Can-do councils will thrive after Brexit

27 Oct 16

While being mindful of uncertainty caused by the EU vote, local authorities are tough, so will be determined to gain repatriated powers and budgets

Britain’s local authorities are a robust bunch. Even through the downturn of the financial crisis, councils proved highly effective at not only surviving but thriving in the face of circumstances that would once have been viewed as insurmountable.

Brexit is likely to be a real game changer for councils. In both the short and long term, they will be faced with unprecedented challenges – and these will need to be dealt with effectively if the delivery of public services is to meet local residents’ expectations.

Councils, already set to gain more financial control through the gradual retention of business rates, will need to factor the considerable economic uncertainty created by Brexit into their budget planning. While the short-term financial effects of Brexit have been less damaging than initially feared, councils will be all too aware that their long-term future depends heavily on the settlement that is reached between the UK and the EU.

One major area of uncertainty is the status of EU structural and investment funds, on which many councils depend heavily for local infrastructure improvements and economic development. The chancellor, Philip Hammond, has confirmed that the government will honour all agreements signed before the Autumn Statement. However, council chiefs will have to wait until then to learn about the fate of funding projects signed off after this date.

With such uncertainty, it is very possible that many councils will tread extremely carefully when making major procurement decisions, rolling out new projects and implementing new initiatives for service delivery until the situation becomes a little clearer.

It is all too easy to focus on the negative aspects of Brexit and, just as with their can-do reaction to austerity, councils should be looking at how they can thrive in a UK outside the EU. The major changes set to take place over the next few years offer local authorities considerable opportunities to expand their roles and functions into new, exciting territory.

One of Greg Clark’s final acts as communities secretary before Theresa May’s reshuffle was to confirm that councils will have a seat at the negotiating table for the UK’s exit from the EU. Crucially, Clark also insisted that Whitehall will not be the “default destination” of powers being repatriated from Brussels. Local authorities will look to use this influential position to gain control of new budgets and responsibilities to improve services.

Accruing greater responsibilities and powers is no simple task, and the process will leave some council chiefs facing very complex decisions on issues of risk sharing and governance. If service delivery is to meet expectations, then it is essential that local authorities carry out the necessary due diligence to understand their new roles fully as well as the risks and liabilities that come with them.

Councils will need to ask themselves difficult questions regarding whether their organisation has the necessary resources, capability and capacity to take on and deliver any new responsibilities sustainably. If not, then management should hold sensible conversations to discuss what changes, innovations or transformations are needed and ensure they are able to bring in specialists when necessary. Risk experts such as Zurich Municipal can help guide councils on managing transformation in their organisation and on understanding the risks and liabilities that come with change.

It is difficult to recall many other times where the local government landscape was as complex and uncertain as it is right now. There are major challenges ahead but councils can thrive in this new environment and we as well as a number of other partners stand ready to help.

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