You would assume there could not be a better time for councils to be thinking innovatively. After 13 years of austerity and finances getting tighter than ever before, many would claim it is the only option left.

But there is an ever-looming shadow hanging over any council considering a move away from the safe and predictable – the risk of heading into section 114 territory.

With many councils already having fallen foul of plunging into potential money-making schemes, has that backdrop put others off the idea of taking risks? And, consequently, if councils are overly risk-averse is the chance of innovation dead?

Those were the questions posed at a round table sponsored by Norse Group which brought together council chief executives and senior managers alongside others with an interest in the future of innovation within local authorities.

There was a recognition that alongside financial pressures for the sector a looming General Election had created mild policy paralysis and diners at this London lunch accepted it was a very difficult time. ‘What we are finding is a real fear of taking risks,' said one. ‘That's also the case for well-run councils, they are also now feeling the financial strain.'

Another agreed fear was stifling innovation and linked the problem with a new breed of councillors.‘There is a fear they will break the council,' they said. ‘They are afraid to take risks because of fears it will come back to bite them.'

This was particularly the case at councils which had moved away from clear one-party control. Where councils were now finely balanced politically, leaderships were loathe to rock the boat too vigorously only to find themselves in opposition again if things went wrong.

Homelessness and housing were issues of particular concern for some around the table and, with a recognition that there was no prospect of government sorting the problem any time soon, one participant argued this left councils with ‘no choice but to innovate'.

‘It's about how we innovate successfully and how we put things in place to do it right.'

But the same voice recognised the nervousness among members at the thought of large-scale innovation which would stretch decades into the future. ‘Section 114 notices have spooked them,' they added. But the answer, they continued, was to explain to councillors that the threats they face threaten the very existence of the council.

Another had perceived a change in attitude of council leaderships, with an increasing focus on guarantees from ventures and an encouragement to stick to the authority's strongest skills set. ‘They want growth but are nervous of risk.'

For someone else participating in the discussion, the important thing was for councils to understand the risks they were entering into with innovation. When projects were performing well it was important to build up a fund to carry the authority through difficult times.

‘It's also important to build up an assets team,' they added. ‘If you are going to have that level of innovation, you need to have certain skills. But politics still runs the risk of getting in the way, with community kickback over plans potentially proving a huge constraint.

When faced with political resistance, one participant emphasised the importance of scenario planning as well as spelling out the consequences of doing nothing. ‘The financial situation means we have to innovate or we die.'

Nonetheless, there was a view from one participant that a conversation was needed about some of the investments councils plumped for. ‘If the private sector is not doing something,' they said, ‘there must be a reason. We need to focus on what we are good at.'

Another said it depended on the reason for the council choosing a venture. While the private sector may choose to pass up an opportunity because the financial bottom line wasn't there, a council may choose to step in to meet a wider strategic need. ‘There may be a case for a social return rather than just a financial return.'

However, there were voices who questioned how easy it would be to assess the real value of social good, the danger of the new Office for Local Government (Oflog) focusing on the numbers and the growing reality councils were already having to do just that.

One participant spotted a growing tendency for councils to focus on price at the expense of social value and quality. ‘You won't be able to compete if you're not strong on price,' they added.

It was clear from the conversation that councils were trapped between a desire to avoid risk, as s114s crop up across the country, and a reality – as one put it – that ‘the lights will go off in five years' time if the council didn't start doing things differently. ‘We need innovation and we need to have an honest conversation about how we do it,' argued one diner. ‘But we need to give members options that are fully costed. And you need patience to take members with you.'

But there was also a frustration at the way councils were criticised on all fronts if they tried something that didn't work out. While there was a recognition there would always be local criticism of some sort, this was increasingly being exacerbated by social media criticism and, critically, national political criticism.

There was a lot of sympathy at the lunch for councils which had tried a different approach and ended up facing the wrath of ministers, particularly the likes of South Cambridgeshire DC which has introduced a four-day working week.

As one voice around the table pointed out, this would not be the case if a private company tried something that didn't go exactly according to plan. ‘Members are expected to be omnipotent,' they said. ‘But they need confidence they won't get hammered at the ballot box.'

The gathering agreed that there was a need for Government to change their reaction to councils which tried things and failed as ‘innovation does mean trial and error'.

‘The Government needs to cut us some slack', said one participant. ‘We are doing stuff that is fairly innovative.' Uncertainty over funding was also highlighted as a blocker to innovations, with councils often relying on a plethora of discretionary grants but without any idea if these would continue in future years. ‘That makes long-term planning very difficult.'

When it came to lessons learned from past attempts to innovate, one voice highlighted the need to avoid doing things on your own and instead to partner with other councils where possible. A problem shared is a problem halved after all…

So, what were the take aways from the discussion?

One was the need to innovate in a sensible way and to learn the lessons from failures elsewhere. When it comes to s114 failures there was plenty to learn from the likes of Birmingham, Woking, Thurrock and Slough. Making sure ideas were fully thought through, fully costed and contingencies were in place.

The need to take councillors and communities with you on plans to innovate was also crucial – making sure they understand the risks as well as the potential.

Despite the financial pressures faced by councils it was also vital innovation was not pursued purely for the cost benefits. Initiatives also need to be about the social value they offer.

But above all, the one point ringing in everyone's ears as the coffee came round was clear – innovation isn't a choice for councils. When push comes to shove, with growing demand, dwindling funding and widening challenges local authorities either have to innovate or they will die.

So, despite the risk aversion of new councillors, despite the impact of s114 notices on confidence, despite the uncertainty of long-term funding and despite the willingness of Government ministers to crucify any council that tries something different but fails, at the end of the day innovation seems to remain the only game in town. Just don't get it wrong…

Comment: Geoff Tucker – group business development director, Norse Group

It has become clear over the last few months that local authorities still have an appetite for innovation. This is driven by a desire to serve their communities, maintain and improve important local services and – more than anything – to save money.

These are very difficult times for councils; following the years of austerity we have had to deal with the pandemic and now a cost of living crisis. This series of events has put real pressure on budgets, and there are no easy answers.

The need to innovate has never been greater, but local government leaders undoubtedly feel constrained, and with the recent failures of several councils – and there are probably more to come – any investment is seen as highly risky. The creation of Oflog adds another layer of difficulty, with the fear that any misstep will be pounced on.

It is really important that events like this round table give local authorities the opportunity to share their views and exchange ideas, and I would like to thank The MJ for making it possible.

Round table participants

Terry Collier – deputy chief executive, Spelthorne BC

Simon Howick – managing director, Oxford Direct Services, Oxford City Council

Jonathan Owen – chief executive, National Association of Local Councils

Larissa Reed – chief executive, Swale BC

James Smith – head of business change, Redbridge LBC

Geoff Tucker – group business development director, Norse Group

Michael Burton – editorial director, The MJ (chair)

Paul Marinko – deputy editor, The MJ (reporting)

This article is sponsored content for The MJ