Councils gear up for radical action amid fears of further wave of austerity

Local authorities are “without exception” pursuing or considering a range of radical remedial action amid fears that a further wave of austerity will hit the sector, according to research by KPMG.

Nine out of ten local government leaders surveyed by the firm expect their 2014/15 budget to be lower than the 2010/11 settlement. More a third of respondents predicted having to work with budgets that are at least 25% lower.

The survey found that:

• All local authorities are exploring shared services and mergers with other public sector organisations
• 94% are undertaking or reviewing asset sales and divestment of services
• 72% are considering joint ventures
• Half (50%) are looking at the creation of social enterprises.

Iain Hasdell, KPMG’s UK head of local and regional government, said: “A picture is being painted here of almost frenetic activity levels as those in local government demonstrate there are no sacred cows when it comes to meeting the austerity challenge of delivering better outcomes with much lower budgets and a dramatically smaller workforce.

“This is a positive approach to be welcomed and it differs markedly from some of the more modest, risk averse and incremental ambition that has sometimes characterised modernisation in the sector previously. After decades of evolution local government is now embracing revolution.”

However, the respondents expressed concern as to whether the sector has the skills to implement change programmes.

Some 64% said their organisation had inadequate commercial and contracting skills. A further 58% reported a shortage of experience in organisation and process redesign, while 40% were concerned about project management abilities.

KPMG’s Hasdell insisted that workforce skills issues were not an insurmountable problem.

He added: “At a time when the labour market is, unfortunately, being swelled with unemployed people from the private sector, local government could do more to tap into that expertise; quickly deploying people with relevant commercial, financial and project management skills within its workforce, by using their restructuring and redundancy programmes more smartly to improve skills whilst at the same time downsizing.”