The (local) state we're in

PwC survey on local government's financial challenge 2012

"Virtually all the opportunities for savings have gone"

Council Leader

"The real challenge will be the financial year 2014/15. That is now our focus."

Chief Executive

Our second annual survey finds that local authorities have successfully delivered against an ambitious programme of financial savings over the last year, without any marked reduction in the quality of frontline services. It further highlights a strong level of confidence within councils about being able to repeat that performance in the year ahead. There is notable nervousness however of further financial pressures beyond the current spending review period.

There also appears to be a hardening of public attitudes towards those cuts impacting local public services. There also seems to be much more councils can and should be doing to engage local communities and individuals about the difficult choices they are facing.

Achieving savings targets

Following on from our previous survey, respondents were generally optimistic about achieving their financial savings targets for the last financial year. Over 90% of respondents expected that they would deliver at least their targeted level of savings in 2011/12; indeed just over one third were expecting to exceed their target for the year.

Managing increasing demand

By far the biggest concern for both leaders and chief executives in terms of achieving their savings targets over the next few years is the challenge of increasing demand for services. Our survey in the summer of 2011 identified a similar concern and this is potentially a major area of focus now for local councils. The fear for many is that, no matter the level of focus on transforming internal processes and operations, the sheer level of demand within the system (particularly in people-related services) will outweigh the savings that councils can secure in practice.

The future council

Both chief executives and leaders indicate a significant fear of potential future council failure – both financial and service failure. Almost 90% of chief executives and 80% of leaders believe that in the next three years one or more councils will get into serious financial difficulties, while 70% of chief executives and 80% of leaders believe that one or more councils will fail to deliver essential services.

Over recent years there has been much discussion about what the council of the future will look like - ‘commissioning council’, ‘mutuals’, ‘social enterprises’ and ‘big society’ have all entered the lexicon of local government language. While councils appear to be adopting different models, one common theme for the council of the future is that will be smaller and employ fewer staff.

Public acceptance of cuts

Leaders were more inclined than chief executives to believe that the public had accepted the savings that had been implemented, and that there had been less adverse public reaction to them.

However, this view was not shared by the public, just over 40% of whom said that they fully or tend to oppose the need for savings in local public services. While almost as many said they somewhat or fully accepted the need to make savings, one in five were unsure.

Communicating with residents

Our surveys also uncovered a mismatch between the perceptions of both leaders and chief executives on the one hand, and the public themselves on the other, about how well informed the public are on the reasons councils are making savings. Over half of chief executives and three quarters of leaders said that they thought the public very or fairly well informed about the reasons that the council was planning to make savings. By contrast, only one quarter of the public thought that they were very or well informed.