The Covid-19 pandemic has presented local government with its biggest test. But it may also be an opportunity to shape a new organisational model for the future
The country is reeling from the impact of the Covid-19 crisis and the implications will be felt across society for the rest of our lives. As ever, local government has risen to the challenge in supporting the National Health Service, housing the homeless, providing social care to the vulnerable, and pursuing the public health agenda. Most prominent in the support to communities has been the contribution made by front line staff.
Meanwhile, local authority finance teams have made a fundamental contribution ensuring that money is available for key activities delivering support schemes for businesses and individuals affected by the impact of the pandemic.
As ever, local authorities demonstrate their ability to deal effectively with an immediate and toxic threat to health and wellbeing. However, they will also need to plan for the new environment they face going forward. Finance teams will need to consider news scenarios for the future.
Community Awareness
It has always been present but community awareness is sometimes latent and hidden. The Covid-19 crisis has brought community awareness to the forefront of people’s minds. Citizens understand that they are “in it together” and show a greater awareness of the value that public services bring to their lives.
This must provide an opportunity for local government to strengthen the relationship it has with its communities so that its work is valued and supported. The chance is there for citizens to enter a meaningful dialogue with their local authorities and transform democratic involvement in a positive fashion.
Economic Challenge
The impact of the pandemic on both global and national economics is eye-watering with a record 5.5% plunge in the GDP in March 2020 alone. The impediment to economic activity and the costs associated with Covid-19 have initiated an economic crisis with implications set to affect the UK for the foreseeable future.
The impact of the loss of income from charges and the arrival of emergency costs will have an immediate effect on local authorities, while in the longer term there will be a further squeeze on public spending which could impact finance settlement allocations.
Perhaps less obvious, but equally important, will be the impact on local authority pension funds which threatens to be long term and could ultimately put severe pressure on council tax levels.
This represents a very gloomy picture for the finances of local government over the medium term. The challenge for finance professionals is to help their organisations find a route out of this inevitable labyrinth of challenges.
Virtual World
Across local government people were moving to a more virtual way of working. The Covid-19 crisis has accelerate the pace and dictated that working practices are consistent with the skillset required for the middle part of the 21st Century.
Councils have come to terms with the use of the virtual meeting even for the delivery of political-level decision making.
For finance teams it means that there is a greater emphasis on influencing through online platforms. While the traditional technical skills of data manipulation, drafting, and accounting are still important, the ability to communicate, guide and influence using online applications is becoming an essential skill. This has the potential to have long-term positive effects in the workplace. In essence, processes are being replaced by genuine communication. This can only add strength to the finance officer’s offering. But be warned; there can be nowhere to hide.
High Quality Decision Making
One of the key lessons from the crisis is the importance of decision making to ensure the best outcome for communities. This is true both at the national and the local level.
We have seen the life and death impact of important strategic decisions on lockdown, social distancing and test-track-trace. In the financial world decisions on investments, relations with central government and service priorities can be critical to achieve positive outcomes for local authorities.
As finance professionals we are relied on for accounting, stewardship and management but at the senior management level finance professionals will be asked for their input into strategic decisions, providing both expert advice and leadership. Particularly in turbulent times key stakeholders need to have assurance that their finance teams can provide and advise on decisions to maintain and build the financial strength of their organisations.
Back to the future does not offer progress
A nostalgia-driven desire for a return to business as normal is unlikely to achieve a favourable outcome for councils. No one would see Covid-19 as a positive, however, throughout history plagues have often had useful consequences. For example, the Black Death during the medieval period was followed by the Renaissance. There is no reason why we, in the UK public sector, cannot learn from the challenging experience and build a revived public service offering that is progressive and modern.
This may not be without pain, we are all learning what a new offering might look like. Indeed, some services viewed as sacrosanct until now, may no longer offer communities what is needed for the future.
Attempting to reconstruct the world of 2019 is unlikely to have a positive outcome. The development of scenarios will be key to our medium-term planning going forward. For finance professionals in local authorities, there is a unique opportunity to help shape the organisational model of the future. Let’s seize that and show what a positive contribution we can make.
Stephen Fitzgerald is an interim finance director in local government.
@SHJFitzgerald
