By Daniel Hunter

The findings in The Local State We’re In is PwC’s third annual survey of how local authorities are responding to continued financial pressures, which surveyed local council chief executives and leaders across the UK, and the public.

Last year 98% of council chief executives said they were confident that the savings they needed to make could be achieved without seriously impacting the quality of services delivery and outcomes. This year, only 58% are confident.

The report finds increasing signs that cracks are appearing as councils adjust to continued and significant financial pressures, and concern that these will become even more pronounced after the forthcoming Spending Review.

Nine out of 10 chief executives and leaders now believe that some local authorities will get into serious financial crisis or fail to deliver the essential services that residents require within the next three years.

The report also finds that:

- Councils have once again achieved planned budget savings, by focusing on improving service delivery processes, support activities and third party expenditure;

- 36% face the same level of savings target two years in a row, and 40% have even bigger targets;

- There is universal expectation that this month’s Spending Review will mean further savings targets announced above and beyond those already in place;
Wile public understanding or perception of ‘cuts’ to date remains relatively low, of those aware of cutbacks to their local council services, or believe they have been introduced (55%), more than half (53%) oppose them, up from 36% two years ago;

- Environmental services such as road repairs, parks, and street cleaning are the biggest areas of concern for cuts for the public;

- Community budgets were met with general scepticism in the survey, with only 23% of chief executives and 6% of leaders believing they will lead to significant savings and transformational change.

“Having successfully delivered unprecedented savings over the last three years, councils have trimmed all they can, and there’s little left to achieve with more efficiencies alone. Local authorities are increasingly confronting fundamental questions about ‘what they do’ as much as ‘how they work’," Andy Ford, head of local government, PwC, said.

“The harsh reality is that public concern about service reductions is high, and understanding of the need for savings is low. The public are becoming increasingly opposed to reductions in local public services, particularly in visible services like road repairs and leisure services.

“The scale of concern about the impact of sustained austerity should not be underestimated. With the cracks already beginning to show, and difficult decisions ahead, councils need to act urgently in changing the way services are delivered or provided.”

While there is some evidence in this survey that councils are getting better at engaging with their communities about the difficult choices they face, there remains a very wide gap between how local authorities believe they are doing in this respect and how the public perceives they are performing. Leaders (75%) and chief executives (53%) level of confidence that the public are well informed about the reasons for cuts is over twice that of the public (26%).

In the face of longer term budget cuts, and the decline of traditional central government support, the PwC survey highlights how local authorities are increasingly looking to new sources of revenue to balance their budgets, including increases in charges or new fees, reducing concessions, and increasing commercial/trading activities.

The survey also highlights local government’s enthusiasm for the reforms proposed by Lord Heseltine, but finds that the jury remains out on whether the Government’s actions to enable local growth will be sufficient to support councils in generating regional growth.

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