Councils face ‘volatile, unprecedented and unpredictable environment’

Councils are facing severe financial pressures and major service reforms at a time when they need to play a pivotal role in recovery from Covid-19, a new report has said.

The Accounts Commission – the public spending watchdog for local government – has warned councils are dealing with increasing demand, service backlogs, and high absence levels and skill shortages among frontline staff.

At the same time, they are facing a lack of certainty and flexibility over funding, while juggling national priorities and other long-standing pressures, including rising poverty.

This has created an “increasingly volatile, unprecedented and unpredictable environment” in which they operate, the Commission has said.

Chair William Moyes said: “Pressures on councils and their communities have intensified from spiralling inflation and significant increases to the cost of living. This has direct and unintended consequences on councils at a time when they sought a period of stability to tackle the impacts of the pandemic.

“Councillors and senior officers must use learning from the past two years, working with their partners and communities in the recovery, renewal and difficult decision making about the future of services.”

The 2022 report, which follows the recent local government election, recognises the pressures put on councils by the pandemic.

But it also highlights some of the efforts made by councils to improve collaborative working, which it says will help recovery and improve outcomes.

It calls for workforce plans to be updated, taking into account new ways of working and the need for wellbeing support, and for councils to improve their data tools to support performance monitoring and service management.

Regarding the closure of some services during the pandemic, the report highlights not everything is back to pre-pandemic levels which is hitting those most in need hardest. It says councils must evaluate these impacts to better tackle underlying inequalities.

Flexible governance and decision-making structures should also be considered, it says, including working with local communities and the voluntary sector.

National policies which are placing additional pressure on local authorities include social care reforms and climate change.

The report warns that plans for the new National Care Service carries “challenges” and says that “focusing on such a major transformation will also risk a diversion from tackling the immediate challenges within the social care sector.”

On climate change, it calls for “clearer plans” from councils on how they will achieve net zero.

The report also says Brexit is exacerbating many of the challenges councils face, particularly higher prices and shortages of resources, and the uncertainty surrounding the loss of EU structure funds. It points to a lack of understanding about how the Shared Prosperity Fund – the UK government’s plan to replace EU funds – will work.