2014 Grant Thornton UK LLP. All rights reserved. 2020 Vision
Exploring finance and policy futures for English Local Government
SOLACE West Midlands Mark Stocks January 2015
Slide 2
2014 Grant Thornton UK LLP. All rights reserved. The challenge
of the next ten years Possible future scenarios Conclusion and
recommendations Agenda
Slide 3
2014 Grant Thornton UK LLP. All rights reserved. The challenge
of the next 10 years
Slide 4
2014 Grant Thornton UK LLP. All rights reserved. The English
question Experiences elsewhere The wider political dimension What
is changing? Developing localist agendas This is a period of
unprecedented change and challenge for Great Britain
Slide 5
2014 Grant Thornton UK LLP. All rights reserved. Did the Autumn
statement 2014 signal a change financial settlement government view
- local services will not face additional cuts in 2015/16 but
acknowledged 1.8% cut in purchasing power Other commentators by May
2015, Government funding for councils will be 40 per cent lower
than in 2010 2015/16 reduction in purchasing power around 6% if
Better Care Fund and ring fenced grants excluded Central government
funding to reduce by 14%
Slide 6
2014 Grant Thornton UK LLP. All rights reserved. Did the Autumn
statement 2014 signal a change no new funding for social care, no
changes to the Housing Revenue Account borrowing cap no decision on
devolution to local government but strong support for further
combined authorities and the role of cities in generating growth
Some positives - multi-year funding settlements to embed joint
working between health and social care, reviews of business rates
structures and licensing simplification So, in summary, another
tough settlement but some support for new structures and
devolution
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2014 Grant Thornton UK LLP. All rights reserved. So what will
the funding look like in 2019/20? Council with lowest level of
anticipated funding MeanCouncil with highest level of anticipated
funding Type of council London borough57%74%89% Metropolitan
district55%71%81% English unitary66%79%90% Shire county73%82%99%
Shire district65%94%100% Region East Midlands66%79%100% East of
England65%83%100% London57%74%89% North East65%74%80% North
West62%75%100% South East71%84%100% South West65%83%100% West
Midlands68%76%100% Yorkshire & Humberside55%73%100% Deprivation
Most deprived (Ranks 1 - 50)55%70%99% Ranks 51 - 10064%75%100%
Ranks 101 - 15065%78%100% Ranks 151 - 20076%81%100% Ranks 201 -
25077%85%100% Ranks 251 - 30080%84%100% Least deprived (Ranks 301 -
353)65%91%100% Source: Local Government Association, 'Future
funding outlook for councils 2014', p19-20
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2014 Grant Thornton UK LLP. All rights reserved. Will the
Better Care Fund Help? Maybe . but not yet! Key issues Projected
savings of more than 250m at risk as reductions in emergency
activity underpinning them need to be revised downward Most areas
are not willing to pool more than the minimum resources Concerns
have arisen over the potential for delivery of social care savings
Providers have had little input into many plans H&WB Boards
have had a limited impact Joint contracting is limited So this is
not offering the solutions to social care demand that were
anticipated
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2014 Grant Thornton UK LLP. All rights reserved. What is local
government doing? Approaches to balancing the books LGA analysis
Maximising income through investment, fees and charges: 40% Using
reserves to support revenue budget: 38% Increasing the local tax
base and New Homes Bonus receipt: 12% Reviewing how assets can be
used more effectively: 12% Changes to council tax support: 6%.
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2014 Grant Thornton UK LLP. All rights reserved. What is local
government doing? The financial focus of councils maintaining
viability Type of councilFinancial focus Unitary Efficiency and
rationalisation (including reductions in staff terms and
conditions) Service reductions Charge increases County Efficiency
and cost reduction Service re-design (including devolution to
parishes and the community sector) Income generation and
application of technology London borough Economic growth
Collaboration and partnerships Seeking to help communities be more
resilient to reduce demand District Commercialisation Income
generation Prioritisation (including changing service
standards)
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2014 Grant Thornton UK LLP. All rights reserved. What else
should it be considering? What are the economies of the future?
forecasting the future is difficult but is key for the future
prosperity of areas four possible scenarios that may come through .
Disney Director creative industries come to the fore supported by
franchise arrangements, growth moves away from London as people
search for better standards of living and technology allows easy
production Kick Starter series of SME growth based on graduate
start up companies focussed on technology and digitisation
Materials Magnate consolidated power of large corporation with
control over key material and energy Extractive Entrepreneur lack
of resources sees exponential growth in waste recycling as
populations and demand grow These are only potential scenarios but
it is important that local government considers what economy it
will be working in Source: Grant Thornton - Future
perspectives
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2014 Grant Thornton UK LLP. All rights reserved. What else
should it be considering? Useful economic considerations the
importance of economic thinking technology & Moore's Law uneven
productivity growth income elasticity of demand price
discrimination price elasticity of demand public goods
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2014 Grant Thornton UK LLP. All rights reserved. How
financially resilient is local government to these changes?
concerns remain as to whether local government services can meet
public need however very few councils are rated as 'at risk'
financially growing confidence that the risks can be overcome many
authorities maintained or improved financial performance growth in
innovation and strong leadership for some a path is clearing to
self financing for most a clear trajectory towards financial
sustainability for some a tipping point remains a distinct
possibility Source: Grant Thornton, Rising to the Challenge
Slide 14
2014 Grant Thornton UK LLP. All rights reserved. Analysis and
possible scenarios