Shielding from future shocks

By Gary Fielding | 25 January 2021

Over a century ago, US author Zora Neale Hurston observed: ‘There are years that ask questions and years that answer’. One hundred years later it still sounds pertinent, as 2020 has certainly asked a lot of us and it remains to be seen whether the answers will be in 2021 or if we will have to wait longer. This is the backdrop as councils across the land set out their budgets and longer-term financial plans.

We all strive to avoid short-term decisions as they are reactive and rarely produce the best results. But when it comes to long-term financial planning, the number of obstacles we currently face is eye-wateringly high. A single year funding settlement doesn’t help, but this is far from the only issue.

Can anyone truly say they know how long COVID will be with us and where many of our demand-led budgets will be? The care market has been at the vanguard of COVID response but how sustainable is that already fragile but essential market? And, what about increases in welfare support when furloughing stops; increases in child protection cases following prolonged periods of family stress; a distressed transport market; and many other imponderables?

Imagine that we can have a stab at future projections. After 10 years of austerity it is fair to say saving money now needs even more ingenuity and that requires people, time, permissions and the right support networks.

How reasonable is it to redesign the way we deliver care without involving those staff who know it best? And, what prospect is there of freeing them up to set out savings plans when urgent need surrounds them on an hourly basis?

It doesn’t stop there. Most councils are drastically short of organisational bandwidth.

It may be tempting to succumb to pressure, whether political or officer-led, to make budgets balance with heroic assumptions to avoid the unpalatable or to start priming the COVID recovery plan.

Councillors rightly want to see their local businesses and communities flourish and many will call for funds to kick-start this recovery – but caution is needed. To help others you need to be in good shape yourself or things can quickly spiral out of control.

We are far from in complete control of our own destinies and there is no point pretending we are. A global pandemic will leave, as yet unclear, consequences – cultural, operational and financial – for those in business and for our personal lives. Bemoaning the current predicament will only take us so far. Doing nothing feels like abdication of responsibility. What can we do to plan for the future?

If you knew you were setting out on a car journey in difficult weather you might give yourself more time, take some provisions with you, charge your phone and tell people your route, etc. We cannot control Mother Nature but we can try to protect ourselves.

Uncertainty is rarely welcomed but it needs to be called out. Nobody can be sure where we are heading and the best estimates for next year will almost certainly be wrong by quite a margin. Any council that does not accept this is setting itself up for a fall. We must confront the risk we face and be honest about it.

Given the uncertainty, we must maximise flexibility. Demand and prices will be under perpetual strain so ensure there is some headroom or, failing that, a good Plan B. Model with members and officers what happens if trigger points are hit so there are fewer shocks. Prepare for the worst and hope for the best.

Regarding reserves, successive Governments have been ambivalent at best, and usually downright hostile to councils and their levels of reserves. We should now be thankful that many councils have been able to set aside (one-off) funds that can buy time while we gather better intelligence about the future.

After a decade of austerity, this is harder for some than others, but the current position should be a good reminder that reserves are essential now and in the future.

Finally, we must grasp some of the opportunities that will come from the challenging position we are in. This crisis should prime better discussions within councils and between local and national government about risks and longer-term planning. Let’s hope that in 2021 we can all start to provide, or at least influence, the answers to the questions 2020 begged.

Gary Fielding is corporate director of strategic resources at North Yorkshire CC

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