Local government at a crossroads

Principal consultant Aidan Rave highlights some of the strategic priorities and governance challenges facing a sector under growing pressure

The local government sector finds itself at a critical juncture. Faced with sustained financial pressures, growing public expectations, and complex service demands, councils must balance the competing imperatives of innovation, efficiency, and accountability. Against this backdrop, governance and regulation are increasingly centre stage—not simply as compliance obligations but as enablers of transformation.

Context and challenges

Local authorities are operating in one of the most turbulent environments in recent memory. The cumulative effects of a decade and more of austerity, Covid-19 recovery demands, and inflation-driven cost pressures have left many councils in trouble and more than a few teetering on the edge of financial crisis.

Section 114 notices—once rare—have become common, prompting renewed scrutiny of financial governance, leadership capability, and risk assurance frameworks.

Compounding this are major system shifts: the devolution agenda, the rise of place-based partnerships, the integration of health and social care, and a growing emphasis on citizen engagement and digital transformation. Councils must also respond to the net-zero agenda and the long tail of pandemic-related inequality.

Leadership teams are grappling with the need to rethink service models, reshape organisational cultures, and maintain trust in institutions—often with reduced resources and fragile staff morale.

Regulatory landscape

As if all that were not enough, regulation in local government is tightening. The Office for Local Government (Oflog), still in its formative phase, is setting the tone for more transparent and data-led oversight. Alongside this, the Department for Levelling Up, Housing and Communities (DLUHC) continues to intervene in cases of serious failure, often mandating external reviews, improvement plans, and governance restructuring.

Audit and scrutiny functions are under review, with concerns about capacity, independence, and impact. Effective assurance across finance, risk, performance, and corporate governance is no longer a ‘nice-to-have’—if it ever was—it is a strategic necessity.

Boards and executive leaders must develop sharper self-awareness about the effectiveness of their structures, behaviours, and decision-making systems. This is not just about avoiding failure but enabling innovation and restoring confidence.

Reviewing governance

Unlike many other public-facing sectors, local government doesn’t routinely review its governance. In sectors like health, housing, and education, independent governance reviews are routine—seen as essential for transparency, accountability, and improvement. Of course, the LGA Corporate Peer Challenge (CPC) reviews do include governance, but they are more general and do not specifically focus on the core aspects of governance that can give leaders critical insight into the stability of their organisations during times of extreme challenge.

Of course, councils, like their partners in the health, charity and private sectors, can no longer think in purely unilateral terms about governance. Even effective individual organisations are no guarantee of wider community outcomes if there is insufficient coordination and integration at neighbourhood level. Neighbourhood governance matters not just for democratic renewal but for effectiveness: it allows services to be shaped around what communities need most, and it builds trust through proximity and visibility.

For councils exploring new models of subsidiarity or co-production, we offer both technical and relational expertise to ensure those models are grounded in sound governance.

GGI’s deep experience in public sector governance, combined with our systems-thinking mindset and values-driven approach, makes us a critical ally for councils navigating complexity.

In the current political and economic climate, local government needs more than recovery—it needs reinvention. That journey must be underpinned by strong, ethical, and future-fit governance.

GGI’s work in the sector is tailored to address precisely these challenges. We support councils through:

• Governance reviews and board development: helping leaders improve decision-making clarity, accountability, and risk assurance.

• Executive team development: strengthening strategic leadership and cross-functional alignment.

• Governance diagnostics: offering rapid and insightful assessments of current governance maturity.

• Organisational strategy and engagement: facilitating vision-setting, stakeholder alignment, and co-produced improvement plans.

• Integrated governance and place-based working: supporting local authorities in developing collaborative models with NHS, VCSE, and other partners.

A particular strength of GGI is our work on neighbourhood-level governance and engagement. We can support councils and place-based partnerships with:

• independent insight into what’s working and what’s not
• practical support to improve decision-making, roles, and relationships
• stronger risk and financial oversight in a high-pressure environment
• better partnership governance for ICSs and place-based working
• visible commitment to improvement—for auditors, regulators, and residents.

A governance review shouldn’t be a last resort. It should be part of a council’s ongoing commitment to reflection, leadership, and improvement, because in a time of rising expectations and shrinking resources, you simply can’t afford weak governance.

GGI works with local authorities across the UK to review and strengthen governance. Let’s discuss what we could do for your council.