THE LOCAL STATE WE'RE IN PWC'S ANNUAL LOCAL GOVERNMENT SURVEY 2018 - JUNE 2018 - WWW.PWC.CO.UK/LOCALGOV

 
THE LOCAL STATE WE'RE IN PWC'S ANNUAL LOCAL GOVERNMENT SURVEY 2018 - JUNE 2018 - WWW.PWC.CO.UK/LOCALGOV
June 2018

The local state we’re in
PwC’s annual local
government survey 2018

                      www.pwc.co.uk/localgov
THE LOCAL STATE WE'RE IN PWC'S ANNUAL LOCAL GOVERNMENT SURVEY 2018 - JUNE 2018 - WWW.PWC.CO.UK/LOCALGOV
THE LOCAL STATE WE'RE IN PWC'S ANNUAL LOCAL GOVERNMENT SURVEY 2018 - JUNE 2018 - WWW.PWC.CO.UK/LOCALGOV
Contents
Executive summary                                                                                 1

Introduction                                                                                      4

Continued austerity: council resilience and commercial acumen                                     5

Making the most of new technologies: digital disruption and the use of data                       9

Reforming and transforming local public services                                                15

Place based growth: collaboration, barriers and the impact of Brexit                            19

The new local government landscape: is devolution stalling?                                     23

Agenda for action                                                                               27

Methodology                                                                                     28

About us                                                                                        29

                                                        The Local State We’re In – PwC’s annual local government survey 2018
THE LOCAL STATE WE'RE IN PWC'S ANNUAL LOCAL GOVERNMENT SURVEY 2018 - JUNE 2018 - WWW.PWC.CO.UK/LOCALGOV
Executive
summary                                  Key findings
                                         Fears of failure rising: a need for         Making the most of new
There is a sense in this year’s survey
                                         organisational resilience and               technologies: digital disruption
that, while there has long been a
                                         commerical acumen                           and data analytics
‘cliff edge’ approaching for council
                                         Austerity continues but seven in ten        There is a strongly felt opportunity
finances, expectations of crisis and
                                         (72%) of council respondents to our         of an intelligent digital dividend,
failure are close to a tipping point.
                                         survey remain confident of delivering       which extends beyond saving costs:
                                         savings next year without impacting         nine in ten survey respondents expect
Our latest ‘Local State We’re In’
                                         on quality of service or outcomes.          digital will enable them to engage
survey of Local Authority Chief
                                         However, a cliff edge remains in sight      communities in new ways and 80%
Executives and Leaders shows that
                                         in the medium term as confidence            expect digital to enable improvements
while councils have coped well in the
                                         plunges to one third (33%) when             to service delivery.
face of continuing austerity and the
                                         considering the three year outlook, and
uncertainty of Brexit, there are now
                                         one fifth (19%) when considering the        But there are challenges to deliver
real fears of failure looking ahead.
                                         next five years.                            this dividend with a new realism from
                                                                                     councils on their capability to make
The scale of the challenge is indeed
                                         There is also a much increased fear         the most of new digital technology.
significant but also with every
                                         of failure, with almost three quarters      Only 3 in 10 survey respondents
threat comes an opportunity. Digital
                                         (74%) of respondents expecting that         feel that their council is confidently
disruption, Artificial Intelligence
                                         some councils will get into serious         embracing new technologies like AI
(AI) and robotics have the potential
                                         financial crisis in the next year (54%      and robotics (similar to the public’s
to transform local public services
                                         last year).                                 view). There is a particular gap in data
even if they equally also pose threats
                                                                                     and analytics with only half of our
such as from cyber attacks.
                                         Given these pressures, there is a greater   survey respondents confident in their
                                         than ever need to build organisational      councils’ capabilities in this area. The
In response, councils need not only
                                         resilience: respondents pinpoint            pace of technological change and the
greater organisational resilience
                                         particular gaps in supply chain             complexity of implementation means
and agility, but also enhanced
                                         management and commercial                   that the potential of new technologies
capabilities to exploit the potential
                                         acumen. With further closures or            is not being maximised.
of data and analytics and a focus
                                         service reductions likely in many
on partnership working in order
                                         areas, engaging the public on the           In addition, more needs to be done to
to deliver place based growth and
                                         reasons, and addressing their concerns,     shift behaviour to enable people to get
public service reform.
                                         is another pressing issue. Over half        the most from the technology available.
                                         (56%) of the public we surveyed were        This includes moving more of the public
                                         concerned about the impact that             online: almost two thirds (62%) of the
                                         service reductions and closures will        public polled had not interacted with
                                         have on them personally and 61% were        their council digitally in the past month
                                         concerned about the impact on their         and 20% were not aware of any council
                                         local community.                            services being available digitally. These
                                                                                     proportions have hardly changed from
                                                                                     last year suggesting a major challenge
                                                                                     for councils to encourage their service
                                                                                     users to make the digital shift.

                                                                                     There is also work to be done to
                                                                                     make council staff more cyber
                                                                                     savvy, with only 41% of our survey
                                                                                     respondents confident that council
                                                                                     employees exhibit robust cyber
                                                                                     security behaviours at work. This
                                                                                     highlights a continuing potential area
                                                                                     of vulnerability for councils.

1
THE LOCAL STATE WE'RE IN PWC'S ANNUAL LOCAL GOVERNMENT SURVEY 2018 - JUNE 2018 - WWW.PWC.CO.UK/LOCALGOV
Reforming and transforming               Delivering good, place based                 The new local
local public services                    growth with Brexit around                    government landscape: is
Beyond technology, place based           the corner                                   devolution stalling?
transformation is seen to involve        Collaboration is also a feature of           With so much dealmaking in
collaboration across a place with        place based growth, especially with          government focused out towards the
a need to focus on, and measure,         Local Enterprise Partnerships (LEPs).        EU, it may seem that there has been
outcomes and the related costs.          Council priorities for place based           too little focus and capacity to deliver
Councils feel they are making progress   growth focus on the key enablers             the next stage of the much promised
in this area. Six out of ten survey      – skills, infrastructure (housing            ‘devolution revolution’.
respondents agree that councils should   and transport) as well as inward
be more responsible for facilitating     investment. However, significant             This appears to be confirmed in our
outcomes rather than delivering          barriers remain in each of these             survey where there is a perception
services, and a similar proportion       areas, with 72% of our respondents           that devolution has stalled, with
now feel able to measure outcomes        identifying lack of investment in            only 13% of respondents agreeing
and assess impact which is key to        infrastructure as a key barrier, 61% a       that their council will have more
delivering place based transformation.   lack of influence over skills and 60% a      powers and responsibilities in 2022,
                                         lack of affordable or suitable housing.      similar to 12% last year and well
However, taking the example of                                                        down from 33% in May 2015 when
health and social care integration,      With Brexit next year, respondents           the Conservative government led by
while appetite for reform remains,       see high impacts on their councils           David Cameron came into power.
barriers to integration are apparent     for trade, Foreign Direct Investment
when seeking to deliver joined up        (FDI) and funding. Yet only 12%
public services across a place with      of respondents see their council
mixed views on engagement e.g. on        proactively promoting city-to-city
the Sustainability and Transformation    links overseas to find investment
Partnership (STP) process. The           and promote trade for their local
barriers to further integration          economies. In addition, 74% are not
centre on institutional, strategic and   confident that central government
cultural differences between the         will engage with cities and local
NHS and councils.                        government in reshaping regional
                                         investment and regeneration funds
                                         beyond Brexit.

                                         The impact of Brexit is also a source
                                         of uncertainty for the public: almost
                                         half (46%) of the public neither agree
                                         nor disagree that their local area will
                                         benefit from leaving the EU.

                                                         The local state we’re in – PwC’s annual local government survey 2018    2
THE LOCAL STATE WE'RE IN PWC'S ANNUAL LOCAL GOVERNMENT SURVEY 2018 - JUNE 2018 - WWW.PWC.CO.UK/LOCALGOV
Expectations of further devolution
                                         It is crucial that councils now respond to six key challenges:
have hit rock bottom, with only
one in ten respondents expecting         Defining, developing and delivering sustainable, inclusive place based
to be part of a Combined Authority       growth strategies and securing a clearer economic identity to attract, and
by 2021. Barriers to further             retain, talent and investment.
devolution are seen to be jointly the
mayoral model and local political        Working across places and securing the right public service reforms to
relationships as well as a lack of       underpin place based transformation and the delivery of key outcomes by
potential powers to be gained.           redesigning services and building new partnerships.

The new cohort of metro mayors           Focusing on building the skills, capabilities and processes to secure
may yet give devolution a jump start     organisational resilience, being prepared to manage key risks but
as their collective impact starts to     also being agile to respond to, and recover from, unforeseen events
be felt but this will take time as the   and challenges.
public increasingly understands
the role of a mayor and can see the      Developing commercial skills and business acumen, being prepared to
impact that they can have.               work outside council organisational boundaries and seamlessly across the
                                         public and private sectors in order to achieve better returns on investments
Key areas of focus for                   and better value from public/private sector arrangements.
the future
As councils look to the next             Embracing the value of data as an asset and investing in data analytics
Spending Review in 2019 and              capabilities to inform decision-making and generate insight, drive smarter,
beyond, there are new opportunities,     earlier interventions and influence behaviours, manage demand and
such as AI and digital, as well as       reduce cost.
risks to manage, from cyber to the
                                         Harnessing digital disruption and new technologies such as AI to change
shift away from grant funding.
                                         traditional ways of working, creating new value and better serve the needs
Councils have proved their ability to
                                         of communities.
deal with significant challenges in
the past and will need to continue to
adapt and innovate as they enter a
post-Brexit world.

3
THE LOCAL STATE WE'RE IN PWC'S ANNUAL LOCAL GOVERNMENT SURVEY 2018 - JUNE 2018 - WWW.PWC.CO.UK/LOCALGOV
Introduction

In early 2018, we conducted our eighth annual survey of local                                              This report presents our survey
authority Chief Executives and Leaders across the UK. We also                                              findings and focusses on a number of
                                                                                                           key themes for local government over
commissioned online polling of a representative sample of over                                             the next year:
2,000 members of the UK public to find out their views on their
council’s performance, role and purpose.                                                                   • Continued austerity and the
                                                                                                             need for resilience and greater
Our aim with these surveys is to                        However, the financial sustainability                commerical acumen: What is the
explore how councils are dealing with                   of councils is under real pressure.                  scale of the challenge for the next
the changing circumstances in which                     As the National Audit Office (NAO)                   year and into the next decade? Do
they find themselves. This includes                     highlights,1 councils face continuing                councils have the capabilities they
continuing financial pressures and an                   acute pressures. There has been a                    need for the future?
ever evolving political and economic                    near halving in real terms of central              • Digital and data: To what extent
landscape but also new opportunities                    government funding between                           are councils embracing digital
– tapping into the power of data and                    2010/11 and 2017/18 and a real term                  to engage citizens and/or make
analytics, riding the digital wave                      reduction of nearly a third (28.6%)                  savings? Will AI and robotics offer a
and embracing place based growth                        in local authority spending power                    route to transforming services and
and transformation.                                     over the same period (when including                 lowering costs? Do councils have
                                                        Council Tax). With a fundamental                     the skills they need to make the
Context                                                 shift also forthcoming in the way                    most of data, and to keep it secure?
Our annual local government                             local government is financed, councils               Is cyber a growing worry?
surveys have tracked the remarkable                     must continue to be resilient and more             • Public service reform and
transformation of local government                      commercial to be fit for the future.                 transformation: What progress
over the past eight years. Whereas                                                                           is being made on health and
in our first Local State. We’re In                      There are also uncertain economic                    social care integration? What
survey confidence in the future was                     times ahead, not least due to Brexit                 are the barriers to wider public
at a low, over the years councils have                  which will impact on regions to varying              service reform?
demonstrated their resilience in the                    degrees depending on the nature of the             • Place based growth: What are
face of deep austerity and their ability                future UK-EU relationship. Yet there                 the key priorities for local growth?
to innovate and transform in the face of                are also grounds for optimism. The UK                What impact is Brexit having on
their changing circumstances.                           economy has not stalled and indeed is                local economies? What will be
                                                        projected to continue to grow across all             the impact of the shift to business
                                                        regions over the next year.2                         rate retention?
                                                                                                           • The new local government
                                                                                                             landscape: Where next for mayors
                                                                                                             and Combined Authorities? What
                                                                                                             are the prospects for further
                                                                                                             devolution, including fiscal powers?

1 ‘Financial sustainability of local authorities 2018’, NAO, 8 March 2018
2 ‘UK Economic Outlook’, PwC, March 2018 https://www.pwc.co.uk/services/economics-policy/insights/uk-economic-outlook.html

                                                                            The local state we’re in – PwC’s annual local government survey 2018   4
THE LOCAL STATE WE'RE IN PWC'S ANNUAL LOCAL GOVERNMENT SURVEY 2018 - JUNE 2018 - WWW.PWC.CO.UK/LOCALGOV
Continued austerity:
council resilience and
commercial acumen
Fiscal austerity continues but local authorities remain
relatively confident in the short term. Indeed, 72% of respondents
agree that they will be able to make the necessary financial
savings without seriously impacting the quality of service delivery
and outcomes over the next year (a slight increase compared to
68% last year).

However, a cliff edge remains in sight      Figure 1: Confidence in making savings without impacting quality of services
in the medium term, as confidence           delivered or outcomes
plunges to one third (33%) when
considering the three year outlook,           100
and one fifth (19%) when considering            90
the next five years. There is also a            80
much increased fear of failure, with            70
three quarters (74%) of respondents             60             72
expecting that some councils will get
                                            %

                                                50
into serious financial crisis in the next
                                                40
year (54% last year).
                                                30
Given these pressures, there is a               20                                           33
greater than ever need to build                 10                                                                     19
organisational resilience: respondents
                                                 0          Next year                    Next 3 years              Next 5 years
pinpoint particular gaps in supply
chain management and commercial
acumen. With further closures or
service reductions likely in many           Over a quarter of councils lack                Longer term, the outlook is more
areas, engaging the public on the           confidence about the year ahead                challenging with only 33% of
reasons, and addressing their concerns,     While the majority of all respondents          respondents feeling confident about the
is another pressing issue. Over half        to our survey remain confident about           next three years and, in the next five
(56%) of the public we surveyed were        the year ahead, over a quarter (28%)           years, only 19% confident that they will
concerned about the impact that service     lack confidence that they will be              be able to make the necessary savings
reductions and closures will have on        able to make the necessary savings             without seriously impacting the quality
them personally (similar to last year, at   while delivering quality services and          of service delivery and outcomes.
53%) and 61% were concerned about           outcomes over the next year (Figure 1).
the impact on their local community         While this is slightly lower than last         This follows a similar pattern to our
(consistent with 60% last year).            year (32%), it is still a concern that         surveys in recent years, where the ‘cliff
                                            such a significant proportion have fears       edge’ always seems to be three to five
                                            about their ability to continue to deliver     years away (see Figure 2).
                                            services in the next year without
                                            impacting on quality of services
                                            or outcomes.

5
THE LOCAL STATE WE'RE IN PWC'S ANNUAL LOCAL GOVERNMENT SURVEY 2018 - JUNE 2018 - WWW.PWC.CO.UK/LOCALGOV
Figure 2: ‘Cliff edge’ constant over time
We are confident that we will be able to make the necessary financial savings without
seriously impacting the quality of services delivery and outcomes in the (% agree)

 100

    80

    60
%

    40

    20

     0
               2015                  2016                 2017                   2018

            Next Year          Next 3 years        Next 5 years

                                                                  The local state we’re in – PwC’s annual local government survey 2018   6
THE LOCAL STATE WE'RE IN PWC'S ANNUAL LOCAL GOVERNMENT SURVEY 2018 - JUNE 2018 - WWW.PWC.CO.UK/LOCALGOV
Financial failure is anticipated              Figure 3: Confidence in the sector
by most in the next year                      Some councils will get into serious financial crisis in the...(% agree)
To date, councils have managed to find
a way through the challenges they face,         100
although there now seem to be growing             90
concerns when it comes to considering                                                             95                        93
                                                  80
the sector as a whole rather than their
                                                  70
own council.
                                                  60               74

                                              %
The proportion of all respondents who             50
believe that some councils will get into          40
serious financial difficulty in the next          30
year has leapt from just over half last
                                                  20
year to almost three quarters (74%)
                                                  10
this year (Figure 3). Meanwhile over
half (53%) think that some councils                0           Next year                     Next 3 years                Next 5 years
will fail to deliver the essential services
residents require over the next year
(Figure 4).                                   Figure 4: A fear of failure
                                              Some councils will fail to deliver essential services in the...(% agree)
Following a similar pattern to before,
confidence in the sector over the next            100
three and five years falls notably, with          90
almost all of our respondents fearing             80
that some councils will get into serious                                                                                     84
                                                  70                                              79
financial crisis in the next three to five
                                                  60
years, and 84% believing that some
                                              %

councils will fail to deliver essential           50
services in the next five years (similar          40               53
to last year).                                    30
                                                  20
Taken together, this is a stark reminder
                                                  10
of the significant challenges ahead for
councils, with austerity still casting a           0            Next year                     Next 3 years               Next 5 years
long shadow over the sector.

7
The view of the public                              Furthermore, less than a fifth (19%)                   In particular, only 41% of respondents
Our public polling indicates that                   of the public surveyed think that their                feel that their council is well equipped
there is also continuing opposition to              council has become more efficient                      with supply chain management
cuts with almost half (48%) of those                over the past five years – the same                    capabilities (although this is higher
surveyed opposing the idea that their               proportion as last year. A similar                     than last year’s 33%), while just
local council needs to reduce or close              proportion (16%) think that their                      over half feel they are well equipped
services or facilities (compared to 45%             council has become more effective over                 with commissioning and contract
last year). A similar proportion (49%)              the same time period.                                  management capabilities and
feel that their council has not kept them                                                                  commercial acumen (e.g. driving
well informed about the reasons for                 Building organisational resilience                     commercial income and realising the
closures or service reductions over the             and commercial acumen                                  full value of owned assets).
past 12 months.                                     With significant challenges ahead,
                                                    councils need to build organisational                  Investing in capabilities in these
Despite low levels of awareness, there              resilience and develop new skills                      areas will be important in building
are concerns about the impact of                    and commercial acumen in order to                      council resilience and developing
council closures or reductions. Over                be effective. While council survey                     the commercial acumen that will be
half (56%) of the public surveyed                   respondents are confident of their                     essential for success in future.
were concerned about the impact that                capabilities in areas such as leadership
reductions and closures will have on                (95%) and strategic financial
them personally (similar to last year, at           management (96%), they appear to
53%) and 61% were concerned about                   feel under-equipped in a number of
the impact on their local community                 significant areas that will be essential
(consistent with 60% last year). With               for their effective operation in the
further closures or reductions still                future (Figure 5).
likely in many areas, engaging the
public on the reasons for these changes
and addressing their concerns remains
an ongoing issue.

Figure 5: Commercial capabilities
My council is well equipped with the following capabilities

           Commercial acumen                                        56               23             22
                                                                                                                Tough questions on
                                                                                                                organisational resilience
  Information, governance and
          records managemen
                                                                                71             20 9             1. Is your council confident in its
                                                                                                                   approach to reducing costs,
                                                                    56                         37 7                developing innovative solutions
         Contract management
                                                                                                                   to commissioning and supply
                                                                                                                   chain management?
            Talent management                                           59                     32 9             2. Are you building the right skills,
                                                                                                                   capabilities and processes to
                     Leadership                                                                 95 4 1             secure organisational resilience and
                                                                                                                   manage key organisational risks?
                                                                                                                3. Does your council have the
                Commissioning                                     53                      33        14             commercial skills and acumen
                                                                                                                   needed to optimise revenue and
    Supply chain management                                  41                       39            20             realise the value of your assets?
                                                                                                                4. Do you have a plan for attracting,
                                                                                                                   developing and retaining a
Risk and portfolio management                                                   74              21 5               workforce with the skills and
                                                                                                                   capabilities that you will need
         Financial management                                                                   96 2 1             in future?
                                                                                                                5. How well is your council engaging
                                                                                                                   with residents and communities on
                                  0     10     20    30      40    50      60    70       80   90    100
                                                                                                                   service reductions, closures and the
                                                                   %                                               future shape of the council?
                                      Strongly agree/agree    Neutral      Strongly disagree/disagree

                                                                        The local state we’re in – PwC’s annual local government survey 2018          8
Making the most of new
technologies: digital
disruption and the use of data
There is a strongly felt opportunity in this year’s survey of an
intelligent digital dividend, which extends beyond saving costs:
nine in ten survey respondents expect digital will enable them
to engage communities in new ways and 80% expect digital to
enable improvements to service delivery.

But there are challenges to deliver
                                            Figure 6: The digital dividend – engagement and service delivery
this dividend with a new realism from
                                            Digital will enable us to (% agree)
councils on their capability to make
the most of new digital technology.
                                             100
Only 3 in 10 survey respondents
feel that their council is confidently
                                                                                                                                         90
embracing new technologies like AI              80                  85                           87
                                                                                                            83
                                                            80                                                                    80
and robotics (similar to the public’s
view). There is a particular gap in             60
                                                                                                                          63
data and analytics with only half of
                                            %

                                                                                         58
survey respondents confident in their                                      54
                                                40
councils’ capabilities in this area. The
pace of technological change and the
                                                20
complexity of implementation means
that the potential of new technologies
is not being maximised.                          0
                                                                  2016                          2017                            2018
In addition, more needs to be done to                Significantly reduce costs   Improve service delivery        Engage in new ways with communities
                                                                                                                 and residents
shift behaviour to enable people to get
the most from the technology available.
This includes moving more of the public
online: almost two thirds (62%) of the      Delivering the intelligent                          There is also an opportunity to use
public polled had not interacted with       digital dividend                                    digital to engage staff, suppliers
their council digitally in the past month   This year we are seeing the                         and residents in new ways, as we’ve
and 20% were not aware of any council       continuation of a trend that has                    found in our work with the London
services being available digitally. These   been notable over recent years with                 Borough of Waltham Forest (see Box).
proportions have hardly changed from        a further shift in the expectations of              However, whether we are at a tipping
last year suggesting a major challenge      what digital can deliver. While council             point in the delivery of the vision of
for councils to encourage their service     respondents still agree that digital will           smart cities is less clear, with only 25%
users to make the digital shift.            enable them to reduce costs (63%) and               of respondents planning to become a
                                            improve service delivery (80%), there               smart city.
There is also work to be done to            is growing recognition that digital will
make council staff more cyber               enable them to engage in new ways
savvy, with only 41% of our survey          with communities and residents, up
respondents confident that council          from 54% in 2016 and 83% in 2017 to
employees exhibit robust cyber              90% in 2018 (Figure 6).
security behaviours at work. This
highlights a continuing potential area
of vulnerability for councils.

9
Figure 7: Embracing new technologies 3
My council is confidently embracing the opportunities new technologies offer for better
local public services (% agree)

    80

    70                      76
    60
                                                    61
    50
%

    40

    30
                                                                             30
    20                                                       25                      26
                                    23
    10
      0
                              2016                     2017                       2018
            Survey respondents        Public
                                                             A digital divide?                                     Indeed, for the first time, there is
                                                             Digital disruption and new                            alignment between the confidence
                                                             technologies like AI and robotics                     of council respondents and that of
                                                             are enabling local government to                      the public, with only about a quarter
                                                             transform everything from the                         in both cases agreeing that their
                                                             back office to how they engage                        council is ‘confidently embracing’ the
                                                             with residents and communities.                       opportunities that new technologies
                                                             This year, it appears that council                    offer (Figure 7). This may also
                                                             leaders are recognising this and,                     reflect a growing realisation by
                                                             as a consequence, are also much                       councils that digital embraces many
                                                             less confident that they are fully                    challenges such as AI and robotics
                                                             embracing the potential to improve                    which have increasingly come to the
    Intelligent Digital: an                                  local services using new technology.                  forefront when the potential of new
    innovation challenge                                                                                           technologies is discussed (see Box).

    As part of their new digital
    strategy Waltham Forest Council
                                                             Robotics in Haringey
    is planning to enhance their use
    of digital to work smarter and
                                                             Like all Councils, the London                         Adjustment process and adding
    improve residents’ lives.
                                                             Borough of Haringey needs to make                     capacity to the Benefits Department
                                                             savings. The Council was therefore                    by freeing up the staff from the
    To help, the council utilised
                                                             looking for a solution where staff                    repetitive, time consuming Rent
    PwC's Innovation Crowdsourcing
                                                             would be freed up from the basic                      Adjustments process.
    service to ask their people, 'How
                                                             tasks to focus on the increasingly
    can digital improve our ways
                                                             complex cases that were causing a                     The results included processing
    of working and enhance our
                                                             backlog across the Council.                           time reduced from over 10 minutes
    residents' lives?'. In the space of a
                                                                                                                   per previous staff interaction to a
    three week competition, one fifth
                                                             We helped the Council identify                        robot that processes the claims in
    of their workforce submitted 90
                                                             where it was possible for Robotic                     less than a minute, 24 hours a day
    ideas and voted on which they
                                                             Process Automation (RPA) to                           and an equivalent saving of c5 Full-
    thought were the best ones.
                                                             make a difference e.g. by reducing                    Time Equivalents over a period of 4
                                                             error rates and increasing staff                      months which is now re-allocated to
    This insight and ideation not
                                                             productivity. This included                           more complex assessments.
    only enhanced the content of
                                                             designing and implementing an
    the strategy – it empowered
                                                             automated robotic solution for the
    their people to have a say on the
                                                             Council’s Housing Association Rent
    council's plans for digital.

3 This year the question was changed from recent years with the italicised text added in the following statement: “My council is confidently embracing the
   opportunities new technologies like Artificial Intelligence (AI) and robotics offer for better local public services.” As such, results are not directly comparable to
   previous years.
                                                                             The local state we’re in – PwC’s annual local government survey 2018                     10
11
Digital interaction with                        There is still, however, a growing public      Figure 9: Channel shift
the public                                      appetite to have more council services
We also asked the public about the              available online, particularly among
ways in which they currently engage             those who already use digital services                                          I would prefer
with their council (Figure 8). Over a           (Figure 9). Almost half (48%) say they                                          more council
                                                                                                                      48%       services to be
fifth accessed information on services          would prefer more online services,
                                                                                                                                available online
online (up slightly from 18% last year)         with a clear preference among younger
while 10% have used digital platforms           people (59% of 18-34 year olds)
to pay for services (9% last year).             compared to older generations (39% of
                                                55+ years).
However, almost two thirds (62%)
had not interacted with their council           A notable proportion of respondents                                             I prefer to interact
                                                                                                                                with my council
digitally in the past month and a fifth         to our public poll also still prefer to                               31% in person
(20%) are not aware of any council              interact with their council in person
services being available digitally. These       (31%) or by telephone (28%) although
proportions have hardly changed from            both are lower than last year (35% and
last year suggesting a major challenge          30% respectively).
for councils to encourage their service
users to make the digital shift.
                                                                                                                                I prefer to interact
                                                                                                                                with my council by
                                                                                                                      28%       telephone

Figure 8: Digital interaction with the public

                                                                        Accessed information on services digitally
                                                                        (e.g.website, app etc.)
                                                                 21%

                                                                              10%   Used a digital platform to pay for public
       None of these                                                                sector services (e.g. council tax)
                        62%

                                                                              8%    Used a digital platform to interact with the
                                                                                    customer service department

                                                                         7%    Gave feedback on services via
                                                                               a digital platform
                                                                   6%
                                                            5%
                                                       2%               Engaged with others members of the public
                                                                        (e.g. on an online forum)
       Other (please specify)
                                                                     Engaged with your local council vis social
                                                                     media (e.g. Twitter, Facebook etc.)

Respondents were able to select multiple responses for their use of online services

                                                               The local state we’re in – PwC’s annual local government survey 2018             12
Doing more with data                                   Indeed, our survey also suggests that              Figure 10: Data and analytics
Transformation of public services                      there is a capability gap in terms of data
requires not only new digital processes                analytics. While councils feel relatively
but also the ability to create new                     confident in their business intelligence
                                                                                                                                    Say their council
insights from data generated. It is                    and information governance                                                   is utilising data
therefore significant to note that data                capabilities, at 64% and 71%                                          46%    analysis to inform
and analytics is another key area that                 respectively, only 48% are confident of                                      decision-making
councils are beginning to tap into                     their capabilities when it comes to data                                     and strategy
and one where there is growing use                     analytics, although this has increased
(Figure 10).                                           from 32% last year (Figure 11).

Almost half of all council survey                      Of course, the new General Data
respondents (46%) agree that their                     Protection Regulation (GDPR) also
council uses data analytics effectively                poses additional challenges for
to inform decision-making and                          councils, although only one in twenty
strategy, up from a third (33%) last                   (5%) of the respondents surveyed felt
year. However, this also highlights                    unprepared for its introduction.
that there is still significant scope for
councils to interpret and use data more
effectively in areas such as anticipating
and managing demand.

Figure 11: Data and information capabilities
My council is well equipped with the following capabilities

     Information, governance and
            records management
                                                                                71           20    9

                    Data analytics                               48                    37          15

             Business intelligence                                         64                  32 4
                                     0     10     20     30     40    50   60    70     80    90    100
                                                                      %
                                         Strongly agree/agree   Neutral    Strongly disagree/disagree

13
Cyber risks                                    In response to cyber threats, over
Clearly, new digital and data                  half (58%) of council respondents to                       Tough questions on digital
approaches offer great opportunities           our survey are confident that their                        disruption and data
                                                                                                          1. Do you have a clear vision of
for local authorities, but it is important     approach to digital security will cope
                                                                                                             how new digital technologies can
to put in place the relevant safeguards        with cyber threats (Figure 12). Almost                        engage residents and communities
for privacy and also to ensure cyber           two thirds (63%) say they actively                            and enable the delivery of outcomes
and information security.                      monitor people-related cyber security                         (including becoming a ‘smart city’)?
                                               risks, but only 41% are confident                          2. Are you harnessing emergent digital
This is a concern for the public, with         that their employees exhibit robust                           technologies to create new value,
only around a third of our public              cyber security behaviours at work,                            experience and insight?
                                                                                                          3. Are you investing in your capability
polling respondents trusting their             highlighting a continuing potential
                                                                                                             around data, insight and predictive
council to manage and share their data         area of vulnerability for the majority                        analysis and using this to drive
and information appropriately (35%)            of councils.                                                  smarter, earlier interventions?
and to protect their personal data and                                                                    4. Have you the business intelligence
information from cyber attacks (37%).                                                                        and real time information you
This is perhaps unsurprising given                                                                           need to manage demand and
recent high profile examples such as the                                                                     resource deployment?
                                                                                                          5. Do you have the appropriate
NHS ransomware attacks in 2017.
                                                                                                             governance and controls in place
                                                                                                             to safeguard data and respond to
                                                                                                             cyber risks?

                                  Figure 12: Cyber security
                                  Considering cyber security, my council...

                                                 Actively monitors people-related
                                                             cyber security risks                                              63             26        11
                                          Is confident that our employees exhibit
                                        robust cyber security behaviours at work
                                                                                                               41                          44           15

                                                  Is confident that its approach to                                        58                  33        9
                                       digital security will cope with cyber threats
                                                                                       0     10     20    30      40     50    60    70     80     90    100
                                                                                                                         %

                                                                                           Strongly agree/agree     Neutral    Strongly disagree/disagree

                                                                 The local state we’re in – PwC’s annual local government survey 2018                    14
Reforming and transforming
local public services

Beyond technology, place based transformation is seen to
involve collaboration across a place with a need to focus on, and
measure, outcomes and the related costs. Councils feel they are
making progress in this area. Six out of ten survey respondents
agree that councils should be more responsible for facilitating
outcomes rather than delivering services, and a similar proportion
now feel able to measure outcomes and assess impact which is key
to delivering place based transformation.

However, taking the example of health
and social care integration, while the
                                           Figure 13: Delivering outcomes
appetite for reform remains, barriers to
integration are apparent when seeking
to deliver joined up public services
                                               70
across a place with mixed views on
engagement e.g. on the STP process.            60
The barriers to further integration                               58    58
                                                                                                60
centre on institutional, strategic and         50
                                                                                                                       51
cultural differences between the NHS
                                               40                                        44
and councils.
                                           %

                                               30
Delivering and
measuring outcomes                             20                                                              25
Councils recognise their role in
                                               10
facilitating outcomes, and feel they
are becoming better at measuring                0
them and the related costs. The same                        Councils should be       We fully understand  We fully understand the
                                                           more responsible for        how to measure    cost of securing outcomes
proportion of respondents (58%)                            facilitating outcomes    outcomes and assess (on a multi-organisational
agree that councils should be more                         rather than delivering    the impact we have    basis) across our area
                                                              service solutions
responsible for facilitating outcomes
rather than delivering service solutions            2017   2018
as last year (Figure 13).

15
In terms of delivering public service                                  In terms of delivering place based
reform, a similar proportion (60%)                                     transformation, perhaps unsurprisingly
feel they now understand how to                                        the key partners are predominantly
measure outcomes and assess the                                        seen to come from the public sector,
impact they have while a half (51%)                                    including other local public service
feel their council fully understands the                               providers in education and health
cost of securing outcomes on a multi-                                  (see Figure 14).
organisational basis across their area.
                                                                       However, over half of respondents
It’s worth noting that there is less                                   also see Small and Medium-sized
expectation that structural change will                                Enterprises (SMEs) and third sector
drive the reform agenda. Only about                                    organisations as part of the approach,
a third (35%) of respondents expect                                    perhaps building on the so-called
that significant reorganisation of two                                 Preston model supporting procurement
tier local government will happen by                                   from locally based organisations. In
2020 (compared to 43% in last year’s                                   contrast, fewer respondents see their
survey) although since we completed                                    councils looking to collaborate with big
this survey the Minister has stated that                               business or trade bodies.
"there is a clear space and scope for
unitary authorities."

Figure 14: Key partners in transformation
The following are key partners to collaborate with the council and deliver place based transformation

             80

             70                                                          75

             60         65                                                                              63
                                     59        59          58
             50                                                                                 53              51        50
       %

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                                                                                        The local state we’re in – PwC’s annual local government survey 2018   16
Health and social                            In terms of the future of integration, a
care integration                             much higher proportion of respondents
The transformation of public services        this year feel confident that the
locally can be seen in the case of health    extension of the social care precept will
and social care integration. Four fifths     help address the social care funding
(81%) of our survey respondents agree        challenge (38% compared with 13%
that integration will have a positive        last year), 32% believe their council
impact on health outcomes, but only          will be part of an accountable care
28% think it will support economic           organisation within the next three
growth or generate council savings           years (same as last year), while 39%
(Figure 15).                                 (up from 32% last year) agree that their
                                             council has been fully engaged in the
In terms of moving the health and            STP process (Figure 16).
social care agenda forward, in this
year’s survey only 19% of respondents
(compared to 25% last year and 60% in
2016) said that a devolution deal is part
of their strategy for health and social
care integration. This perhaps reflects
how the pipeline of devolution deals
has stalled over the past year.

                      Figure 15: Integrating care – a case study in reforming local public services

                                                                                    Further integration of health and social care will...

                                                     Support economic growth                        28                      35                           37

                                               Generate savings for my council                     28                 25                                 47
                                              Have a positive impact on health                                                              81       17 1
                                             outcomes for the local population

                                                                                    0      10     20     30      40   50        60     70    80     90       100
                                                                                                                      %
                                                                                        Strongly agree/agree     Neutral        Strongly disagree/disagree

                      Figure 16: The future health and care integration

                              The extension of the social care precept will help
                                     address our social care funding challenge                              38             20                            42
                                     My council will be part of an accountable                         32                  26                            42
                                      care organisation within the next 3 years
                         My council has been fully engaged in the STP process                               39                  26                       35
                                    A devolution deal is part of our strategy for            19                  27                                      54
                                            health and social care intergration

                                                                                    0      10     20     30      40   50        60    70     80     90    100
                                                                                                                      %
                                                                                        Strongly agree/agree     Neutral        Strongly disagree/disagree

17
Views on barriers to integrating care,
however, highlight the ongoing conflict         Making money work better in the NHS
of approaches to strategy and delivery          PwC recently worked with the Healthcare Financial Management
in the health and adult social care             Association (HFMA) to consider future financial flows within
systems and a perceived lack of focus           the health and care system in England. We spoke to NHS finance
within the NHS system on outcomes               professionals, non-executive directors and NHS leaders across the
and prevention (see Box).                       country and, with the help of the HFMA, we surveyed over 200
                                                finance professionals to understand what they think about the way
                                                money works in the healthcare system and how it could be improved.
                                                76% felt the current funding structures in the NHS are not fit
                                                for purpose.

                                                We found an integrated model of care is undoubtedly the
                                                right direction for the UK healthcare service and made several
                                                recommendations, aimed at re-aligning financial flows with the
                                                emerging place based architecture of the system, giving systems
                                                better long term line of sight over their funding envelope, and
                                                ensuring that money is directed towards incentivising better patient
                                                outcomes. For more information, visit www.pwc.co.uk/healthcare

  “Institutional                 “A realistic view on           “The STP Footprint               “The focus of
  parochialism and               need not one assessed          does not relate to the           discussions continues
  a lack of focus on             on the basis of                local communities                to be about acute
  outcomes in the NHS”           available finance”             it should be there to            health and social care
                                                                serve”                           issues rather than
                                                                                                 preventative policies
                                                                                                 such as better housing,
                                                                                                 improved leisure offer”

  “Self-interest of              “Lack of a strategic           “I am not convinced              “The continuing
  individual CCGs and            approach by NHS                it'structural                    focus on funding the
  NHS Trusts”                    partners who can only          integration that's               acute part of NHS
                                 plan forward for a             needed. We need to               healthcare, at the
                                 year at most”                  reset the objectives             expense of community
                                                                of our health and                based/preventative
                                                                care systems and                 services”
                                                                incentivise radical
                                                                shifts to keep people
                                                                well and at home in
                                                                vibrant communities”

  Tough questions on public service reform
  1. Do you have a good               3. To what extent do you need
     understanding of the business       to consider reorganisation,
     and operating models needed to      for example, creating
     deliver key economic and social     new unitary authorities or
     objectives and outcomes across      combined authorities?
     organisational boundaries in     4. Are your delivery models fit
     your place?                         for purpose, including being
  2. Is your council fully engaged       tax efficient?
     in health and social             5. How well are you collaborating
     care integration?                   with other public sector partners
                                         to manage, rationalise and share
                                         your property and other assets
                                         across a place?

                                                              The local state we’re in – PwC’s annual local government survey 2018   18
Place based growth:
collaboration, barriers and the
impact of Brexit
Collaboration is also a feature of place based growth,
                                                                                                        What should a good
especially with Local Enterprise Partnerships (LEPs). Council
                                                                                                        local industrial strategy
priorities for place based growth focus on the key enablers –                                           comprise?4
skills, infrastructure (housing and transport) as well as inward                                        A successful local industrial
investment. However, significant barriers remain in each of these                                       strategy, like the national one,
areas, with 72% of our respondents identifying lack of investment                                       needs to be based on a consistent
                                                                                                        long term approach to policy
in infrastructure as a key barrier, 61% a lack of influence over
                                                                                                        aimed at improving the local
skills and 60% a lack of affordable or suitable housing.                                                economic conditions affecting
                                                                                                        businesses across all sectors – a
With Brexit next year, respondents                  Collaboration for growth                            so called ‘horizontal’ approach.
see high impacts on their councils                  Delivering growth requires the                      It also needs to set out how
for trade, FDI and funding. Yet only                interaction of councils with many                   places will choose their priorities
12% of respondents see their council                local partners. In terms of working                 for investment to deliver local
proactively promoting city-to-city                  with others to deliver place based                  economic success.
links overseas to find investment                   growth, LEPs and other public sector
and promote trade for their local                   agencies are both identified as key                 In addition, the outcomes from
economies. In addition, 74% are not                 partners by just over three quarters of             key policies need to be delivered
confident that central government                   survey respondents.                                 efficiently and effectively so that
will engage with cities and local                                                                       economic benefits are realised
government in reshaping regional                    Indeed, for the first time LEPs are                 in a timely fashion, particularly
investment and regeneration funds                   marginally the most important,                      when it comes to infrastructure
beyond Brexit.                                      perhaps reflecting their now central                (given the long lead times). This
                                                    role in formulating Local Industrial                means identifying interventions
The impact of Brexit is also a source               Strategies in non-mayoral areas.                    and making sound evidence-
of uncertainty for the public: almost               A large majority of those surveyed                  based investment decisions which
half (46%) of the public neither agree              (84%) see their council working with                deliver value, realise economic
nor disagree that their local area will             their local LEP(s) to develop a local               and social impacts and outcomes
benefit from leaving the EU.                        industrial strategy (spanning skills,               as well as manage risks.
                                                    infrastructure, innovation and business
                                                    growth) and deliver a joined up                     Drawing on PwC’s submission
                                                    approach to local growth (see Box).                 on the Industrial Strategy Green
                                                                                                        Paper,5 any local industrial
                                                                                                        strategy needs to span at least
                                                                                                        three key dimensions: skills and
                                                                                                        education; infrastructure; and
                                                                                                        innovation and business growth.

4 Drawn from‘Good Growth for Cities 2017’, PwC/Demos, November 2017 https://www.pwc.co.uk/
   industries/government-public-sector/good-growth.html
5 A modern industrial strategy to underpin UK economic success', PwC, 2018 www.pwc.co.uk/industries/
   governmentpublic-sector/insights/modern-industrial-strategyfor-economic-success.html

19
Universities

                                                                                                                                63%

In addition, about two thirds of our              Figure 17: Key partners for growth
respondents view universities further
education (FE) colleges and SMEs as
key partners (Figure 17).                                                                                                             FE colleges
                                                                                   Local Enterprise
                                                                                   Partnerships
Barriers to growth                                                         77%                                                  61%
In terms of specific barriers to
economic growth, lack of investment in
infrastructure (72%), lack of influence
over skills policy (61%) and lack of
affordable or suitable housing (60%)
continue to be the top three concerns                                              Public sector                                      SMEs
(Figure 18). Noticeably, however, all                                              partners
                                                                           76%                                                  61%
of these concerns are lower than for
last year.

                                                                                   Universities

                                                                           63%

                                                                                   FE colleges

                                                                           61%
Figure 18: Barriers to economic growth

                                                                                                        70
                Lack of affordable or suitable housing
                                                                                                  60

Lack of investment in digital connectivity / broadband
                                                                                     47
                                                                                   SMEs
                                                                                         50
                                                                           61%

                                                                                                                 79
                  Lack of investment in infrastructure
                                                                                                        72

                   Lack of influence over skills policy                                                 67
                                                                                                  61

                                                                                42
            Lack of capacity within the local authority
                                                                               38

                                                                 17
Difficulty in agreeing collaborative arrangements with
                               private sector partners           18

     Difficulty in agreeing collaborative arrangements                    31
                           with public sector partners                 26

                                                          0    10     20      30    40     50      60       70        80   90
                                                                                         %
                                                              2017     2018

                                                                      The local state we’re in – PwC’s annual local government survey 2018           20
The impact of Brexit                       Figure 19: The impact of Brexit
With growing clarity on the                Thinking about the potential consequences of leaving the EU, to what extent will the
parameters of a likely future Brexit       following factors impact on our council?
deal, particularly with the transitional
agreement, there has been an increase              Foreign direct investment
                                                               into your area                             44                  28                28
in the respondents to our survey who
felt that the areas of greatest impact                 International trade of
                                                                                                                 51              26             22
on their councils would be on trade,                 businesses in your area
foreign direct investment (FDI) and
funding (Figure 19).                                       Funding received                                  49             21                  29

But only 12% of respondents say                       Your human resources                        31                   31                       38
their councils are proactively going
abroad on a city-to-city basis to find                Policy and regulations                           38                        38             24
investment, develop trading links
                                           Revenue from business rates and
and promote exports. In addition,              any other local taxes / duties                           41                    31                28
74% are not confident that central
                                                                                0     10    20     30       40    50   60      70     80   90    100
government will engage with cities
                                                                                                                  %
and local government in reshaping
regional investment and regeneration                                                High impact    Neutral       Low impact

funds beyond Brexit. These are both
important areas for action.
                                           The public view on the impact of
                                           Brexit on the local economy                                 Tough questions on place
                                           In terms of the impact on local                             based growth
                                           economies, the impact of Brexit is also                     1. How ‘investor ready’ are you in
                                           a source of uncertainty for the public:                        terms of having stakeholders
                                           almost half (46%) of the public neither                        aligned behind a shared vision
                                                                                                          and identity for your area and the
                                           agree nor disagree that their local area
                                                                                                          priorities for good growth?
                                           will benefit from leaving the EU.                           2. Do you have a deliverable strategy
                                                                                                          and feasible plans to meet your
                                                                                                          infrastructure needs, including
                                                                                                          housing, transport and skills?
                                                                                                       3. How well are you engaging
                                                                                                          with the private sector to boost
                                                                                                          productivity and meet local
                                                                                                          employers’ needs?
                                                                                                       4. How will your local economy
                                                                                                          fare in terms of trade, FDI and
                                                                                                          investment on leaving the EU?
                                                                                                       5. Can you do more to help local
                                                                                                          businesses by proactively going
                                                                                                          abroad on a city-to-city basis to
                                                                                                          find investment, develop trading
                                                                                                          links and promote exports?

21
The local state we’re in – PwC’s annual local government survey 2018   22
The new local
government landscape:
is devolution stalling?
With so much dealmaking in government focused out
towards the EU, it may seem that there has been too little focus
and capacity to deliver the next stage of the much promised
‘devolution revolution’.

This appears to be confirmed in our
                                            Figure 20: Prospects for further devolution
survey where there is a perception
                                            By the end of the parliament, my council will have significantly more powers and responsibilities
that devolution has stalled, with only
13% of respondents agreeing that
their council will have more powers         March 2015              22               26                                   52
and responsibilities in 2022, similar to
12% last year and well down from 33%          May 2015                     33       13                                    55
in May 2015 when the Conservative
government led by David Cameron             March 2016              20                      35                          45
came into power.
                                            March 2017        12                    32                                    56
Expectations of further devolution
have hit rock bottom, with only one in      March 2018        13             23                                           64
ten respondents expecting to be part of
a combined authority by 2021. Barriers                   0     10     20    30      40      50     60   70    80     90    100
to further devolution are seen to be                                                        %
jointly the mayoral model and local                          Strongly agree/agree        Neutral    Strongly disagree/disagree
political relationships as well as a lack
of potential powers to be gained.

The new cohort of metro mayors may          Where next for devolution?                              Since 2015 our survey has charted the
yet give devolution a jump start as         Our polling shortly after the 2015                      rise and, until last year, slight decline
their collective impact starts to be felt   General Election showed that 33% of                     in those who believe that their council
but this will take time as the public       survey respondents believed that their                  will be part of a combined authority
increasingly understands the role of        council would have greater powers and                   by the end of this Parliament, peaking
a mayor and can see the impact that         responsibilities by 2022, which fell to                 at 69% in March 2016 and down to
they can have.                              only 12% in last year’s Survey.                         47% last year. Our survey this year,
                                                                                                    however, shows how dramatically
                                            This year shows a continuing low level                  opinion has change with a sharp
                                            of expectation for increased devolution                 decline to only one in ten (11%) of
                                            (Figure 20). Only 13% of respondents                    those surveyed who think they would
                                            think their council will have more                      be part of a combined authority by the
                                            powers and responsibilities by the end                  end of this Parliament. It appears that
                                            of this Parliament, similar to last year                confidence in further devolution has hit
                                            but with a hardening of the undecided                   rock bottom.
                                            and with two thirds disagreeing or
                                            strongly disagreeing.

23
Why has devolution stalled?                  Figure 21: Barriers to devolution
It is little surprise that the mayoral
model is still identified as a key barrier
to devolution, with 74% of respondents
                                                  Lack of potential powers gain                                                 63            17             20
citing this as an issue. However, local
                                              Increase in potential financial risk                     34                        31                           35
political relationships are now of
almost equal importance at 73% (up                Lack of potential funding gain                                       53              21                    26
from 62% last year) with concerns
on the lack of potential powers to be        The mayoral modelling requirement                                                         74      9             17
gained not that far behind (Figure 21).
                                                             Difficulty agreeing
                                                          economic geography                                              58           15                    27
Fiscal devolution: shifting
to business rates and more                          Local political relationships                                                      73      12            15
radical options                                                                     0      10    20    30        40      50      60      70    80       90    100
On the subject of being prepared for                                                                                     %
the shift from grant funding to business                                                Strongly agree/agree          Neutral        Strongly disagree/disagree
rate income, there has been a step jump
from last year (when just over half of
respondents said they were prepared):
almost three quarters (73%) of
respondents say their council is ready
(Figure 22).
                                             Figure 22: Readiness for business rates
                                             My council is prepared for the shift from grant funding to business rate income

                                                                           2016                                  46                           36             17

                                                                           2017                                         54                    28             18

                                                                           2018                                                        73          16        11
                                                                                    0     10     20    30        40      50     60       70    80       90    100
                                                                                                                         %
                                                                                        Strongly       Neutral         Strongly
                                                                                        agree/agree                    disagree/disagree

                                                             The local state we’re in – PwC’s annual local government survey 2018                            24
IFS on business rates retention             • Respondents from councils that
     fiscal devolution                             have been relative gainers from the
     The Institute of Fiscal Studies (IFS)         existing BRRS are more optimistic
     used recent surveys from the Local            about the local impact of a 100%
     Government Intelligence Unit                  BRRS. Those from areas where
     (LGIU) and last year’s Local State            recent economic growth is higher
     We’re In survey to examine council            are also more optimistic, although
     decisionmakers’ views on the impact of        this optimism may be misplaced:
     business rates retention scheme (BRRS)        other research suggests there is
     on revenues and incentives across             little relationship between economic
     England. Key findings included:               growth and business rates revenue
                                                   growth, at least during the period
     • Two-thirds of survey respondents            between 2010 and 2015.
       say that it is impossible to work out
       whether their council has gained          • Those expecting to gain from a
       financially from the current BRRS.          100% BRRS are also more likely
       This may be because they are                to say that such a scheme would
       unsure what the funding system              provide an incentive to councils
       would otherwise have looked like.           more generally to promote
                                                   economic growth.

     However, like last year there remains        Looking at other options for greater
     a divide over how funds should be            fiscal devolution, almost all of our
     redistributed, with a third (36%)            council respondents (96%) want greater
     agreeing that the incentive for growth       freedom over the structure and level of
     should have precedence while two             Council Tax while nine in ten want to
     thirds (64%) agreeing that revenues          have greater freedom over the structure
     should be largely redistributed to ensure    and level of business rates and to be able
     that all areas can provide services to a     to retain 100% of right to buy receipts.
     reasonable standard.                         In comparison, more radical options had
                                                  less support including being assigned
     We asked a similar question of the public    a proportion of income tax (58%) and
     and received very similar responses          having control over a locally variable
     to last year: 26% agreed that councils       income tax (54%).
     should be able to keep all of the revenue
     raised by local taxes regardless of
     need, 36% thought there should be a
     balance between being able to keep
     revenue while ensuring that every area
     had enough to meet their needs, and
     19% agreed that local taxes should
     be allocated to whichever areas need
     them most.
25
Figure 23: The public’s view on devolution

                     Ministers should have less power over local services such
                                as hospitals and policing and local government            16                             43                          41
                                       More directly elected mayors should be                  24                              46                 30
                                        introduced to run our towns and cities
                                 The current balance of power between central                        32                               49          18
                                           and local government is about right
                           I am confident that local councillors and officials are                      34                             45              21
                         up to the job of having more power over local services
                                                                                   0     10     20    30     40     50    60    70        80    90    100
                                                                                                                    %
                                                                                       Strongly disagree/disagree   Neutral         Strongly agree/agree

The public’s view on devolution                Does this mean a bleak future for
                                                                                                          Tough questions on devolution
Our public polling suggests that public        mayors? Not in our view. For instance                      1. How can local leaders in
appetite for devolution remains, with          in London, where the Mayor has been                           public, private and third sector
only 18% agreeing or strongly agreeing         established for some time, there is a                         organisations work better together
that the current balance of power              more positive view with 30% of our                            across your place to deliver a
between central and local government           polling respondents agreeing that the                         devolution dividend?
                                                                                                          2. How prepared are you for the
is right (the same as last year) and 41%       Mayor of London has had a positive
                                                                                                             shift to business rates and the
(similar to 43% last year) agreeing or         impact and only 22% disagreeing. Our
                                                                                                             financial freedoms and incentives
strongly agreeing that Ministers should        local authority survey respondents                            you will need to deliver place
have less power over local services and        in councils with elected mayors also                          based growth?
local government should have more              on balance see a positive impact                           3. Can you provide evidence to
power (Figure 23).                             (although the numbers who responded                           central government of the case for
                                               to this question are too low to be                            further devolution or for setting up
                                                                                                             a combined authority?
There also seems to be an appetite for         statistically representative).
                                                                                                          4. Do you have the governance
more local accountability and control
                                                                                                             arrangements in place to be
through the mayoral model with nearly          This confirms our wider research that                         held account for the delivery
a third (30%) of the respondents to our        once the public understands the role                          of outcomes?
public poll believing that more directly       of a mayor and can see the impact that                     5. Do you understand the risks
elected mayors should be introduced to         they can have, they generally become                          inherent in taking on additional
run our towns and cities.                      more in favour of the mayoral model.                          powers, services or funding and
                                                                                                             how are you managing these?
                                               So if the metro mayors elected last
However, only 21% of the public polled         year can make their mark and prove
are confident that local councillors           their worth to their electorates, over
and officials are up to the job of             time their collective impact can have a
having more powers (the same as last           wider impact.
year’s poll). In addition, in areas with
directly elected mayors only a fifth
(20%) of the respondents to our public
polling feel that their mayor has had a
positive impact on their local area in
the past year.

                                                                The local state we’re in – PwC’s annual local government survey 2018                      26
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