This document summarizes a presentation given by Guy Clifton of Grant Thornton UK LLP to the PPMA Annual Seminar on April 17, 2015. The presentation explores possible futures for English local government through the development of scenarios. It outlines the national context including austerity measures and demographic changes. It then discusses the financial challenges faced by local governments and how they are seeking to maintain viability. Six potential scenarios for 2020 are presented: adaptive innovation, running to stand still, nostril above the waterline, wither on the vine, just local administration, and imposed disruption. Attendees provided feedback on which scenarios best represent their current and future positions. The presentation concludes with four recommendations for political parties, Whitehall, local governments

1. © 2015 Grant Thornton UK LLP. All rights reserved.
2020 Vision
Exploring finance and policy futures for English
Local Government
PPMA Annual Seminar
17 April 2015
Guy Clifton

2. © 2015 Grant Thornton UK LLP. All rights reserved.
• Introduction to 2020 Vision
• Context – the national picture
• The challenge of the next ten years
• Possible future scenarios
• Conclusion and recommendations
Agenda

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2020 Vision: our methodology
• A desk top review of literature on the future of local government,
forming an initial discussion paper
• Discussions and interviews on the discussion paper with politicians
and chief executives and senior managers from local government
• International comparisons drawn from literature and academic
discussion
• Development of a further paper to develop analysis and scenarios
• Scenario testing at round table events with local government
chief executives
• Amendment of analysis and scenarios and development
of the report

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The national picture
• Fiscal consolidation and austerity
– SR10/SR13
• Demographic and technological change
• The consequences of the Scottish referendum – devolution?
• Regional differences

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Financial and economic challenges
Challenge
• What will 2019/2020 look like without concerted action?
• Only half way through the planned period of fiscal
consolidation
• The Local Government Association (LGA) anticipates a
£14.4bn shortfall in the funding required in 2019/20
• LGA asserts that 60% of councils are no longer
able to meet the budget challenge through
efficiency improvements

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Anticipated funding against pressures for
individual councils in 2019/20
Council with lowest
level of anticipated
funding
Mean Council with highest level
of anticipated funding
Type of council
London borough 57% 74% 89%
Metropolitan district 55% 71% 81%
English unitary 66% 79% 90%
Shire county 73% 82% 99%
Shire district 65% 94% 100%
Region
East Midlands 66% 79% 100%
East of England 65% 83% 100%
London 57% 74% 89%
North East 65% 74% 80%
North West 62% 75% 100%
South East 71% 84% 100%
South West 65% 83% 100%
West Midlands 68% 76% 100%
Yorkshire & Humberside 55% 73% 100%
Deprivation
Most deprived (Ranks 1 - 50) 55% 70% 99%
Ranks 51 - 100 64% 75% 100%
Ranks 101 - 150 65% 78% 100%
Ranks 151 - 200 76% 81% 100%
Ranks 201 - 250 77% 85% 100%
Ranks 251 - 300 80% 84% 100%
Least deprived (Ranks 301 - 353) 65% 91% 100%
Source: Local Government Association, 'Future funding outlook for councils 2014', p19-20

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Approaches to balancing the books – LGA
analysis
• Maximising income through investment, fees and charges: 40%
• Using reserves to support revenue budget: 38%
• Increasing the local tax base and New Homes Bonus receipt:
12%
• Reviewing how assets can be used more effectively: 12%
• Changes to council tax support: 6%.

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Economic issues that local government
must consider
the importance of
economic thinking
technology &
Moore's Law
uneven
productivity
growth
income
elasticity of
demand
price
discrimination
price elasticity
of demand
public goods
and market
failure

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The financial focus of councils – how they
are seeking to maintain viability
Type of council Financial focus
Unitary  Efficiency and rationalisation (including reductions in staff terms and
conditions)
 Service reductions
 Charge increases
County  Efficiency and cost reduction
 Service re-design (including devolution to parishes and the community
sector)
 Income generation and application of technology
London borough  Economic growth
 Collaboration and partnerships
 Seeking to help communities be more resilient to reduce demand
District  Commercialisation
 Income generation
 Prioritisation (including changing service standards)

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2020 Vision: Possible scenarios

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Voting buttons
• As we progress through the scenarios, we have included a
number of questions. We would like your views.
• We understand that this is the first you will have seen of
these scenarios, so we ask for your initial thoughts on them
and how you feel they apply to your organisation.

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Adaptive innovation
• Councils creatively redefine their role
• Able to actively affect own operating environment
• Close partnership working with other authorities

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To what extent do you believe your council can
identify with this scenario?
A. Completely
B. A reasonable amount
C. To a small extent
D. Not at all
Com
pletely
A
reasonable
am
ountTo
a
sm
allextent
Notatall
9%
0%
23%
68%

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Running to stand still
• Councils are led and managed well
• Can see a positive future provided they
maintain pace and there are no major shock

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How much of your Council is 'running to stand
still'?
A. Most or all of it
B. About 50%
C. Very little
D. None at all
M
ostorallofit
About50%
Verylittle
Noneatall
17%
0%
22%
61%

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A nostril above the waterline
• Councils acting with short-term view
• Hand to mouth existence
• Even a small external change can represent a
challenge to their viability

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How far do you agree with the 'nostril above the
waterline' scenario for your council?
A. Completely, it represents
the most likely outcome
B. It is distinct possibility
given the challenges
C. It is unlikely
D. Not at all
Com
pletely,itrepresents...
Itisdistinctpossibilitygi...
Itisunlikely
Notatall
5%
18%
41%
36%

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Wither on the vine
• Councils have moved from action to reaction
• Finances and capacity not sufficient to the task
• Retreating into delivering statutory services
only, run at the minimum

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To what extent are you worried that your
council could 'wither on the vine'?
A. It is serious concern
B. There are aspects I find
concerning
C. A minor consideration
D. Not at all!
Itisseriousconcern
There
areaspectsIfind
...
A
m
inorconsideration
Notatall!
4%
39%39%
17%

20. © 2015 Grant Thornton UK LLP. All rights reserved.
Just local administration
• Council have lost the capacity to deliver services
• They have either handed back the keys
or
• They have had responsibility for significant
services taken from them

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Do you see any part of your Council being
threatened by this scenario in the next 5 to 6
years given the challenges we face?
A. Yes, it is an growing concern
B. Yes, but only in small parts
C. No, but I believe I may in the
near future
D. Not at all, it isn't a possibility
Yes,itisan
growingconcern
Yes,butonlyin
sm
allparts
No,butIbelieve
Im
ayin...
Notatall,itisn'tapossibi...
0%
59%
14%
27%

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Imposed disruption
• Local authorities at a decisive point
• The challenge of adults' and children's social care
• Local government's constitutional position
• Diversity within the sector and its bearing on
decisive action

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Which of the six scenarios do you feel best
represents the position of your Council?
A. Adaptive innovation
B. Running to stand still
C. Nostril above the waterline
D. Wither on the vine
E. Just local administration
F. Imposed disruption
Adaptiveinnovation
Runningto
stand
still
Nostrilabove
thew
aterline
W
itheron
the
vine
Justlocaladm
inistration
Im
posed
disruption
48%
33%
5%
0%0%
14%

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Putting your organisation aside, how do you feel
that local government is coping given the national
context?
AdaptiveInnovation
Runningto
stand
still
Nostrilabove
thew
aterline
W
itheron
the
vine
Justlocaladm
inistration
Externallyim
posed
change
5%
23%
14%
0%
14%
45%
A. Adaptive Innovation
B. Running to stand still
C. Nostril above the waterline
D. Wither on the vine
E. Just local administration
F. Externally imposed change

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Fast forward five years. Which position do you
think your Council will be in?
A. Adaptive innovation
B. Running to stand still
C. Nostril above the waterline
D. Wither on the vine
E. Just local administration
F. Imposed disruption
Adaptiveinnovation
Runningto
stand
still
Nostrilabove
thew
aterline
W
itheron
the
vine
Justlocaladm
inistration
Im
posed
disruption
41%
32%
9%
0%
9%9%

26. © 2014 Grant Thornton UK LLP. All rights reserved.
Some recent voting results
Scenario
SOLACE CIPFA SOLACE CIPFA SOLACE CIPFA
Adaptive innovation 44.7% 38.00% 55.1% 18.00% 3.8% 4.00%
Running to stand still 46.8% 51.00% 12.2% 38.00% 61.5% 46.00%
Nostril above the waterline 0.0% 7.00% 4.1% 31.00% 23.1% 41.00%
Wither on the vine 0.0% 0.00% 6.1% 4.00% 0.0% 2.00%
Just local administration 0.0% 0.00% 6.1% 4.00% 1.9% 0.00%
Imposed disruption 8.5% 4.00% 16.3% 5.00% 9.6% 7.00%
Totals 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
MyAuthorityNow My authority in 5 years LocalGovernmentasawhole

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Four recommendations
Political
Parties
• Consider wholesale change. Whichever party forms the
next government – they must be ready for a serious
discussion within the sector.
Whitehall and
the rest of the
public sector
• Must participate in constructive dialogue about what the
future could look like, leading to real change
Local
government,
and the private
and 3rd sector
partners
• Agree that fundamental change is needed and begin to
plan for a transition to a more sustainable long term
framework.
Individual
Councils
• Understand which scenarios you identify with, the
context in which you are working and what to do next.

28. © 2015 Grant Thornton UK LLP. All rights reserved.
2020 Vision:
Exploring finance and policy futures for English
local government
www.gt-thornton.co.uk/2020-vision

29. © 2015 Grant Thornton UK LLP. All rights reserved.
Questions

30. © 2015 Grant Thornton UK LLP. All rights reserved.
Guy Clifton
Head of Local Government Advisory
Grant Thornton UK LLP
T - 020 7728 2903
E - guy.clifton@uk.gt.com
Twitter - @guy_clifton
Guy has worked in the local government sector
for over 20 years. A CIPFA qualified accountant,
he spent the first half of his career in local
government operational roles, and was Head of
Finance at a London borough. He has been with
Grant Thornton since 2007 and currently leads
the local government advisory team. His current
focus is providing finance, governance and
collaboration solutions to clients.
Speaker details

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Thought leadership for the sector

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About Grant Thornton
Grant Thornton has a well-established market in the public sector, and has been working with local
authorities for over 30 years. We are the largest employer of CIPFA members and students and our
national team of experienced local government specialists, including those who have held senior positions
within the sector, provide the growing range of assurance, tax and advisory services that our clients
require.
We are the leading firm in the local government audit market, and are the largest supplier of audit and
related services to the Audit Commission, and count 40% of local authorities in England as external
audit clients. We also audit local authorities in Wales and Scotland via framework contracts with Audit
Scotland and the Wales Audit Office. We have over 180 local government and related body audit clients in
the UK and over 75 local authority advisory clients. This includes London boroughs, county councils, district
councils, city councils, unitary councils and metropolitan authorities, as well as fire and police authorities.
This depth of experience ensures that our solutions are grounded in reality and draw on best practice.
Through proactive, client-focused relationships, our teams deliver solutions in a distinctive and personal
way, not pre-packaged products and services.