Local authorities must dodge the fate of Birmingham City Council and fix their finances
The troubles at Birmingham City Council threaten to pull down cash-strapped local authorities across the country, writes Claire Corbett
Last week, Birmingham City Council declared itself bankrupt over £760m in unpaid equal pay claims. It followed in the footsteps of Hackney, Thurrock, Woking and Northamptonshire, which have all filed similar notices.
Local authorities, as we know all too well, are a fragile sector, and they are currently battling both growing demand and reduced funding. Tough choices will need to be made, with services likely to be heavily impacted, affecting everyone in the community.
According to the Local Government Association, local authorities across the country are dealing with financial challenges, with many facing the threat of insolvency – partly due to outdated funding models and depleted reserves.
These pressures are not going away any time soon. Facing systemic problems that need the appropriate time, resources, and funding to be properly taken care of, it’s understandable why many are in trouble and are desperately trying to find long term sustainable solutions with the constraint of capacity and funding to do it.
But if there is a silver lining to all this, it is that lessons can – and must be – learnt.
Firstly, we need to provide investment and support to our local authorities to move away from short term planning. Too often, budgets and targets are set on a year-by-year basis using historical information, looking in the rear view mirror without really challenging future demand assumptions. At the same time, the political cycle means decision makers are at risk of changing every three to four years, leading to shorter term approaches or plans being changed.
Supporting local authorities to put in place long term business planning and funding models that will meet the needs of their areas is one solution. Local authorities hold large swathes of data and insights on the services they provide. If they use this data effectively, analysing it to identify where issues lie based on both historical and real-time information, local authorities can take strategic and knowledge-based approaches to better target where funds are spent.
Local authorities often have large legacy system landscapes which prove expensive to integrate and use. These investments into big, bespoke technologies have frequently ended up locking them into costly maintenance contracts and inflexible technology roadmaps. Thinking that large, one off technology systems are a quick fix or a way to streamline processes needs to end. Adopting a user centred, digitally minded approach to understand needs makes local authorities smarter commissioners of future digital and technology solutions, providing a better understanding of the benefits and risks of different platforms is a way forward. Leveraging the existing technology capabilities with the introduction of the lo-code platforms, AI and robotics capabilities can accelerate service innovation, reduce costs and avoid pricey vendor lock-ins.
Many authorities face the same challenges and they need to work together to share and learn from each other. There are already systems in place to allow them to do this, such as community platforms. Groups like this provide a hub for local authorities across the country to come together and share their projects, successes and ideas for building better public services. They can then take what they’ve learnt away and replicate it in their area, which could be at a much lower level of investment than what they were planning when working individually.
There’s never been a more important time for brave and bold leadership in local government. By taking a longer term approach, being people centred and working together, local authorities up and down the country can take important steps in the right direction.