Thursday 26 May 2016 1:31 am

More than eight-in-ten local authorities will be in serious financial difficulty in the next three years, chief execs warn

Local authorities are at risk of failing to deliver essential services in coming years, the government is being warned. 

PwC’s annual survey of local government leadership has shown that 81 per cent of local authority bosses believe that some will not deliver essential services within the next three years. 

Almost nine-in-ten – 86 per cent – of council leaders believe that some local authorities will get into serious financial trouble inside the next three years, with 56 per cent anticipating that some authorities will face a financial crisis inside the next 12 months.

Council chiefs warned that as the austerity measures continue they are increasingly likely to maintain required services. 

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A majority of chief executives – 64 per cent – are confident of making necessary financial savings over the next 12 months without seriously impacting the quality of service delivery.

However, this drops to 13 per cent when asked if they could maintain service delivery in the face of expected financial constraints over the coming five years. 

Chris Buttress, PwC partner and local government leader said:

There is real shift in emphasis this year – a focus away from delivering ‘cuts’ towards making interventions that underpin regional economic ‘growth’ and public sector reform. However, leaders and chief executives also recognise the magnitude of the financial struggle and the necessity to find solutions, as the shift continues from grant reliance to self-sufficiency.

Consequently, as we look towards 2020, we are expecting to see some fundamental changes in the way local public services are delivered. As that journey continues, councils need to ensure that they have the capacity and capability to match their ambition in order to deliver on new opportunities while managing new risks.

The survey also revealed that fewer than half of councils are prepared for the shift to business rates, with council leaders slightly more confident than chief executives on this point.

Concerns over the safety of digital information is also increasing. Just under half of chief executives – 48 per cent – are confident in their approach to digital security.

Read more: Should we scrap council tax and business rates and replace them with a land value tax?

Meanwhile, the number of council leaders expecting increased devolutionary powers has dropped, despite the government pledging to hand back more power to local councils. 

PwC's post-General Election May 2015 survey found that 33 per cent of chief executives and council leaders felt confident that local government would have more powers and responsibilities by 2020.

This has now fallen to 20 per cent.