Half of local authority workers are unsure their organisation can avoid bankruptcy, a new study has found.
Audit, tax and advisory firm Mazars said its study highlighted how local authorities are “facing an uphill struggle to ensure operational efficiency and financial growth”.
Of the almost 100 local government workers surveyed, 15% were “unsure” their organisation is financially sustainable, while 26% were “not very confident” and 9% were “not at all confident” this is the case.
Only 14% of those surveyed in the ‘Beyond efficiency: what’s left for local government?’ report were “very confident” their organisation is financially sustainable.
Mazars said its study was driven by the increased scrutiny on the financial stability of local authorities, with public services and employment being put “increasingly at risk”. The study was conducted by Surveys in Public Sector in partnership with Mazars between late August and mid-September 2023, and sought the views of a broad cross-section of job functions.
The firm said its report “looks to understand organisations’ approaches to financial sustainability and risk, and identify how they can reverse this, embed resilience and safeguard essential public services”.
Given the findings of the survey, Mazars has urged local authorities to shift focus from short-term efficiencies to prioritise digital transformation, skills and capabilities to future-proof public services.
A large majority of those surveyed – 86% – said they believed that economic challenges presented the biggest risk to their organisation in the years ahead, followed by workforce challenges, at 58%.
By contrast, long-term goals and issues have been sidelined, the survey found, including that of digital transformation. Only 14% of the workers surveyed see this as a future risk to their organisation, “suggesting it is viewed as less of a priority”, Mazars said.
While Mazars said digital transformation is “essential” to the long-term success and viability of local authorities, its survey showed only 12% of workers label their organisation as a ‘digital transformer’, while 37% regard themselves as ‘digital beginners’.
Local authorities may also not be as digitally mature as they think, Mazars noted. When asked if their organisation is adopting specific technologies to improve internal processes and/or external service delivery, while 27% had made some progress on robotic desktop automation, over a third, or 34%, were unsure about their organisation’s current approach.
There were similar levels of uncertainty for robotic process automation, at 32%; artificial intelligence, at 32%; and machine learning, at 29%. In the case of artificial intelligence, 37% also said their organisation currently had no plans to adopt this.
Peter Cudlip, head of UK public & social sector at Mazars, commented: “The outlook for local authorities feels relatively bleak and their financial stability remains under immense scrutiny, meaning public services and employment are increasingly at risk. Understandably, they’ve been focusing on short-term measures to plug the finances, especially as there are few efficiencies left to be found.”
With local authorities worried about their financial stability, further immediate action is essential, Cudlip said.
“However, to enable lasting improvement and allow real change to happen, a radical rethink in approach is needed. Local authorities should turn their attention to transformation instead of short-term efficiency gains, and prioritise digital skills and capabilities.
“The sector needs to invest in attracting the best minds in their fields who can leverage technological solutions and innovate ways to overcome the challenges. Without investment in new and existing talent, and a culture that supports and nurtures that talent, vital public services will remain at risk.”
—————
FREE weekly newsletters
Subscribe to Room151 Newsletters
Follow us on LinkedIn
Follow us here
Monthly Online Treasury Briefing
Sign up here with a .gov.uk email address
Room151 Webinars
Visit the Room151 channel
