England & Wales, Global, Ireland, Scotland Finance

Sustainable approaches to local government funding will create resilient places

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Image by Alexandr Ivanov from Pixabay

LGIU’s 40th anniversary comes at what feels like a critical juncture for local government. Longstanding challenges such as financial constraints, increased demand for services and pressure on infrastructure are butting up against more existential threats to communities like climate change, populism and unregulated, poorly understood technology.

Our LGIU@40 campaign, while utilising our unrivalled experience of working with local government is very much about the future. Identifying three core themes – participation, trust and finance – we have been working extensively with our members and the wider sector on a set of new ideas for how local government could work better in the future. A manifesto – to be published next month – will provide a blueprint for how we can move from aspiration to action and build the foundations that local government needs to navigate the challenging times we all face.

Local government finance systems are markedly different in different countries. The LGIU’s Local Democracy Research Centre is currently engaged in international comparative research into the situations in England, Germany, Italy and Japan – a unique study that is vital for generating new, evidence-based ideas for change. It is clear that local government finances and how they are funded will be pivotal in navigating the challenges posed by the many global interconnected and escalating issues, such as climate change, economic instability, and public health emergencies. It’a also clear that different funding systems incentivise different behaviours and drive different outcomes. In this context, achieving financial sustainability becomes an imperative for local governments as they grapple with the multifaceted nature of the permacrisis.

In the UK we have seen local government in acute financial crisis. In England our research shows that only 14% of council leaders are confident in the sustainability of local government finance. In the last two years, we have seen several councils effectively go bust, including Birmingham, the country’s second-largest city. We’re starting to see Scottish councils raising similar alarm bells. It’s not just a British problem in Australia, especially in New South Wales and Victoria, rate capping, cost shunting and emergency services levies are starting to make many local government leaders worry about the sustainability of their finances.

And even in places where the systemic health of local government finance is reasonably robust the extreme challenges facing many communities may require a shift in practices and priorities for local government to be able to grapple long-term with these problems. A sustainable approach to local government finance that focuses on integrating economic, social, and environmental considerations will need to be explored in order to develop long-term resilience in local government and communities.



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