Providing public services against a background of extensive funding cuts and financial uncertainty can be all consuming, with local authorities understandably having to constantly manage those immediate and short-term challenges. At the same time, decision-makers within local government are aware of the importance of looking beyond the immediate future to those longer-term macro challenges they will face, which could fundamentally change the way they operate within the next 20 years.

To help local authorities better understand the challenges ahead, Zurich Municipal worked with the Social Market Foundation to identify some key drivers of change, and the trends which are likely to determine future demand for local public services, as part of a new research report Local Public Services 2040.

The UK population is growing, but what is of greatest concern is the fact this growth will be significantly skewed towards the pension-age population in the next 20 years. According to ONS figures the number of over-75s in the population is set to rise by 89% and if this trend is borne out, it is reasonable to expect increased demand for health and social care services, unless health in old age improves dramatically from what we see today.

As the population increases, the next 20 years will also see major changes to the way individuals live. The projected increase in the number of households suggests local authorities may need to deliver services to more fragmented families. Alongside this, intergenerational responsibilities within families could also change, with the task of childcare falling to great-grandparents, grandparents, the state and the private sector, as well as parents.

UK economic performance will also have a strong bearing on the future trajectory of employment, unemployment and wage growth, with a knock-on effect on demand for public services and tax revenues. While local government cannot directly influence these external factors, it is important to forecast a range of economic scenarios when long-term planning service provision.

Climate change is an issue that touches all levels of government. The knock-on implications such as flooding, extreme weather and subsequent damage to the physical environment mean that councils need to take urgent steps to prepare, as they will increasingly find themselves on the front line managing the consequences of climate change.

Technological progress and increased automation dominates the news agenda, and yet for every opportunity for improved productivity innovation brings, there is also the looming risk of job losses and the potential impact on communities. Productivity gains are understandably a significant priority for local government, and technology has already opened new avenues for the service delivery across education, policing and care.

Awareness of these external factors and the ability to set in place long-term plans to mitigate future risks and challenges is vital for local authorities. However, time to evaluate these factors is always at a premium, so local government decision-makers should look to work with external experts – such as insurance providers – to help them prepare for the challenges ahead.