Local government continues to adapt to the changing world around us
03/29/2022
It’s tough, but not too tough to handle.
Over two years since the pandemic hit the UK, local government continues to adapt to the changing world around us.
Funding and fiscal pressures, plus changing community needs and expectations were identified as the top two future threats to tackle in Zurich Municipal’s whitepaper, Rising to the Challenge - the future of the public and voluntary sectors.
Our research showed that financial challenges have been the single most influential driver for change for local government in the last five years as councils have stretched to meet increasing demand with constricting budgets.
Balanced budgets for 2022 and 2023 are essential, given that pandemic emergency funding has run out, but the pandemic response, and investment in people and equipment, continues. This is based on the supposition that no further threatening variants of COVID-19 or other coronaviruses will have to be managed in the immediate future.
Financial resilience and business sustainability remain fundamental, but many councils continue to feel vulnerable.
“The emerging picture is more of the same, with additional layers of challenge,” says Rod Penman, Head of Public Services, Zurich Municipal. “The financial future is uncertain, so long-term planning is difficult. Short term decisions based on limited financing do not create sustainability.”
This year developments like workforce issues, supply chain strain, service interruption, increasing societal need, and negative economic drivers add detail to top line considerations for most senior teams in public services in the UK.
The economic pressures on councils are becoming as acute as those faced by their citizens as inflation rises, while legislative and government requirements ramp up. In addition, some income streams remain blocked by the effects of the pandemic.
Councils see costs rising and increased delays in provision of goods and services. Like the private sector the public sector has suffered from disruption to supply chains, including the effects of Brexit, the delay in ships getting through the Suez, the pandemic impacting on global logistics, and skills’ shortages.
“Building contracts are more expensive with time delays, and claims settlements cost more and take longer,” observes Rod Penman. “Everyone is reviewing sums insured with an increase of at least nine per cent expected as costs are impacted by rising inflation. We are seeing inflationary rises not experienced in 30 years.”
Workforce
Workforce issues featured as a top impact for the future in our research and workforce sustainability is an ongoing challenge for all organisations.
As the restriction to work from home lifts across the UK, employees have to adapt once again to a change in work patterns and routines. At a time when job vacancies remain unfilled across all sectors and careers, employers need to make roles as attractive as possible, offering flexibility and training.
Rod: “Our sense is that the average spend on training for public sector employers has always been less compared with private industry, but that needs to change as it makes sense to bridge skills gaps internally.”
Ongoing workforce shortages cannot be solved in the short term, with an impact on services; especially care services. The gaps in care provision add pressure to supplier and partner relationships, especially health trusts, housing bodies and charities. In addition, local government may feel increasingly frustrated in its ability to support central government objectives for NHS and care integration, and the levelling up agenda.
Digitalisation
The pandemic has put the public sector under strain, but it has also opened up opportunities for UK councils. Supporting the transformation in work structures and service delivery has been the increased use of technology, providing a springboard for digitalisation.
“Employees, partners and service users have benefitted from digitalisation, and it is crucial public service organisations keep up the transformation momentum,” says Rod.
One aspect of this however has been cyber crime, which is increasing as criminals see public services and charities as easy targets. “At all times act as if you are uninsured,” says Rod. “At this time, it’s better to spend money on training and prevention. Risk management is more important than insurance on this issue, its best to do what you can to stop the loss happening in the first place."
Public sector investment in information technology, and staff and supplier training has not kept up with levels in the private sector.
Rod: “Staff have to be aware of changing frontline attacks and know how to manage them. IT infrastructure must be up to date to combat criminal and fraudulent activity. It’s not easy. It requires a spending commitment, and often culture change.”
Times are hard after two exhausting years of COVID-19 and may get harder with post pandemic impacts and global influences threatening systemic risks. However last year, those we surveyed generally relayed a mood of realistic optimism. Three-quarters of organisations surveyed feel both prepared to face future challenges and well placed to take advantage of future opportunities.
Further guidance from Rod and his team is available by contacting us on 0800 232 1901 or info@zurichmunicipal.com
