Councils in Wales face risk of “service collapse” without reform, thinktank says

In a report published this month, the Wales Centre for Public Policy called on the Welsh Government to address the systemic weakness of the current finance system and streamline the approach to local government accountability, to instil a more robust and systemic approach to assessing the performance and financial health of councils.

The report, which was supported by the Welsh Local Government Association (WLGA), also recommended the Welsh Government help address capacity problems in local government and invest in rebuilding the sector’s capacity for innovation "so that there is a coordinated, sector-led effort to develop, test and implement new models of delivery".

On implementing a new operating model, the report said investment from the Welsh Government should first fund a "collaborative, shared resource which can support multiple councils".

"The precise form of this should be developed through a scoping exercise undertaken by Welsh Government in partnership with the sector. Whatever emerges should be capable of enacting meaningful change commensurate to the scale of the challenge we face," it said.

The group recommended that the Welsh Government and the sector should ultimately develop an agreed approach to support the development of a new model of local government, with concrete ideas and options for developing a model or resource to increase the capacity to innovate.

It also said that it plans to publish a "proposed vision for what the council of the future will look like" in the coming months.

Commenting on the sector's challenges, the Wales Centre for Public Policy warned that the current model of local government is "no longer sustainable" due to financial pressures on councils and the demand for statutory services, particularly social services, education, and housing.

It added: "While most authorities have maintained frontline service provision and workforces to an admirable extent, provision in other services, including those which are most visible to the public (e.g. road maintenance, public realm, community spaces), has been squeezed and council workforces cut.

"This has resulted in a hollowing out of the strategic and long-term planning functions of councils, with senior staff instead focusing by necessity on meeting ever-increasing demand for services and short-term cost pressures."

This comes as the approaches that councils have historically taken to cope with falling budgets while maintaining frontline service provision "have run out of road", the report continued.

It said that back-office capacity "can scarcely be further reduced" and that most efficiency savings have already been made.

"Therefore there is a risk that, if nothing is done, local authorities may no longer be able to meet their statutory obligations, resulting in a section 114 notice and effective service collapse," the report said.

The Wales Centre for Public Policy also highlighted workforce issues, stating that local government headcount has dropped by around a fifth in the last decade, leading to corporate centres being "hollowed out".

There are also increasing issues around recruitment and retention, particularly in social care, which are affected by low pay, poor working conditions, and lack of career progression, the report said.

It also warned that skills gaps are emerging as some local authorities struggle to recruit to more technical roles, and pay can lag behind the private sector for certain positions. Illness and low morale also affect staff in local government, with stress-related sickness rising, it added.

Elsewhere, the Wales Centre for Public Policy said that good organisational cultures are critical to maintaining employee commitment and morale as well as supporting the delivery of organisational values.

It noted that leaders have a "key role" to play in catalysing, mediating and stewarding cultural change, adding: "Organisations where leaders (at all levels) perceive that they have permission to do things differently and, crucially, ‘freedom to fail’ if changes don’t work out, will be more successful at developing open and innovative cultures."

Adam Carey