By Mark Smulian | 15 October 2014
Financial pressures mean there will need to be reforms to the traditional model of local government across England, a report from accountants Grant Thornton has concluded.
Its 2020 Vision: Exploring Finance and Policy Futures for English Local Government report, published today, found that ‘competent operation of the traditional model may work for a while, but is unlikely to be a good long-term strategy and that councils therefore need to…work in very different ways.’
However the report, prepared jointly with the University of Birmingham's Institute for Local Government Studies, the historic centralisation of England meant councils were not free to implement the major changes needed themselves.
This puts English local government at a disadvantage when considering reorganisation compared to its counterparts in some other EU member states, where ‘local government is thriving or has greater potential where there has been a fundamental rethink of the whole system’.
The report added: ‘This validates our view that dialogue is needed urgently, to address the future of the whole system of English government, and particularly at the local level, by 2020.’
There was a major opportunity to break away from the model of local governance, broadly established in 1974, and ‘re-organise local government structures to achieve real devolution and efficiency, where the benefits clearly outweigh the costs, and many of them see an urgent need for debate on this’.
But the report warned central government indifference to this debate meant councils could instead be ‘hollowed out’ by a series of cuts.
The report speculated whether the three-tier system of counties, districts and parishes remained viable, and said stakeholders expected this to convert eventually to a system of unitary councils and parishes.
‘Our research leads us to believe that we will see greater use of combined structures, including combined authorities,’ the report noted.
‘Stakeholders thought this should happen at a bigger scale and with a wider number of partners. This would not be about redrawing the formal boundaries, but incentivising co-operation and risk sharing across them.’
Paul Dossett, Grant Thornton’s partner and head of local government, said: ‘The pressures local government are under – financial and operational – will magnify exponentially over next 10 years.
‘With funding reductions due to bite harder and deeper after 2015, and many councils already facing a potential “tipping point”, authorities will need to maintain a relentless focus on transforming the models that have largely served them well over the past generation.’
Depending on how the political and financial environments develop, the report identified six potential scenarios for the future of local government:
• Adaptive innovation: councils creatively redefine their role and are able to affect their operating environment, often working in close partnership with other authorities.
• Running to stand still: councils are led and managed well and can see a positive future, provided that they can keep up the current pace and that there are no major shocks.
• Nostril above the waterline: councils are only able to act with a short-term view, their existence is hand to mouth and even a small external change might seriously challenge their viability.
• Wither on the vine: councils have moved from action to reaction. Their finances and capacity are not sufficient to the task and they are retreating into statutory services run at the minimum.
• Just local administration: councils have lost the capacity to deliver services, either because they have 'handed back the keys' or because responsibility for significant services has been taken from them.
• Imposed disruption: councils are subject to some form of externally imposed change, such as local government reorganisation.
