Peering into the crystal ball

By Michael Burton | 23 November 2016

Chief executives are a positive bunch, at least publicly, as anyone attending last month’s Society of Local Authority Chief Executives (SOLACE) annual conference can testify. Chief executives don’t do doom and gloom; optimism is part of their job description. Considering the challenges lined up for them and their staff, they can act no other way; Henry V did not motivate his troops into battle with a cry of ‘we’re all doomed!’

But away from the public gaze chief executives are less sure of the future, summed up by one comment in a report as ‘we are in the best of times and the worst of times’. The report, Worlds apart: The 2016 senior managers’ risk report by Zurich Municipal, formed part of a round table debate at SOLACE chaired by The MJ, in which leading chief executives aired their views on the future of the sector.

Zurich Municipal has spoken to more than 60 local authority chief executives and directors since it started producing these reports and concluded that ‘in 2016 many local authorities are becoming bold commercial entities’ and that for some ‘it is change or bust’. In this environment risk taking ‘is now the default position’ and chief executives are viewing calculated risk ‘as an acceptable side effect of opportunity’. However not all councils are the same and some struggle with funding black holes. The report added: ‘Some local authorities are worlds apart from others’ and ‘there is a polarisation between the optimists and those with deep concerns; some who see opportunities at every turn and others with real challenges around new and bigger risks’.

As Andrew Jepp, Zurich Municipal’s managing director, told the debate participants: ‘The pace of change is speeding up, there is increasing uncertainty plus demographic and political change and yet no change in public expectation while needs are actually increasing.’

Chief executives in the report touched on the key issues of change, budget pressures, adult care and health integration and devolution, all of which were addressed during the debate discussion. There was a brief mention of Brexit, one participant commenting: ‘We’re not divided because of Brexit. Everything Brexit expressed was there before. We were divided before then.’ Otherwise it featured little during the debate.

Budget constraints were clearly a priority and yet elicited varying reactions. The pessimists – or realists, depending on your view – warned of some councils going bust while others saw austerity as the catalyst for implementing long overdue change. As one participant said: ‘Ten years ago chiefs had to tick boxes. Now we’re on the cusp of another stage of devolution. We’ve got a lot of powers and we’ve the opportunity of a four year settlement. It’s time for Darwinian adaptation.’ Another added: ‘We have to be infinitely creative and flexible.’ Another commented favourably on the change from 15 years ago saying that ‘the challenges in 2002 when I became chief executive were inward looking –best value, CCT and all that tosh. Now they’re external.’

The report feedback was that councils have to be more commercial, especially with plans to replace revenue support grant with business rate income, but some debate participants were pretty scathing about the latter concept. More than one said the idea of councils relying on business rate was ‘a lie’. One added: ‘The idea that growth can replace revenue funding is in fact a lie, and SOLACE and the Local Government Association should challenge it.’ Another added: ‘Businesses will want a bigger say and they won’t necessarily want to see their money going on social care.’ Other comments were: ‘Local government won’t take the same view on business rate as there will be winners and losers’ and ‘everything is predicated on achieving growth which we can’t all do’. A rural council chief pointed out that the ‘new system relies on growth but how do we find it? We’re very rural and it’s difficult to find business rate income. No one wants to build housing anywhere.’ Another added: ‘New Homes Bonus will disappear if we don’t get growth but elected members don’t want more houses.’ A further comment was: ‘The pace of change on revenue raising is a challenge. Local government financial reform won’t solve the problem. We’ll still be administering a national tax.’

Even devolution was regarded as a double-edged sword with one chief executive saying that ‘we don’t think devolution is the only answer but it’s the only one we’re offered’. But for those without devolution in the pipeline, the focus on it as a panacea was a concern, one saying: ‘We haven’t got devolution so that won’t solve our financial problems.’ Another commented: ‘The challenge is helping managers understand risk; the balance between profit and community benefit. Devolution is a sideshow. The main events are conversations around collaborating at sub-regional level.’

There was also scepticism about attempts to push health and care integration via the sustainable transformation plans (STP) which one chief executive described as ‘not sustainable, not transformational and they’re not plans and the idea this will provide a solution is a lie’. Another participant added: ‘We’re concerned about STPs and the lack of local government involvement.’ The social care crisis was described as a ‘horror’ by one participant who added that ‘we can’t afford adult care anymore. If we invented the system now we wouldn’t have care in a different organisation.’ There were concerns about the ability of the private sector market in residential care even to be sustainable. Another chief executive said: ‘Everyone expects to have whatever they want from the state and they can’t.’

The focus on local leadership requires a system change down the organisation and all accepted the importance of ensuring staff are fully on board, one participant saying ‘staff have got to be involved, you have to take them with you’ and another agreeing ‘leadership isn’t just about us, it has to flow down the organisation’.However, does it? One participant referred to a report of social enterprises which showed many of their heads still sceptical about local government’s supposed flexibility, saying: ‘The report of social enterprises revealed what they saw as a disconnect between the top of local government and the reality on the ground where services are prescriptive, regulated and in a permafrost. They saw themselves being stifled at procurement level. The language of new ways of working isn’t reflected on the ground.’

However, as optimists, chief executives regarded the sector as powerful because of its collective strength. As one said: ‘Local authorities aren’t in competition with each other. There’s an incredible power in that collective ability.’ Another added: ‘We’re much better off working together rather than always asking what we can get from government.’

Round table attendees

Abdool Kara chief executive, Swale BC

Martin Swales chief executive, South Tyneside MBC

Sophie Hosking executive director (service delivery and commercial development), South Hams DC

Steve Jorden executive director (strategy & commissioning) and head of paid service, West Devon BC and South Hams DC

Matt Prosser chief executive, Dorset Councils Partnership

John Gilbert chief executive, Swindon BC

Martin Reeves chief executive, Coventry City Council

Eric Robinson chief executive, Wirral MBC

Ian Miller chief executive, Wyre Forest DC

Carole Mills chief executive, Milton Keynes Council

John Metcalfe chief executive, Isle of Wight Council

Deborah Cadman OBE chief executive, Suffolk CC

Paul Najsarek chief executive, Ealing LBC

Andrew Kerr chief executive, City of Edinburgh Council

Sandy Hopkins chief executive, East Hampshire DC and Havant BC

Stephen Baker chief executive, Suffolk Coastal and Waveney DCs

Robin Tuddenham director for communities and service support, Calderdale MBC

Andrew Jepp managing director, Zurich Municipal

David Forster head of risk, Zurich Municipal

Heather Jameson editor The MJ (chair)

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