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Future Councils pilot finds systemic blockers to digital innovation

Councils face a range of challenges, hindering digital transformation, including inconsistent approaches to making the case for change, complexities surrounding resource allocations, lack of data and time

The Future Councils pilot scheme has identified a number of reasons why local government struggles with digital transformation and set out plans for how to tackle them.

The pilot, which was run by the Department for Levelling Up, Housing and Communities (DLUHC), aimed to understand barriers and opportunities to transform local government.

The scheme, which ran from March to October 2023, involved eight councils from across England, which worked with the department to find the root causes underpinning the challenges.

A report evaluating the pilot scheme found that although most councils are keen to innovate, they struggle to do so.

“These challenges relate to organisational structure in how councils innovate, and how central government regulation and market forces influence their choices,” the report said, adding that the challenges also manifest in residents’ experiences further down the line.

Local government already struggles with limited funding and cost-cutting measures, which makes prioritising digital projects challenging due to political and organisational risk, the report said. It added that due to the technology landscape changing so rapidly, it is difficult for councils, particularly those that already lack technology, to have clarity on what to do.

It added that councils find it hard to procure the technology they need when working within a market where costs are high, and they are often locked into long contracts for systems no longer fit for purpose.

“There’s no consistent approach to making the case for change. There is no agreed method of calculating return on investment (ROI). This makes it difficult to quantify long-term benefits,” the report said.

“The mechanisms for allocating resources are complex, duplicative and ineffective. Councils are often siloed organisations with complex governance structures, and a lack of join-up between services makes it difficult to prioritise across the organisation. Silos within the council mirror a siloed sector with ring-fenced funding for statutory services.”

The report found that skills in local government are also an issue, especially when most of a council’s energy goes into focusing on delivering business as usual on a tight budget.

“Digital teams sometimes sit in a bubble, meaning that transformation can be viewed as peripheral, or even with scepticism. The sector-wide skills gap makes it difficult to attract and retain staff and undermines transformation across the lifecycle,” the report said.

In a blog post by DLUHC’s Local Digital team, the department said the Local Digital Declaration, published in 2018, set out to “co-create the conditions for the next generation of local public services, where technology is an enabler rather than a barrier to service improvements”.

However, the department said it has since become clear that a broader approach is needed to remove the barriers to change, as improving one service does not drive overall digital transformation.

The work DLUHC did with the eight pilot councils identified three key challenges that require collaboration between councils, central government, suppliers and other stakeholders: a lack of standards for change, no way to de-risk innovation and a challenging market.

Following the pilot, the department has come up with several ideas to tackle the challenges, including some that councils can address themselves immediately. These include working on strategic alignment, analysing problems, reviewing ways of working, and investing in skills and new technologies.

“Through working with the pilot councils, we have heard that there is a sector-wide need for guidance, and that councils look to DLUHC to provide this,” the blog post said.

“In the short to medium term, we heard that councils would welcome more direction and support from central government, be that: scaling standards, how to better arrange governance or how to approach the market when procuring and so on.

“The long-term ambition of Local Digital is to ensure the sector is mature and robust enough to guide itself, but for now there is a need for this additional support to unblock the sector.”

The eight councils taking part in the pilot were Broadland District Council and South Norfolk Council, Cornwall Council, Dorset Council, Leicester City Council, London Borough of Lewisham, Reading Borough Council, South Tyneside Council and Stevenage Borough Council.

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