The forthcoming chill of November, accompanied by the shortened daylight, is not just a signal of nature's transition but also heralds a pivotal moment in the political calendar: the Autumn Statement. This year, its significance is magnified, with the spectre of ongoing financial challenges and statutory interventions within local government casting a long shadow over the proceedings.

Recent high-profile interventions have, undoubtedly, heightened the alarm bells ringing across corridors of power, illustrating in no uncertain terms the delicate edge on which many councils currently teeter. The sector's challenges cannot continue to be pacified with short-term solutions and stop-gap measures – what is needed now are substantive systemic reforms.

At the heart of the concerns lies the financial vulnerability of councils. We estimate that up to 42% of local authorities could be at risk of financial failure over the next five years. And while it can be argued some of the recent failures have been largely self-inflicted, it is also clear the funding formula, in its present state, is incapable of addressing the diverse, evolving needs of our communities.

Only complete fiscal reform – addressing all the core pillars of local funding – revenue support grant, council tax, business rates and social care – will unlock sustainable revenue funding for our core public services, bringing with it the promise of stability. In essence, reform should operate on the principle of allocating resources based on actual need and the services councils have a duty to deliver, ensuring equity and effectiveness. Key components include:

• Needs: evaluating need based on the current demand, future projections and the unique challenges local authorities face.
• Allocation: allocating resources not merely on historical precedent or broad-brush national averages but on a clear understanding of regional disparities and requirements.
• Definition: clear definition of ‘core services', outlining what constitutes essential services, ensuring funds are prioritised for critical areas and reducing the possibility of misallocation or diversion of funds.
• Flexibility: allowing a degree of flexibility, giving councils the autonomy to adjust based on their specific needs and situations.
• Feedback: collecting data on the effectiveness of funding allocations to ensure that, for example, an allocation towards sports and leisure leads to positive health outcomes and reduced pressure on health services.
• Transparency: the entire process – from needs assessment to fund allocation – should be transparent. Yet, the discourse cannot stop at just financial reforms.

Devolution is is not new, but its resolution seems elusive. The deadlock around directly-elected mayors has stalled meaningful progress. And for genuine devolution to take root, it seems the Government must first outline a clear role for regional, sub-regional and local government. A blueprint, however, is not enough. These bodies need an environment where they can operate with true autonomy, removed from the direction and delegation from the centre.

The regeneration and investment narrative is equally critical. It is undeniable: our regions need an environment conducive to growth and rejuvenation. For this, the fiscal policy must be an ally, encouraging businesses to anchor themselves in local communities, bringing employment and innovation. And amidst all this, we must not lose sight of the ‘levelling up' agenda. It has remained a buzzword, but the time for rhetoric is past. Concrete steps towards improved infrastructure, education and healthcare are now sorely needed, ensuring equal opportunities for every citizen.

As the Autumn Statement inches closer, all eyes are on the chancellor. The challenges are daunting – a national economy seeking direction, the post-pandemic world's intricacies, and the omnipresent undertones of a post-Brexit landscape.

With significant challenges come great opportunities. This statement could redefine the central-local government dynamic – so, should we be optimistic?

Well, local government needs to exercise better governance and earn ministerial trust. While it is a small minority, flawed decision-making and, in some cases, reckless gambling, creates the wrong narrative. Local government needs to promote its best performance, highlight its outstanding achievements and accelerate its transformation efforts to balance the current noise around sector governance. This is perfectly achievable through the proper peer challenge and taking to heart and acting on issues raised by regulators, auditors and advisers.

Perhaps cautious optimism is the order of the day. And, even if the chancellor's intent does not manifest itself in immediate relief measures, he will hopefully not miss the opportunity to outline a vision for long-term reforms.

Simon Christian is director, public services advisory, Grant Thornton UK LLP

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