Public Services

Council cash constraints - crippling problem or catalyst for change?

Published 12 February 2018

Northamptonshire's funding distress signal provides wake-up call for Whitehall and potential powers for cash-strapped councils, says Alan Mo


Last week was a rude awakening for local government, as Northamptonshire effectively declared bankruptcy by issuing the sector's first section 114 notice in decades. Local authorities will hope that this is a wake-up call, prompting Whitehall to issue more funds and powers to councils to help them address the crippling challenge of balancing budget cuts in the face of growing service demand.

Surely something needs to be done? Well, we wouldn't advise the tech industry to hold its breath. Part of Northamptonshire's problems was spiralling social care costs, and while Sajid Javid announced an extra £150m in funding over the next financial year, this will hardly plug the annual social care funding gap of £2.3bn by 2020.

That said, local government must continue to campaign hard for more support. It cannot afford to stand still. If anything, Northamptonshire's current predicament should prompt organisations to accelerate transformation efforts.

With this in mind, it was good to see Walsall go to market for a new multi-disciplinary consulting partner to help it devise the next stage of its transformation journey. While it may not quite be in section 114 notice territory, Walsall is forecasting a funding gap of £58m in the period to 2022/23. The council has gone as far as it can with tactical cost saving measures and service-led change, and it must now deliver a much wider organisational change programme to break down the siloed ways of working that are still afflicting organisations.

Walsall is looking to split its project into two phases - discovery and delivery. The chances are the successful bidder will be involved across the two phases, but much will depend on the initial auditing and scoping exercise, which will help inform the business case for a new digitally enabled transformation programme.

What's clear from this opportunity, as well as North Lanarkshire who went to market for similar requirements last week, is the need for transformation is not matched by the skills and resources within local authorities. This is driving up demand for consulting and advisory services, and a key reason why we are predicting spend will grow by a CAGR of 7.3% over our current forecast period. This is naturally great news for consultancies, but suppliers further down the food chain should be monitoring developments and ensuring these advisors are fully up to speed with what they could offer to transformation initiatives.


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