Local Government Studies

Europe’s Largest Local Authority – It’s NUTS!

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Chris Game

It’s little consolation to the ‘powers that were’ in Birmingham Council House, but the past several months’ headlines about “Europe’s Largest Local Authority” going bankrupt have done wonders for my personal online social networking. From the BBC and Financial Times to the World Socialist International Trotskyists, that headline has made us Brummies suddenly globally famous as citizens of ELLA.

I’ve been emailed by erstwhile colleagues and ex-students I’ve not seen or heard from for years, now back home in Australia and South Africa, Japan and Kazakhstan, wanting to know whether Birmingham really is Europe’s Largest Local Authority – like it boasts on its Website Awards page – and, if so, why didn’t I make more of it while they were students here.

Yes, they’re curious about the bankruptcy bit, which I also have to try to explain, but it’s the ELLA boast that really fascinates them – because they recall their travels around Britain and Europe, and clearly blame me for their not having been able to boast about temporarily residing in the continent’s LLA.  The clever-dick ones even add, “What about Kent?” Or “Didn’t you say it was East Lindsey in Lincolnshire?”.

And they’re not wrong, of course. Take the real ‘biggies’.  In population, Kent is nowadays just one of the ‘Big 3’ of the 36 non-metropolitan or shire counties – its 1,858,000 fractionally behind Essex and Hampshire, and all roughly half as large again as Birmingham City Council’s 1.15 million. However, those counties’ local governments are, of course, two-tiered – counties and districts, each responsible for different functions and services. And – spoiler alert – it’s single-tier or unitary authorities, responsible for providing all principal local government services in an area, that count here. 

County councils provide services covering the whole county – education, adult social care, waste disposal, etc.  More local services, like refuse collection, environmental health, and leisure facilities, are provided – as I’d certainly have pointed out – by, in Kent’s case, 12 smaller district councils.

Sounds straightforward, doesn’t it?  In fact, it’s anything but, and, if you were a class of students, I’d have had to at least mention the bizarre distinctions between ceremonial and historic counties, Lord-lieutenants (Lords-Lieutenant?) and High Sheriffs. Suffice it here to stress that it’s the two-tier structure and the ‘county’ bit that bar these bodies from challenging Birmingham’s status as ‘Largest’.

We do, of course, have a West Midlands Combined Authority, headed currently by Mayor Andy Street, but that’s entirely different and its 18 local authorities cover a far larger regional area than the old West Midlands County Council that Margaret Thatcher abolished in 1986. It’s an increasingly important, and influential, regional and national voice, but definitely not a local authority.

And East Lindsey? I honestly can’t remember ever mentioning this.  If I did, I’d guess it was to encourage some overseas students to visit Skegness, as somewhere ‘different’ but inherently English and off the proverbial tourist track. It’s a pleasant seaside resort with a rather splendid clock tower – which tells the time, unlike, for apparently a further several weeks, the UoB’s Old Joe – that probably happened then to be the largest town in England’s geographically largest local government district – East Lindsey – and five or six times the area of Birmingham.

We’ve fully established, then, that Birmingham’s ‘Europe’s Largest Local Authority’ claim has nothing to do with either population or geographical size, but everything to do with the UK’s uniquely large-scale, or ‘non-local’, local government structure and the gradual disappearance of devolution to more local units of government.

Put another way, it’s a question of NUTS. Yes, there’s plenty about our local government system that doesn’t make much sense – not least its sheer non-localness – but here we’re actually talking about the Nomenclature of Territorial Units for Statistics, which both sounds better in the original French and produces an easily memorable acronym.  

It’s statistical shorthand for the EU’s hierarchical way of standardising the different ways in which the hugely varying EU states administratively structure their sub-central governments – regardless, if necessary, of the institutional reality. A statistical harmonisation exercise, therefore, rather than an aid to serious cross-national local government comparison.

The NUTS classification subdivides every member country into three principal levels, NUTS 1 to 3, to which large countries can add further levels by subdividing NUTS 3 into LAU (Local Administrative Units). Very roughly, then, the currently 92 NUTS 1s are major socio-economic regions or groups of regions of relatively larger states – Germany’s 16 Länder, France’s 14 Régions, Poland’s 7 Makroregiony. And the UK, were we still EU members, would have 12: West Midlands and the eight other English regions, plus Scotland, Wales and Northern Ireland.

The 240 NUTS 2s are basic regions or regional groupings for the application of regional policies – Austrian Bundesländer, Belgian, Dutch and France’s former Provinces – and in the UK 40 conveniently grouped counties, London ‘districts’, and in the West Midlands its seven boroughs.

The 1,164 NUTS 3s tend to be sub-divisions of regions, provinces, counties, or groupings of municipalities for specific purposes, rather than individual local authorities. But such is the UK’s exceptional non-local scale that it takes nearly one-sixth of that total (174), with many councils qualifying for their own, including all seven West Midlands boroughs.

Even forgetting the UK’s large slice, that 1,164 doesn’t sound that many for a whole continent, does it?  Hence those Local Administrative Units – over 92,000 of them which constitute the overwhelmingly biggest columns in the main NUTS table. In our case LAU 4s would be the upper tiers of our traditionally two-tier system of county and district councils, and LAU 5s the lower tiers – or, rather, would have been, the two levels having since been merged.

I hate that LAU term. It’s misleading bureaucratese: a seriously disparaging label for what most European countries’ residents would first think of when asked to identify their elected local governments. To pick some examples: France’s LAU 4s were/are its nearly 35,000 Communes, Germany’s its 10,775 Gemeinden, Italy and Spain their 8,000 Comuni and Municipios – with, obviously, what we would consider mostly modest-sized populations to match.

At which point I admit my age and recall Mr Spock’s immortal response to Star Trek’s Captain Kirk: “It’s life, Jim, but not as we know it”. And yes, I know it was from a later song, rather than the TV series, but it fits. Because for a Brit those sizeable NUTS/LAU numbers could easily be described as representing “Real Local Government, Jim, but not as we know it.”

Chris Game is an INLOGOV Associate, and Visiting Professor at Kwansei Gakuin University, Osaka, Japan.  He is joint-author (with Professor David Wilson) of the successive editions of Local Government in the United Kingdom, and a regular columnist for The Birmingham Post.

Photo credit: Mac McCreery https://www.flickr.com/photos/simac/

Does Parliament discuss Local Government issues?

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Steve Watson

So far in 2024 (as at 19th March), there have been 26 debates in Parliament to discuss Local Government issues. By way of comparison, there have been 12 debates on illegal immigration, and 16 on energy prices.

So, it seems reasonable to conclude that Parliament does discuss Local Government issues, but what issues have been discussed and who’s been doing the talking?

There are various sources of data on this topic, including Hansard and Parliament TV.  For this blog, I used the ScrutinyCounts app, which analyses MP’s contributions in Parliament (as recorded by Commons Hansard) and presents the data in an easy-to-use format on a mobile app so users can see who is saying what about which topics quickly and easily on their smartphone. 

The charts below, taken from the Scrutiny Counts mobile app, show the Local Government debates that have taken place so far this year and the date they took place.

As can be seen from the screenshot charts, there’s a breadth of discussion on Local Government matters ranging from Financial Distress and Funding, Combined Authorities, Mayors, through to Four-day week working. Within the app, there is click-thru functionality which lets you see the full debate content, the MP’s who have participated, and the contributions they have made. There’s also “share” functionality to enable useful and interesting content to be quickly and easily shared with friends and colleagues.

Looking across the past twelve months, there have been over 159,000 words spoken in Local Government debates (measured by words spoken as recorded in Commons Hansard).

Across the debates, Conservative MPs contributed into the debates 66.5%, Labour 22.4% and other parties 11.2% (this compares with the party split by number of sitting MPs of 53%, 30% and 17% respectively).

As can be seen in the “monthly breakdown” area of the chart below, after a relatively quiet few months over summer of 2023, the level of debate activity significantly increased during Autumn 23 and early 2024 with February 2024 being a particularly busy month.

Perhaps not unsurprisingly the top contributing MPs in Local Government debates were government and shadow government ministers such as Simon Hoare (Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities) and Jim McMahon (Shadow Minister (Levelling Up, Housing, Communities and Local Government) with contributions being made in their respective roles.

But aside from Frontbench MP’s, who have been the top contributing Backbench MPs in Local Government related debates during the last 12 months? (measured by words spoken as recorded by Commons Hansard).

The charts below show the top contributing Frontbench MPs, and the top contributing Backbench Conservative and Labour MP’s;

There are often detailed and constructive contributions into the debates from all the parties. The quotes shown below are taken from speeches given by the two top contributors in the above charts. They both give an insight into the work that MPs do in representing their communities and constituents in parliamentary debates.

So, in summary, yes Local Government issues are discussed in Parliament. The news in the mainstream media may focus on the weekly exchanges in PMQ’s, the political gossip of the day, or the topical late night divisions and votes, but in so doing many don’t see the work MP’s of all parties do in important debates across a range of subjects such as Local Government, Housing, Social Care, etc.

The contributions in debates are often constructive and well thought through, providing valuable insight for politicians, councillors, and council officers and all those with an interest in Local Government. The debates form an important function in bringing local issues to the national stage and play an important role in our democratic system.

The charts and images in the article are taken from the ScrutinyCounts mobile app which is available via subscription on Apple AppStore and Google Playstore. The app uses data as reported in Commons Hansard and presents it in an easy to digest format which enables users to quickly and easily read what MPs are discussing in Parliament.

Steve Watson is a Director of Hinc Ltd, the provider of the ScrutinyCounts mobile app. Steve started his career as an electronics engineer but quickly came to realise he was more suited to working with computers rather than designing them! After being a joint owner of a Local Authority data insight company which was successfully grew and subsequently sold, Steve started a new venture to develop a mobile app called ScrutinyCounts which enables users to quickly and easily see what is being said, and by who, in Parliament.   More information about ScrutinyCounts can be found here or at Twitter/X @ScrutinyCounts 

Empowering Local Voices: Unveiling the Role of Councillors in European Governance

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Dr Thom Oliver

In the intricate tapestry of European local governance, local councillors stand as pivotal figures, linking citizens to decision-making processes that shape their daily lives. Their interactions within communities, councils, and broader public administration are the bedrock of modern democracy. Last week, alongside colleagues from the University of Bristol, Cardiff University, and Ghent University, we embarked on an ambitious endeavour: an email survey reaching over 19,100 councillors across England, Scotland, Wales, and Northern Ireland.

The survey is part of a broader European effort, with a single shared survey being rolled out with spans twenty-eight European countries driven by a broad collaboration of academics emerges from extensive international research network dedicated to conducting surveys with local political actors to understand local and national political dynamics. Over two decades their comparative work has shed light on the councillor, council leader and mayor roles of local government, administrative intricacies, civic cultures, and political practices across Europe, enriching both academic and practical understanding.

Our latest research now refocuses on local councillors, probing fundamental questions about democracy, their perceptions of their roles, views on local government, challenges within the institutional environment, and policy priorities. The survey also aims to understand councillors’ experiences with aggression and abuse and the influence of such encounters on their council activities and public engagement.

But this survey is more than just academic curiosity; it’s about amplifying the voices of local representatives. Councillors are the conduits between citizens and power, entrusted with articulating community aspirations and championing collective interests. They face mounting external pressures—from austerity to centralisation—and grapple with balancing economic growth, development, and environmental concerns, alongside the existential threat of rising social care costs as more and more councils face financial distress.

Unlike previous paper-based iterations, this survey employs electronic questionnaires sent to individual councillors across England, Wales, Scotland, and Northern Ireland, with the survey lasting around 15 minutes, we are keen that councillors both start and finish the survey, so have enabled them to complete it over multiple sittings if required via simply clicking on the email invitation.

As the survey unfolds across 28 countries, we urge councillors to join the dialogue and lend their voices to the study. Personalised emails have been sent directly to councillors’ inboxes, and follow-ups will continue over the coming month. Any councillors unable to access the survey can reach out to the project team using the contact details provided below.

We are calling on all councillors to check their inbox for our survey! Your voices are crucial to use better understanding the challenges and priorities in your role. This is the first time we have delivered the survey across England, Scotland, Wales, and Northern Ireland so we are really keen to ensure that all voices are represented across political parties, different tiers of local government, and geographies. Let’s ensure all your voices are heard loud and clear.

Dr Thom Oliver is a Senior Lecturer in Politics at the University of the West of England, Bristol. Thom completed his PhD at INLOGOV in 2011. Along with Dr David Sweeting (Bristol), Prof Colin Copus (Gent), and Dr Bettina Petersohn (Cardiff), he is leading the Return of the Councillors study in England, Wales, Scotland, and Northern Ireland. Thom leads the Qualitative Election Study of Britain, and is a co-investigator on the Bristol Civic Leadership Project.

How do we strike the right balance in public sector workforce training?

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Shailen Popat

I was delighted to be invited to attend and speak at the APSE annual seminar in Belfast in September 2023. For us at the Department of Public Administration and Policy, connections with elected members and council officers are an integral part of our research and teaching, so I had no hesitation about accepting the invite and being with you.

I took the opportunity in my talk to share some questions I’ve been asking myself. The first is: do you feel that your education prepared you for a role in public management?

This is an important starting point for those of us who plan continuing professional development (CPD) for others. There is no shortage of master’s degrees and CPD courses, but we must continuously consider their pertinence and relevance. Sometimes educational courses are good learning experiences that are worth having for that reason alone, however we must reflect on whether a good learning experience is also useful in the field.

Since 2008, the public service mantra has been to ‘do more with less’. As we all know this places burdens on organisations and their staff. Having to do more with less often entails operating across multiple roles and skill sets, requiring a lot of flexibility. For example, a local authority may decide that it is more efficient to have one person covering multiple roles, whereas previously, there may have been two. This can compel public service workers to try and act as experts in areas where they are not. Similarly, elected members often have to make decisions on matters that they are not experts in, whilst engaging with those who are.

Both officers and elected members need to be able to assimilate, synthesise and communicate the rationale behind policy positions and decisions that they are not experts in. This not only poses a challenge for them but also for those who support their training. We must ask ourselves, what skills do we need to train non-experts in? And how do we train them?

A further complication is that the culture, norms, and political boundaries of an organisation may not be flexible. Even though an employee may have to work and think flexibly, the structures they operate in may be very rigid. Trainers need to consider whether they are educating people with this need for flexibility in mind.

Neuroscience tells us that learning occurs incrementally – the brain’s neural networks are constantly being revised and refined as we repeat actions. The science tells us that experience matters. However, an important part of experience is making mistakes.

Therein lies the problem, for elected members and senior executives, mistakes are a luxury that they cannot afford and are unlikely to be tolerated. This puts us in another quandary: we know that learning requires mistakes, and therefore we have to train practitioners and decision-makers to be reflective, however, if decision-makers fear making mistakes, this will hinder their learning.

 I also wonder whether this fear of making mistakes stops us from challenging ourselves to think, decide, and act differently from the norm. How much do our cultures and structures empower public service workers and elected members to be genuinely innovative? A lot of our learning occurs when we are exposed to new materials that challenge our previous beliefs and understandings.

There is also a concept called disfluency which means that not only should we learn something new but when we use and explain it to others, it begins to become clearer as to how we could enact it ourselves. ‘How much do we practice dysfluency and how can we educate for it?’ I would welcome anyone who would like to continue the discussion to email me.

Shailen Popat is Director of the INLOGOV full-time MSc in Public Management. In 2022, he was awarded the accolade of the University outstanding Teacher of the Year, and in 2023 was awarded a Senior Fellowship of the Higher Education Academy. He can be contacted via email at: [email protected]

This article was first published in the Association for Public Service Excellence (APSE) newsletter, Winter 2024

Zilch for timing, but this Resolution Foundation report is important

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Chris Game and Jason Lowther

If you wanted some serious reader attention for something West Midlands local governmenty, you really, really wouldn’t have chosen this past November. The war in Gaza was seriously hotting up, there were the COP 28 talks in Dubai, Christmas was coming, and Aston Villa were en route to becoming the Premier League’s “foremost home team”, whatever precisely that means.

Serious distractions, but competition for headlines was only part of the challenge facing the Resolution Foundation’s early November release of its In Place of Centralisation report setting out a proposed and far-reaching Devolution Deal for London, Greater Manchester, and the West Midlands. There were other diversions and potential confusions too.

It was barely a month since Birmingham City Council – the principal West Midlands local authority involved in this proposed ‘Devo Deal’ – had issued not one but two Section 114 notices, reportedly declaring itself doubly “bankrupt”, unable to meet the Council’s financial liabilities relating to Equal Pay claims and an in-year financial gap within its budget, and handing over its governance to Communities Secretary Michael Gove’s appointed Commissioners.

And, if that wasn’t potentially complicating enough – for those directly affected as well as onlookers – in that same previous month representatives of the West Midlands Combined Authority (WMCA) had ratified the “Deeper Devolution” aka “Trailblazer” deal announced in the Chancellor’s March Budget.

That deal, comparable to that agreed by Greater Manchester back in March, but relatively little of which we’d heard in the meantime, would devolve more powers to ‘Metro-Mayor’ Andy Street (or, given the May Mayoral elections, potentially his successor), the 30 WM local authorities (7 met boroughs, 4 unitaries, 19 districts) and their 6 million population, and simplify funding arrangements, with £1.5 billion to spend on long-term infrastructure projects and services such as transport, skills, housing and regeneration.  A key element is a single block grant negotiated with the Government, like a central government department, as part of next year’s Spending Review.

Key ‘highlights’ include:

  • A ‘landmark’ housing deal worth up to £500 million, offering greater flexibility to drive brownfield regeneration and funding to deliver “affordable housing at pace”;
  • Greater control over local finance, including retention of an estimated annual £45 million of business rates for the next decade [hold on to that version of ‘local financial control’!];
  • Up to six ‘levelling up zones”, backed by £25-year business rate retention, with an estimate total value of at least £500 million, to target investment and encourage regeneration in areas agreed with the Government;
  • Measures to tackle digital exclusion, including greater influence over high-speed broadband investment across the region and a £4 million fund to get more people online.

In anywhere other than one of the most centralised governmental systems in the developed world, describing this package as ‘trailblazing’ would be wildly OTT. Here, though, it was rightly welcomed as constituting serious devolutionary progress, and Mayor Street, not surprisingly, was enthusiastic, seeing it as “marking the beginning of the end of … the ‘begging bowl culture’ where we must regularly submit bids for various pots of money on a piecemeal basis.”

Here’s the thing, though – well, two things, actually. First, the really rather big thing. The leading West Midlands council in this new ‘Trailblazer’ era is currently, following the issuing of those Section 114 notices, (a) in severe financial straits, and (b) being run until quite possibly 2028 not by elected councillors, but by Lead Commissioner Max Caller, his associate commissioners and political advisors – none of whom have ‘Trailblazing’ as a core part of their brief.

The second and, in Birmingham’s current circumstances, almost other-worldly thing, is the Resolution Foundation’s In Place of Centralisation report which is, incidentally, not the first RF report to be covered in these pages. It’s other-worldly too in the sense that it’s just one, albeit important, product of a bigger, wider-ranging academic project: The Economy 2030 Inquiry – a Nuffield Foundation-funded collaboration between the Resolution Foundation, an independent think-tank, and the LSE’s Centre for Economic Performance.

UK economic growth is their primary project – not boosting local democracy – one persistent obstacle to the attainment of which they identify as “the decades of underperformance of the big cities of Manchester, Birmingham, and more recently London” – the key cause being, they reckon, the centralisation of the British state. No startling news to INLOGOV blog readers, but a contrasting starting point to, say, that of the authors of Trailblazer deals, and their prescriptions go a good deal further.

They start (p.4), unsurprisingly, from a different array of statistics, demonstrating the extreme centralisation of the British state.

Only 5 per cent of the UK’s tax revenues in 2019 were collected by local    government, compared to 14 per cent in France, 23 per cent in Japan, and 35 per cent in Sweden. Accordingly, local government relies on grant funding, with only 19 per cent of all local spending in the UK funded locally, compared to 37 per cent in the average OECD unitary state.

They concede that “recent advances in devolution have begun to unwind this”, but, following a decade of austerity, significantly further fiscal devolution is required to improve growth without increasing inequality – in the form of a ‘triple deal’ negotiated between the Government and the Mayors of Greater Manchester, the West Midlands, and London as a trio, going “beyond the recent ‘trailblazer’ deals” and into which other mayors would be able to opt in the future.

The core of the triple deal would be fiscal devolution, “which would help to end the centrally-imposed local government funding crisis for the three cities by widening the local tax base, and resourcing improvements in the local economy.” Everyone would be a winner – the mayors, borough and Exchequer all benefiting from a new revenue-neutral fiscal settlement, including (pp.4-5):

  • A local share of income tax receipts, with Greater Manchester and West Midlands keeping a larger share than London;
  • Complete retention of business rates, and control over the ‘multiplier’;
  • A single grant to the mayors distributed on a per person basis;
  • The ability for mayors to reform council tax.

It would then be up to the mayors, in negotiation with the boroughs, to distribute this revenue across local government’s various responsibilities across their city. And in the medium-term?

Well, big IF … but the higher growth in the three cities that would be “likely”, if this fiscal devolution were accompanied by other policy changes, would then translate into higher local tax revenues for the mayors – with, by 2038, Greater Manchester raising between £49 million and £230 million, and the West Midlands between £40 million and £187 million beyond their current level of funding.

That was from p.5 of what is a 64-page report, so there’s a very great deal more explanation and explication. But the key, and hopefully obvious, point of this blog is to enable you, if it crops up in conversation, to disabuse anyone of the notion that the Resolution Foundation’s contribution to this debate is just ‘Trailblazer deals’ writ large.

Our view is that the current local government finance system is bust. Business rates penalise high street shops, the council tax is regressive with hopelessly outdated valuations, and councils spend too much energy chasing central government largesse through competitive funding pots.  Democratically elected councils rely on a begging bowl and lack basic revenue raising powers that are commonplace internationally.  We will be saying more on this as the General Election approaches…

Chris Game is an INLOGOV Associate, and Visiting Professor at Kwansei Gakuin University, Osaka, Japan.  He is joint-author (with Professor David Wilson) of the successive editions of Local Government in the United Kingdom, and a regular columnist for The Birmingham Post.

Jason Lowther is Director of the Institute for Local Government Studies (INLOGOV) and Head of the Department of Public Administration and Policy at the University of Birmingham.

Beyond the Numbers: A Holistic Approach to Section 114 Notices in English Local Government

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Dr Philip Whiteman

In English local government, the issuance of a section 114 notice is often perceived as a dire financial omen, signalling a council’s descent into insolvency. While financial stability is undoubtedly a cornerstone of effective governance, it is crucial to recognize that section 114 notices reveal more than just a precarious financial situation. They serve as a beacon, illuminating underlying issues that extend beyond the confines of spreadsheets and budget projections. Either way, the government’s Department of Levelling Up, Housing and Communities (DeLUHC) tends to respond with intervention and the imposition of commissioners to direct the authorities concerned.

The poor financial position of many authorities may be the direct result of years of underfunding by central government and we can expect many more councils to serve section 114 notices, but it would be improvident to assume there are no further underlying causes.

Nottingham City Council’s recent declaration of a section 114 is a clear indication that some authorities are simply folding due to a broken funding formula, but this is not the sole cause of failure in all cases. When looking at other authorities, alternative underlying causes are present. Further examples include:

  • The BBC Panorama programme highlighted how Thurrock Council was rendered bankrupt following a series failed investments in a solar farm, highlighting disastrous procurement practices, lack of accountability, poor governance, and inappropriate delegations to officers.
  • Birmingham City Council’s problems did not emerge overnight and were a culmination of challenges created by a historic equal pay-claim and botched procurement a new IT system, Oracle. Underpinning this was poor financial planning, governance, accountability, and a failing internal culture.
  • Woking Borough Council racked up a deficit of £1.2bn following the building and acquisition of major property portfolio. Against these investments, the authority had acquired loans from the Public Works Loan Board and other local authorities, accumulating debts that it could not service.
  • Liverpool City Council’s woes are not confined to finances. Government commissioners were appointed to Liverpool City Council in June 2021 following a damning Best Value inspection by Max Caller CBE on matters pertaining to poor leadership, unacceptable performance, poor resource management and a failure to engage with citizens.

Government appointed commissioners tasked with overseeing councils in financial distress must adopt a holistic approach, venturing beyond the immediate financial crisis to uncover the root causes of the council’s predicament. This requires a comprehensive examination of the council’s structural framework, external environment, performance management and internal governance practices.

Structural Challenges: A Precarious Foundation

English local governments face a unique set of structural challenges that can hinder financial stability. The relentless rise in service demands, coupled with a funding system that often fails to keep pace, places immense pressure on council budgets. This mismatch between resources and responsibilities can lead to a cycle of overspending and financial strain.

Commissioners must delve into the council’s structural framework, assessing whether the current allocation of resources aligns with the council’s responsibilities. They must also evaluate the effectiveness of the council’s revenue-generating strategies, ensuring they are maximizing their income potential without overburdening residents.

External Factors: Navigating Turbulent Waters

Local governments are not immune to the vicissitudes of the external environment. Economic downturns, shifts in government policies, and natural disasters can all have a profound impact on a council’s finances. Commissioners must assess the council’s vulnerability to these external factors, evaluating its risk management strategies and identifying potential contingencies.

Internal Governance: Cultivating a Culture of Accountability

While structural challenges and external factors can undoubtedly contribute to financial distress, internal governance failures often play a pivotal role. Poor financial planning, inadequate risk assessment, and a lack of transparency and accountability can erode a council’s financial stability.

Commissioners must scrutinize the council’s internal governance practices, ensuring that financial decision-making is sound, risks are appropriately assessed, and accountability is firmly established. They must also foster a culture of transparency, empowering residents to hold their council accountable for its financial stewardship.

A Holistic Approach: Beyond the Financial Storm

In the aftermath of a section 114 notice, commissioners must resist the temptation to focus solely on immediate financial stabilization measures. Instead, they must adopt a holistic approach, addressing the underlying structural, external, and governance issues that contributed to the council’s financial crisis.

By adopting a comprehensive view, commissioners can guide councils towards long-term financial stability, enabling them to deliver essential services to their communities without succumbing to the pressures of insolvency. Only by addressing the root causes of financial distress can we ensure that section 114 notices no longer serve as mere harbingers of financial doom, but rather as catalysts for positive transformation.

Speculating on further interventions

Speculation is precisely that. Estimates vary widely in terms of how many further councils are anticipated declare section 114 notices, but a clear signal of further failures exists:

  • In July 2023, ITV News cited a leaked DeLUHC document which estimated at least 26 bankruptcies over the next two years.
  • The Institute of Government has estimated that 10% of councils are at risk over the next two years.
  • The Special Interest Group of Municipal Authorities (SIGOMA), a representative body for 47 municipal authorities, published a survey in June 2023 which showed that five of their members were at risk.
  • A Local Government Association Survey conducted in November 2023 revealed that almost one in five local authority leaders and chief executives believe that their authority may have to declare a section 114 notice.

Whilst estimates vary, there is evidence that further authorities will become vulnerable to government intervention via the imposition of DELUHP appointed commissioners.  This raises a final question; can the predicted number of authorities realistically be serviced?