Half of council chiefs braced for finance crisis within a year, poll finds

26 May 16

More than half of council leaders and chief executives believe that some authorities will face a financial crisis inside the next 12 months, a poll has found.

PwC’s survey of 96 senior council figures for its Local State We Are In report found that more than four out of five (85%) say their authorities will face serious financial challenges in the years to 2020.

Although the poll found that a majority of chief executives (64%) were confident of making necessary financial savings over the next 12 months without seriously impacting the quality of service delivery, 56% said they anticipate some authorities will face a financial crisis within the next year.

Asked if it would be possible for their own authority to make the required savings in the next five years, only 13% believed they could maintain service delivery in the face of expected financial constraints.

Chris Buttress, PwC partner and local government leader said the poll showed that leaders and chief executives recognise the magnitude of the financial struggle and the necessity to find solutions, especially ahead of the end to grant funding when business rates are fully localised from 2020.

“Consequently, as we look towards 2020, we are expecting to see some fundamental changes in the way local public services are delivered. As that journey continues, councils need to ensure that they have the capacity and capability to match their ambition in order to deliver on new opportunities while managing new risks,” he added.

The poll also found that 20% of chiefs said they expected local government would have more powers and responsibilities by 2020, down from 33% in last year’s poll despite the government’s devolution drive.

While 69% believe they will be part of a combined authority by 2020, only 36% say they expect this to be overseen by a directly elected mayor, despite chancellor George Osborne making this a condition for devolution deals.

The report also highlighted early concerns over the shift to business rates, with only 42% of chiefs stating their council was currently prepared for the shift to full retention.

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