The Pandemic Brought the Vulnerabilities of Local Government into Sharp Focus

The Covid-19 pandemic was an unprecedented event that put additional pressures on local government in England. As people became unemployed and experienced losses in their disposable incomes during lockdowns, local authorities started to experience increased demand in different service areas.

What were the responses of local government during the pandemic? What do these responses reveal about the resilience of local government? And to what extent was local government in England well-equipped to overcome a crisis of this scale?

Defining resilience

Resilient local authorities are those that can identify and manage their financial vulnerabilities in anticipation of challenging times.

This includes the capacity of authorities to develop a sustainable and diversified economic base, and to restrict their reliance on central government funding. At an aggregate level, local government in England did not have the financial capacity to cope with the unexpected demand caused by the pandemic.

By November 2020, central government had increased spending in the public sector by £127 billion, of which local government received £6.3 billion. This increased funding helped authorities to cover Covid-related expenditure. However, some councils with low levels of reserves, high debt servicing costs and a high reliance on commercial and investment income were still forecast to lose a combined total of £3.7 billion from council taxes and business rates, as a result of higher unemployment and losses in household income.

Resilient institutions are those that implement strategic approaches to contain risks and to keep communities safe from these risks.

There were areas, including the adult social care sector, where local authorities were unable to contain such risks. Local government mainly followed directives from central government, which did not always prove to be adequate. An example of this was in March 2020, when central government allowed the NHS to discharge patients to different settings without having tested those patients first and without any plan to mitigate the risk of infection.

Resilient institutions are those that promote civic participation so that citizens and communities also become responsible in addressing the impacts of adversities.

During the pandemic, communities and voluntary organisations in England acted as extensions of local authorities to safeguard the wellbeing of its members. Through the Emergency Volunteer Scheme, workers were entitled to take unpaid statutory leave to volunteer in health and social care settings during lockdowns, in recognition of the fact that public institutions did not have sufficient capacity to do so. This suggests that local government was somewhat equipped to help local communities develop their own resilience during the pandemic.

Institutional contexts

Political choices focussed on enhancing local competitiveness and growth reduced the capacity of local government to manage the Covid-19 crisis. In the decade preceding the pandemic, central government promoted decentralisation through the implementation of policies that allowed authorities to retain a higher share of their local revenue and by reducing central grants. The latter encouraged authorities to engage in more entrepreneurial activities for the collection of local revenue, even though it meant that authorities also needed to absorb the risks that could come with these practices. The government's decision to push decentralisation, whilst the revenues in local government were falling, meant that many authorities, particularly in more deprived areas, were unable to plan financially for an unexpected crisis and to have more robust reserve bases.

The decision to reinforce the fragmentation of the public sector as a way to achieve more competitive public services also reduced local authority capacity. This was particularly evident in the adult social care sector, where the responses of local authorities lacked coordination. Such fragmentation meant that local authorities did not have a clear understanding of their responsibilities in the management of the crisis.

Furthermore, local authorities faced the pandemic with bounded funding resources, insufficient workers, and a reduced capacity to support the involvement of other sectors in the provision of local services to build more sustainable communities. In spite of additional allocation of funding during the pandemic, local authorities continued to experience funding pressures and there was an expectation by central government that they would cover any additional costs from existing resources.

The future of local government

The pandemic revealed the vulnerabilities of local government and the need for central government to support a more sustainable path for the sector.

In terms of funding, central government announced in the 2021 Local Government Finance Settlement that local government core spending power would increase in real terms for the year 2022–23. However, when taking into account population growth, the expenditure per person will continue to be lower than in 2010–11. Furthermore, the much-needed reform of local government finance continues to be delayed: the current system continues to estimate communities’ needs based on outdated parameters from 2013–14.

Moving forward, the sustainability of the sector needs to be supported through adequate levels of expenditure—enough to give local authorities the capacity to protect the provision of services, increase their levels of reserves, invest in their workforce, develop a sustainable and diversified economic base and support the involvement of communities and voluntary organisations in the provision of services.