Five key insights from the latest NLGN Leadership Index

Local government finance has been making headlines recently, for all the wrong reasons. As news broke that Northamptonshire County Council is now considering a “radical plan” to cut back services to the minimum, increasingly questions are being raised about the wider health of the local government sector.

The Northants case is an outlier, having issued two Section 114 notices applying emergency spending controls this year, its current predicament is the combination of a particular set of political and managerial decisions. Yet the wider operating context for the council is significant, and after nearly a decade of funding cuts, the twin challenge of constrained spend and rising demand is something all local authorities are grappling with.

So what is the current outlook for the sector as a whole? NLGN’s latest Leadership Index reveals some new insights into how those in charge of councils – leaders, chief executives and mayors – feel about the future of their local authority and wider area. Here are the five key takeaways from August’s Index:

1. The future of discretionary services is in doubt – with over two-thirds of councils (68 per cent) reporting that they will not be able to continue providing them beyond five years. This raises the prospect of services in most areas being pared back to the bare minimum – with the loss of services that councils have the power, but not the duty to provide. This indicates an end to valued community commodities like libraries museums, parks maintenance, arts and tourism – or separate charging or providers of these as the norm. It also means that access to children and family support services would be pared back to only the minimum.

2. Social care providing authorities are by far the most pessimistic about the future. When only the responses of upper tier authorities are considered, a steeper 88 per cent of the total report that they will only be able to provide discretionary services for up to five years (nearly half of district councils have confidence they can continue to provide discretionary services beyond five years). This indicates that the internal spending pressures are being driven primarily by children’s and adults social care budgets, which are demand-led but resource-capped.

3. There is political consensus between Conservative- and Labour-led social care-providing authorities over their bleak future. Shhhh! Don’t tell the national parties, whose views diverge on local government finance, but there actually isn’t a huge degree of difference between Conservative- and Labour-led authorities over their future: they are both pretty much equally pessimistic. 88 per cent of Conservative-led authorities and 92 per cent of Labour-led authorities report that they will only be able to continue to provide discretionary services for up to five years. There isn’t much divergence between Metropolitan councils (majority Labour-led, urban areas) and County councils (majority Conservative-led, rural areas) either – with only 7 per cent and 11 per cent respectively feeling confident they could provide discretionary services beyond 2023.

4. The outlook for children’s services and adult social care is particularly grim. The Leadership Index finds declining confidence amongst councils in the power and resources they have to deliver across all major service areas, but the most significant drop is in social care. On a confidence scale of 0 (lowest) to 100 (highest), children’s social care hits 39.2 and adult social care is at 35.3. Since our last Leadership Index published in March this year, this is a fall of 10 per cent and 15 per cent respectively.

5. Wider confidence in the local economy is broadly flat, with significant regional variations in economic opportunities. Council leaders, chief executives and mayors are uniquely placed to provide insight into wider local economic conditions, and so the Leadership Index asks them to score confidence in a range of local economic indicators. This latest survey found broadly flat levels of local economic confidence unchanged from the previous Leadership Index in March, with the worst scoring indicator related to residents’ living standards at 48.6 (on a scale of 0 least and 100 highest). Within this overall figure, there are sharp regional variations, with the North East scoring the lowest at 28 points.

NLGN’s Leadership Index shines a light on the growing strains in the local government sector. As we approach key milestones for local government finance later this year – the Autumn Budget and the outcome of the Fair Funding Review – and look ahead next year to the Spending Review, there will be opportunities for the Government to address the growing pressures on Budgets. We will return to this theme in future Leadership Indexes, and in NLGN’s wider research.

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