Local Authorities Outlook 2024

2024 Outlook: Local Authorities

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Local authorities may feel they face infinite demand with limited resources, but they have talented and committed people and proved in the pandemic that they can be resilient and innovative in navigating tough times.

Julian Batson

Head of Government and Local Authorities, Barclays Corporate Banking

Embracing the theory of devolution

The agenda that we’ve seen over the past few years for devolving greater powers to restructured local government bodies is, I believe, a really positive development. I’m confident this trend will continue in 2024 and the years to come – whatever the result of the general election. Of course, only time will tell how the next government treats LAs, but the Labour Party has said it will continue to support the principle of local government devolution1 if it takes power at Westminster.

To date, we’ve seen that devolution of powers to new bodies such as combined mayoral authorities can work well, especially on the scale of a city like Manchester, for example. It’s perhaps less proven on a smaller scale, but an inexorable rise in devolution should be expected. I wouldn’t be surprised if LAs around the country are offered incentives to encourage them to explore the possibility of having more control over the services they provide and the money they spend on them.

Facing up to funding uncertainty

The 2024/25 provisional funding package announced in December saw the sixth successive single year settlement. The absence so far of a medium- to long-term funding settlement from central government, coupled with a fundamental funding review, is a source of great uncertainty for LAs since it’s key to planning for both capital expenditure and sustainable ongoing service provision. Whereas the settlement confers a 6.5% (or £3.9bn) increase in core funding power, immediate market commentator reaction notes that the costs pressures (inflation and demand) experienced by local government will curtail the real terms impact.

In particular, the increase in the national living wage, announced in November’s Autumn Statement, will increase the pressure on LA funds. The low-hanging fruit, in terms of savings, have already been picked over the past few years, but it’s important to look again for efficiencies – probably through greater use of emergent technology. Every penny that LAs are able to save in efficiencies is worth it if means there’s more money to spend on frontline services.

Because they’re inextricably tied to their communities, LAs are uniquely positioned to respond to community needs, so any opportunity to embrace devolved power is an important consideration.

Julian Batson

Head of Government & Local Authorities, Barclays Corporate Banking

Managing the cost of borrowing

Although UK interest rates are expected to begin to fall at some point in 2024, their elevated level will continue to persuade some cash-strapped LAs to dip into their hard-won reserves rather than take on more borrowing. Those that do look to borrow may find higher interest costs exacerbated by less flexible terms due to a tightening of credit markets available to LAs.

Even where LAs can find a potential lender and can service the terms of the debt, continuing inflationary impacts mean LAs will often be looking at costs for capital expenditure projects that have probably risen significantly since they first conceived their proposals. As a result, I think LAs will be wary and we could see some reticence in committing to investment of this kind.

Key takeaways

Support the local economy

Despite finite resources, LAs can still have an instrumental role in supporting local economic development, not necessarily through financial support but, for example, by focusing on enabling land use, skills development and housing development.

Benchmark your digital services

By comparing themselves to other similar organisations, LAs should be able to take a view on whether they are using all available digital tools to provide their services in the best way – while remembering that some service users may not be tech-savvy.

Set the tone on sustainability

While retrofitting aging housing stock is challenging, there are other ways in which an LA’s approach to sustainability can be influential. There is opportunity to set an example, even be a pioneer, because LA services touch on so many people’s lives.

Keeping fraud front of mind

Fraudsters are as active as ever across the local authorities sector, impersonating our colleagues and attempting to defraud our clients. To help protect you and your business we have a wealth of resources available. You can view our quarterly fraud webinars and take a look at our other educational resources on our Fraud Protection Hub.

Remember, Barclays will never:

Ask you to make payments or move money to a ‘safe’ account

Call and ask you to provide or enter your PIN or use your biometric device, for any reason

Take control of your computer.

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