may be too later for some councils
There have been an increasing number of local authority’s declaring effective bankruptcy – known as section 114 notices – in the last few years. In fact, according to the Institute of Government there have been more in 2023 than in the 30 years before 2018[4]. In February 2024, 19 Councils have been granted exceptional financial support for the next financial year, which shows the scale of the challenges[5].
The Local Government Association has also stated that around 90 per cent of councils were using dwindling financial reserves to keep themselves running over the last few years. Whilst a quarter of councillors have expressed that it is likely their local council will go bankrupt in the next five years, unless funding and support from the UK Government increases[6].
Recently cross-party MPs on the levelling up, housing and communities committee have called out the UK government to act now if they want to avoid a severe crisis and financial distress. This follows a recent report published outlining that funding available to local authorities has not kept pace with pressures, which has led to a funding gap of £4bn[7].
So how do local councils avoid bankruptcy, all while receiving significantly less funding and needing to continue serving their constituency? Utilising technology where possible can provide some help. In an era dominated by technology, digitising internal operations allows for streamlining bureaucratic bottlenecks, improving overall workflows, and saving costs.
Tips councils can follow to optimise spend and budgets:
- Unleash the power of data. Many local councils are still using legacy systems, with a vast amount of data trapped in silos. Unlocking data within their processes will allow local government to create new insights, drive service improvements and identify early intervention to reduce costs.
- Collaborate and share. Utilising this opportunity to collaborate and share ideas to help other councils meet targets and produce results will benefit the local community and save costs.
- Reshape the procurement of digital solutions. Many councils are still procuring for the non-digital age and there needs to be a radical overhaul of how councils specify and procures digital solutions and platforms, saving local councils valuable time and money.
- Use digital tools to transform internal operations. Many councils are still incredibly inefficient in how they organise and run their internal processes and systems. Local authorities need to utilise the technology available to improve and automate workflows, reduce wasted resources and save costs.
- Focus on early intervention and prevention. Local authorities spend a lot of money responding to problems once they have happened, rather than being proactive. Investing in tools such as artificial intelligence and IoT to help prevent issues from occurring in the first place, will save local councils significant amounts of money which can be reinvested elsewhere to improve outcomes.
- Design services with citizens in mind. Too many local authorities invest significant amounts of money into building digital services without really understanding good service design or involving their citizens in the design of those services. This leads to issues with customer service and unhappy citizens, which can lead to financial issues if councils then have to re-develop these services. Include users when designing new services, which they will be using, to ensure the customer needs are met the first time. And get out of discovery into delivery more quickly!
- Rationalise application estates. Local authorities are spending far too much money maintaining legacy applications that are expensive and not particularly effective for today’s digital-first world. But by rationalising applications, councils can streamline processes, cut licence costs, reduce maintenance costs, and enhance overall quality and efficiency.
- Use technology to attract and retain talent. Across many industries, it is becoming hard to attract and keep talent, especially in local government. However, by using efficient tools that make it easier for employees to be successful within their roles, councils can massively improve employee satisfaction and retention rates. This will subsequently save costs and improve productivity.
- Map, improve and control processes. Complex organisations, in particular local authorities, need to understand their processes and ensure they have the right technology and tools to help them map the processes, identify waste, and ensure a streamlined system of efficiency.
- Continue to digitise services. Today there are still too many services within local authorities that are not digitised end-to-end, which leads to waste and failure demand. The technology available to us today provides no excuse for councils to have not already developed modern digital services to benefit their communities.
How technology can revolutionise local government
A cultural shift is needed to realise the advantages of digital technologies and the potential improvements they can bring to local communities when implemented correctly. But it is now crucial that a proactive approach is taken to effectively deliver the services that are so desperately needed to meet citizen needs.
This starts with tackling technical debt, skill shortages, financial limitations and embedded legacy systems within councils. Collaboration is the key to achieving this. Implementing a first-class IT infrastructure, paired with a data management strategy empowers local authorities to focus on improving outcomes for their people and places. Simultaneously, a good digital strategy should strive to support vulnerable citizens who are unable to engage with digital technologies.
The promise of digital transformation can create impactful and lasting change, which is why it is essential to invest in technology where possible to support local communities. With collaboration and a good digital transformation roadmap, councils can provide the best services and support to the citizens they serve.
Feature image by Matthias Zomer on Pexels
[1] NHS Confederation – https://www.nhsconfed.org/publications/adult-social-care-and-nhs#:~:text=The%20population%20is%20ageing%2C%20with,10.47%20million%20in%202021%2F22.
[2] Sky News – https://news.sky.com/story/why-are-councils-going-bankrupt-13018122#:~:text=There%20has%20also%20been%20a,pandemic%20and%20the%20cost%20of
[3] Crisis – https://www.crisis.org.uk/about-us/media-centre/record-number-of-households-stuck-in-temporary-accommodation-in-england-crisis-responds/
[4] Institute of Government – https://www.instituteforgovernment.org.uk/comment/local-government-finance-settlement-council-bankruptcies
[5] Local Government Chronicle – https://www.lgcplus.com/finance/19-councils-granted-exceptional-financial-support-29-02-2024/
[6] The New Stateman – https://www.newstatesman.com/spotlight/economic-growth/regional-development/2024/01/middlesborough-council-bankruptcy-explained#:~:text=After%20surveying%20councils%2C%20the%20Local,in%20the%20next%20two%20years.
[7] The Independent – https://www.independent.co.uk/news/uk/home-news/council-bankrupt-housing-funding-tax-b2488002.html
