How can Councils Save Money – 10 Tips for Thriving in Unprecedented Austerity

22nd February 2024

by Mark Gannon

For nearly 15 years local authorities have had to face and manage the twin challenges of decreased funding, while demand for statutory services increases (the services they are legally required to provide). These services include adults and children’s social care and the provision of temporary accommodation and homelessness support. As a result, this has led to many local authorities now facing a significant risk of entering a financial crisis, at an unprecedented scale. Download the Top 10 Tips; How can councils can save money.

The fallout of the pandemic and the cost of living crisis has significantly increased pressure on local authorities when it comes to statutory services, as funding from central government lessens. First up is social care. The number of over-65s in England increased by more than 400,000 in the past five years, and the older people get, the more likely they are to need care. There has also been a surge in the need for children’s services, with more than 20,000 extra referrals between 2020-22, compared with a decrease of 1,400 year-on-year between 2018-19.

Lastly, there is housing. The number of households living in temporary accommodation – a cost incurred by local councils – reached a record high of nearly 100,000 as of 2023. The cocktail of hardships local authorities are facing is sure to result in more councils struggling to meet financial budgets and potentially declaring bankruptcy.

So, how can councils save money?

There has been an increasing number of local authorities declaring effective bankruptcy – known as section 114 notices – in the past few years. In fact, according to the Institute of Government there were more in 2023 than in the 30 years before 2018.

The Local Government Association also stated around 90 per cent of councils were using dwindling financial reserves to keep themselves running over the past few years. And a quarter of councillors have expressed that it is likely their local council will go bankrupt in the next five years, unless funding and support from the UK Government increases.

Recently, cross-party MPs on the levelling up, housing and communities committee called out the UK government to act now if they want to avoid a severe crisis and financial distress. This follows the publication of a recent report outlining that funding available to local authorities has not kept pace with pressures, which has led to a funding gap of £4bn.

So how can councils save money and even avoid bankruptcy, all while receiving significantly less funding and needing to continue serving their constituency? Overcome budget constraints with Citizen Hub.

Utilising technology where possible can provide some help. In an era dominated by technology, digitising internal operations allows for streamlining bureaucratic bottlenecks, improving overall workflows and saving costs.

How can councils save money with digital adoption?

Many local councils are stuck using legacy systems, with a vast amount of data trapped in silos. Unlocking that data can allow local government to create new insights, drive service improvements and identify early interventions. Application rationalisation to streamline processes can mean that some licences are no longer needed. All of which can help councils to save money.

There are 10 ways in which councils can ensure digital adoption success:

• Unleash the power of data
• Collaborate and share
• Reshape the procurement of digital solutions
• Use digital tools to transform internal operations
• Focus on early intervention and prevention
• Design services with citizens in mind
• Rationalise application estates
• Use technology to attract and retain talent
• Map, improve and control processes
• Continue to digitise services

Revolutionising the public sector with digital technology

The public sector, especially local government, has been slow to adapt to modern digital technologies. A cultural shift is needed to realise the advantages of digital technologies and the potential improvements they can bring to local communities when implemented correctly.

Taking a proactive approach to implementing digital technologies is essential to the effective delivery of services focused on citizen needs. This starts with tackling technical debt, skill shortages, financial limitations and embedded legacy systems within councils. Collaboration is the key to achieving this. Implementing a first-class IT infrastructure, paired with a data management strategy empowers local authorities to focus on improving outcomes for their people and places. Simultaneously, a good digital strategy should strive to support vulnerable citizens who are unable to engage with digital technologies.

The promise of digital transformation can create impactful and lasting change, which is why it is essential to invest in technology where possible to support local communities. With collaboration and a good digital transformation roadmap, councils can provide the best services and support to the citizens they serve.

Citizen Hub is our full-stack, low-code case management solution. It offers councils easy-to-use and cost-effective workflow and process automation. It gives users access to valuable apps designed specifically for local government and allows them to join a collaborative community with their peers. This makes digital transformation and digital adoption much more successful.

Mark Gannon, Director of Client Solutions, was interviewed on the topic of ‘How can councils save money’, discussing how intelligent automation can help councils to innovate, save time and money, in a podcast with Matt Masters, ‘Truth about local government’.

This article also featured in Open Access Government: Digital adoption: Ten tips for local government to save money through unprecedented austerity.