Stephen Fitzgerald: Local authority survival strategies
0Local authorities face challenges from funding constraints and economic uncertainty. Stephen Fitzgerald argues commercial activity, digital technology and workforce planning may hold the key to survival.
With the election of David Cameron in 2015 many could have been forgiven for thinking that he would usher in a period of stability following the turbulence of coalition government. How wrong that assumption has proved to be.
The Brexit referendum, the ending of the Cameron premiership and (though not the fault of the former prime minister) the ascent to power of Donal Trump in the United States have shown that there is a fundamental shift in world politics. This shift is emphatically to the right and has shattered the dominance of the liberal consensus.
Now, some will see this as a shift to a new certainty of individual liberty, private enterprise and small government. To others it represents the introduction of a new dark age where the interests of the disadvantaged are secondary.
At the domestic level this has fundamental implications for the UK public sector. We can only see a further long-term period of expenditure constraint for public services generally, and local government in particular — which has been consistently last in line when it comes to the allocation of central resources.
Looking forward however there a number of areas that offer opportunities for council leaders.
Commercial
The Business Rate Retention scheme creates the potential for local authorities to build their own resource base through regeneration activities alongside progress in national economic growth.
Unfortunately, the Brexit result may have made this approach harder to deliver; there can be little doubt that the economic risk profile nationally has increased, which will be of concern to local authority financial planners.
One strategy for local authorities, already noted on Room151, is the strategic acquisition of major capital assets.
This employs a local authority’s capital purchasing power to acquire land and buildings to generate a long-term revenue income stream.
A number of councils have adopted this strategy both within and outside their boundaries, and it can clearly deliver significant support to revenue budgets.
The potential for long-term commercial rental yields, along with appreciation in capital values, is an attractive prospect. However, enthusiasm should be tempered by the appropriate consideration of the inherent risk.
Digital
Another opportunity is streamlining a local authority’s operations by using the benefits of the digital age.
The move to digital enablement and self-service provides a real opportunity to develop data-driven organisations with streamlined processes aligned to customer needs.
Done well, this can have a definitive role in unleashing the inherent strengths of an organisation to deliver on customer aspirations in times of constraint.
However, for me it is essential that this is mainstreamed throughout an organisation’s operations. In the transformational period much of the work was outsourced to consultants but this could lead to a lack of ownership among those within a council and a hefty bill to the taxpayer.
In some aspects of digitalisation organisations may need limited external support but without an understanding and ownership, and the ability to drive digitalisation from within an organisation, it is unlikely that the outcome will be positive.
Workforce
This leads to my last theme: workforce planning. Every organisation claims to do this but there needs to be deep and creative support to achieve the best outcomes.
Organisations aiming to be the best are reliant on the motivation of their staff, particularly if they are in a service industry like local government.
The realities of the resourcing cuts in the local authority finance settlement means that headcount must inevitably fall, which means that those staff members that remain—hoping to build long-term careers in the public sector— need to give the maximum in ability and motivation.
Achieving this will not be delivered without training, professionalisation and realistic remuneration. For me though, the days of recruit them cheap and pile them high have gone: every employee must be encouraged to have a definitive role and ownership in the journey to organisational excellence. Those that don’t will ultimately fail to add the value that is needed.
These three themes present challenges for all local authorities but I suggest that those organisations that can address these approaching challenges while achieving excellence on the basics are those that are most likely to deliver in the new world of turbulence.
Stephen Fitzgerald, director, Tamar Consulting.
@SHJFitzgerald
