The cuts announced in the Spending Review mean that local authorities will have to work more closely with each other and with other parts of the public sector. Council mergers will inevitably be on the agenda
Councils have already had to deal with the reduction in central government funding of 28% from the last Spending Review. The further cut of 10% announced by the Chancellor today will mount immense pressure on the sector. Ever-tightening purse-strings will be the outlook for local government for the foreseeable future.
On the whole, councils have coped well with the reductions while working hard to mitigate the impact on front-line services. This Spending Review makes the challenge of meeting statutory responsibilities and maintaining basic levels of local services that much greater.
Despite having made a range of savings through efficiency and cuts, the measures announced today mean they need to go much further.
While councils have made savings through joining up and sharing services, the focus of this has primarily been in the back office. Joint management teams will only touch the surface. Authorities now need to work together to collaborate in the delivery of services and full integration at a service level must be explored. We expect many councils to start looking at full operational mergers with their neighbours.
Even then, local government will have to look at how to make better use of the private and third sectors and the role they can play in providing public services.
Local authorities also need to get closer to other local public services, such as health and police, to ensure a joined-up approach that takes costs out further down the line.
Finally, councils also need look again at how to reduce dependency on public services, how to change behaviour to reduce levels of demand and how to maximise the value of the assets - physical, economic and social - they hold.
From today, there are some tough discussions between town halls and voters ahead.
Ian Washington is lead local government partner at Deloitte
