THE LOCAL STATE WE'RE IN PWC'S ANNUAL LOCAL GOVERNMENT SURVEY 2018 - JUNE 2018 - WWW.PWC.CO.UK/LOCALGOV
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June 2018
The local state we’re in
PwC’s annual local
government survey 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
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
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
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
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
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
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
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.
7The 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 8Making 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.
9Figure 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 1011
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 12Doing 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
13Cyber 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 14Reforming 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).
15In 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 16Health 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
17Views 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 18Place 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
19Universities
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 20The 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?
21The 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.
23Why 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 24IFS 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.
25Figure 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 26You can also read
