By Andrew Webb, Chief Economist, Grant Thornton
Our local councils were not in a strong financial position before the COVID-19 crisis struck. Analysis of each council’s finances suggested all 11 councils were carrying debt ranging from £6 million to £80m.
Total debt across all councils was calculated as just over half a billion pounds. The economic shutdown then starved our 11 local authorities of significant income, as rates holidays, closures of leisure and civic centres, and a considerable drop off in use of council car parks impacted on revenue.
One estimate suggested that councils here were burning through approximately £10m a month, and some analysis was raising the prospect that insolvency in some councils was not beyond the realm of possibility.
For many, thoughts of your local council might not extend far beyond which colour of bin goes out this week, or a trip to the leisure centre, but the remit of councils reaches into large swathes of our daily lives, and large parts of our economy.
This is perhaps most evident in the economic development role our councils play, and the various city/growth deals that have been announced in recent times. There is approximately £1.2 billion that has recently been allocated across Northern Ireland for infrastructure, regeneration, and tourism projects.
Pushing that money to the right projects and delivering them effectively and efficiently will take a considerable effort by councils and their partners. Given this, and given the financially precarious situation our councils are in, is it time we gave serious thought as to how our councils work, and what they work on? After a ‘bedding in’ term of our new councils, is it now time to see some aggressive business transformation undertaken?
As councils emerge from the COVID-19 crisis, there is an opportunity to revisit core purposes.
Two things that should be front of mind are; 1) Hold on to what has worked: In responding to COVID-19, many organisations have achieved new levels of local collaboration and community empowerment. Councils must quickly identify, reinforce and retain the positive behaviours and practices learned during their response, and consider where collaboration would be more cost effective and impactful.
2) Stop doing things that others can do: Leaders must create time and space to make sense of a forensic, line by line review of expenditure, and understand why it is needed – could it be done differently/better? Is anyone else already doing it?
Places and organisations are unlikely to return to how things were before the COVID-19 pandemic. Ultimately, lower growth will be mirrored by lower incomes and lower wellbeing – impacting the day-to-day lives of residents.
It will fall to councils, through the community planning process, to create a new long-term vision for their places. To do so effectively, they need to be lean and fit for purpose.
For further information or advice, Andrew Webb can be contacted at andrew.webb@ie.gt.com
Grant Thornton (NI) LLP specialises in audit, tax and advisory services.