ppma annual seminar 2015 - 2020 vision

© 2015 Grant Thornton UK LLP. All rights reserved.

2020 Vision Exploring finance and policy futures for English

Local Government

PPMA Annual Seminar

17 April 2015

Guy Clifton


• Introduction to 2020 Vision

• Context – the national picture

• The challenge of the next ten years

• Possible future scenarios

• Conclusion and recommendations

Agenda


2020 Vision: our methodology

• A desk top review of literature on the future of local government,

forming an initial discussion paper

• Discussions and interviews on the discussion paper with politicians

and chief executives and senior managers from local government

• International comparisons drawn from literature and academic

discussion

• Development of a further paper to develop analysis and scenarios

• Scenario testing at round table events with local government

chief executives

• Amendment of analysis and scenarios and development

of the report


The national picture

• Fiscal consolidation and austerity

– SR10/SR13

• Demographic and technological change

• The consequences of the Scottish referendum – devolution?

• Regional differences


Financial and economic challenges

Challenge

• What will 2019/2020 look like without concerted action?

• Only half way through the planned period of fiscal

consolidation

• The Local Government Association (LGA) anticipates a

£14.4bn shortfall in the funding required in 2019/20

• LGA asserts that 60% of councils are no longer

able to meet the budget challenge through

efficiency improvements


Anticipated funding against pressures for

individual councils in 2019/20 Council with lowest

level of anticipated

funding

Mean Council with highest level

of anticipated funding

Type of council

London borough 57% 74% 89%

Metropolitan district 55% 71% 81%

English unitary 66% 79% 90%

Shire county 73% 82% 99%

Shire district 65% 94% 100%

Region

East Midlands 66% 79% 100%

East of England 65% 83% 100%

London 57% 74% 89%

North East 65% 74% 80%

North West 62% 75% 100%

South East 71% 84% 100%

South West 65% 83% 100%

West Midlands 68% 76% 100%

Yorkshire & Humberside 55% 73% 100%

Deprivation

Most deprived (Ranks 1 - 50) 55% 70% 99% Ranks 51 - 100 64% 75% 100% Ranks 101 - 150 65% 78% 100% Ranks 151 - 200 76% 81% 100% Ranks 201 - 250 77% 85% 100% Ranks 251 - 300 80% 84% 100% Least deprived (Ranks 301 - 353) 65% 91% 100%

Source: Local Government Association, 'Future funding outlook for councils 2014', p19-20


Approaches to balancing the books – LGA

analysis

• Maximising income through investment, fees and charges: 40%

• Using reserves to support revenue budget: 38%

• Increasing the local tax base and New Homes Bonus receipt:

12%

• Reviewing how assets can be used more effectively: 12%

• Changes to council tax support: 6%.


Economic issues that local government

must consider

the importance of economic thinking

technology & Moore's Law

uneven productivity

growth

income elasticity of

demand

price discrimination

price elasticity of demand

public goods and market

failure


The financial focus of councils – how they

are seeking to maintain viability

Type of council Financial focus

Unitary Efficiency and rationalisation (including reductions in staff terms and

conditions)

Service reductions

Charge increases

County Efficiency and cost reduction

Service re-design (including devolution to parishes and the community

sector)

Income generation and application of technology

London borough Economic growth

Collaboration and partnerships

Seeking to help communities be more resilient to reduce demand

District Commercialisation

Income generation

Prioritisation (including changing service standards)


2020 Vision: Possible scenarios


Voting buttons

• As we progress through the scenarios, we have included a

number of questions. We would like your views.

• We understand that this is the first you will have seen of

these scenarios, so we ask for your initial thoughts on them

and how you feel they apply to your organisation.


Adaptive innovation

• Councils creatively redefine their role

• Able to actively affect own operating environment

• Close partnership working with other authorities


To what extent do you believe your council can

identify with this scenario?

A. Completely

B. A reasonable amount

C. To a small extent

D. Not at all

Comple

tely

A reaso

nable

amount

To a small e

xtent

Not at a

ll

9%

0%

23%

68%


Running to stand still

• Councils are led and managed well

• Can see a positive future provided they

maintain pace and there are no major shock


How much of your Council is 'running to stand

still'?

A. Most or all of it

B. About 50%

C. Very little

D. None at all

Most

or a

ll of i

t

About 50%

Very lit

tle

None at all

17%

0%

22%

61%


A nostril above the waterline

• Councils acting with short-term view

• Hand to mouth existence

• Even a small external change can represent a

challenge to their viability


How far do you agree with the 'nostril above the

waterline' scenario for your council?

A. Completely, it represents

the most likely outcome

B. It is distinct possibility

given the challenges

C. It is unlikely

D. Not at all

Comple

tely

, it re

prese

nts...

It is

distin

ct p

ossib

ility gi..

.

It is

unlikely

Not at a

ll

5%

18%

41%36%


Wither on the vine

• Councils have moved from action to reaction

• Finances and capacity not sufficient to the task

• Retreating into delivering statutory services

only, run at the minimum


To what extent are you worried that your

council could 'wither on the vine'?

A. It is serious concern

B. There are aspects I find

concerning

C. A minor consideration

D. Not at all!

It is

serio

us conce

rn

There a

re asp

ects I

find ..

.

A min

or consid

eratio

n

Not at a

ll!

4%

39%39%

17%


Just local administration

• Council have lost the capacity to deliver services

• They have either handed back the keys

or

• They have had responsibility for significant

services taken from them


Do you see any part of your Council being

threatened by this scenario in the next 5 to 6

years given the challenges we face?

A. Yes, it is an growing concern

B. Yes, but only in small parts

C. No, but I believe I may in the

near future

D. Not at all, it isn't a possibility

Yes, it

is an

growin

g conce

rn

Yes, but o

nly in

small p

arts

No, but I

belie

ve I

may i

n...

Not at a

ll, it

isn't

a poss

ibi..

.

0%

59%

14%

27%


Imposed disruption

• Local authorities at a decisive point

• The challenge of adults' and children's social care

• Local government's constitutional position

• Diversity within the sector and its bearing on

decisive action


Which of the six scenarios do you feel best

represents the position of your Council?

A. Adaptive innovation

B. Running to stand still

C. Nostril above the waterline

D. Wither on the vine

E. Just local administration

F. Imposed disruption Adaptiv

e innovatio

n

Running to

stand st

ill

Nostril

above the w

aterli

ne

With

er on th

e vine

Just

loca

l adm

inist

ratio

n

Impose

d disr

uption

48%

33%

5%

0%0%

14%


Putting your organisation aside, how do you feel

that local government is coping given the national

context?

Adaptive In

novation

Running to

stand st

ill

Nostril

above the w

aterli

ne

With

er on th

e vine

Just

loca

l adm

inist

ratio

n

Extern

ally im

posed ch

ange

5%

23%

14%

0%

14%

45%A. Adaptive Innovation





F. Externally imposed change


Fast forward five years. Which position do you

think your Council will be in?

A. Adaptive innovation





F. Imposed disruption Adaptiv

e innovatio

n

Running to

stand st

ill

Nostril

above the w

aterli

ne

With

er on th

e vine

Just

loca

l adm

inist

ratio

n

Impose

d disr

uption

41%

32%

9%

0%

9%9%


Some recent voting results

ScenarioSOLACE CIPFA SOLACE CIPFA SOLACE CIPFA

Adaptive innovation 44.7% 38.00% 55.1% 18.00% 3.8% 4.00%

Running to stand still 46.8% 51.00% 12.2% 38.00% 61.5% 46.00%

Nostril above the waterline 0.0% 7.00% 4.1% 31.00% 23.1% 41.00%

Wither on the vine 0.0% 0.00% 6.1% 4.00% 0.0% 2.00%

Just local administration 0.0% 0.00% 6.1% 4.00% 1.9% 0.00%

Imposed disruption 8.5% 4.00% 16.3% 5.00% 9.6% 7.00%

Totals 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

My Authority Now My authority in 5 years Local Government as a whole


Four recommendations

Political Parties

• Consider wholesale change. Whichever party forms the next government – they must be ready for a serious discussion within the sector.

Whitehall and the rest of the public sector

• Must participate in constructive dialogue about what the future could look like, leading to real change

Local government,

and the private and 3rd sector

partners

• Agree that fundamental change is needed and begin to plan for a transition to a more sustainable long term framework.

Individual Councils

• Understand which scenarios you identify with, the context in which you are working and what to do next.


2020 Vision:

Exploring finance and policy futures for English

local government

www.gt-thornton.co.uk/2020-vision


Questions


Guy Clifton Head of Local Government Advisory

Grant Thornton UK LLP

T - 020 7728 2903

E - [email protected]

Twitter - @guy_clifton

Guy has worked in the local government sector

for over 20 years. A CIPFA qualified accountant,

he spent the first half of his career in local

government operational roles, and was Head of

Finance at a London borough. He has been with

Grant Thornton since 2007 and currently leads

the local government advisory team. His current

focus is providing finance, governance and

collaboration solutions to clients.

Speaker details

mailto:[email protected]


Thought leadership for the sector

http://www.grant-thornton.co.uk/Global/Publication_pdf/rising-to-the-challenge-the-evolution-of-local-government.pdf

http://www.grant-thornton.co.uk/Global/Publication_pdf/Pulling-together-the-Better-Care-Fund.pdf

http://www.grant-thornton.co.uk/Global/Publication_pdf/Where-growth-happens-the-high-growth-index-of-places.pdf

http://www.grant-thornton.co.uk/Documents/Alternative-Delivery-Models-LG.pdf


About Grant Thornton

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ppma annual seminar 2015 - 2020 vision

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