Local Government Leadership in 2025/26: Challenges and Solutions at the Crossroads

As we approach 2026, Chief Executives in local government are navigating one of the most complex and high-pressure environments in recent memory. The sector is contending with a perfect storm of financial instability, political uncertainty, and rising public expectations. From the fallout of inflationary pressures to the demands of governance reform and digital transformation, the role of the Chief Executive has never been more pivotal or more exposed. As Aidan Rave, Principal Consultant at GGI, aptly puts it:

“Local government needs more than recovery it needs reinvention.”

This reinvention must be led from the top, with Chief Executives acting not only as organisational stewards but as system leaders, capable of galvanising cross-sector collaboration, driving cultural change, and restoring trust in public institutions.

1. Financial Crisis and Section 114 Notices

Challenge: The spectre of Section 114 notices effectively declarations of bankruptcy is no longer rare or theoretical. Councils such as Birmingham, Croydon, Thurrock, and Woking have already crossed this threshold, and many others are operating on the brink. The causes are multifaceted: spiralling adult and children’s social care costs, inflationary pressures on contracts and staffing, historic debt burdens from PFI schemes, and the erosion of core funding over more than a decade.

The financial fragility is compounded by the lack of fiscal flexibility. Councils are increasingly reliant on short-term grants, ring-fenced funding, and competitive bidding processes that favour well-resourced authorities. Meanwhile, the cost of temporary accommodation, SEND provision, and home-to-school transport continues to escalate, placing unsustainable pressure on revenue budgets.

As one Chief Executive recently remarked at SOLACE:

“We’re not managing decline anymore we’re managing collapse.”

Solution:In response, the Local Government Association (LGA) has strengthened its financial resilience offer. Through its Finance Improvement and Sustainability Advisers (FISAs), councils can access tailored support to navigate financial turbulence. This includes:

• Mentoring for Chief Finance Officers, particularly those new in post or operating in high-risk environments.

• Masterclasses on financial uncertainty, scenario planning, and risk-based budgeting.

• Bespoke interventions for councils facing exceptional financial challenges, including pre-Section 114 diagnostics and recovery planning.

Additionally, the LGA is advocating for a multi-year financial settlement and reform of the local government funding formula to reflect demographic pressures and deprivation. Councils are also encouraged to undertake independent financial health checks, engage in peer-led budget scrutiny, and explore shared service models to reduce overheads.

The road to recovery will require more than technical fixes it demands political courage, transparent communication with residents, and a renewed focus on preventative investment. As the sector looks ahead, the question is not just how to survive, but how to rebuild in a way that is financially sustainable, socially just, and locally accountable.

2. Governance Under Strain

Challenge: Governance in local government has shifted from being a procedural necessity to a strategic imperative. In 2025, it is no longer confined to the back-office or committee room it is front and centre of public accountability, organisational resilience, and political legitimacy. The introduction of the Office for Local Government (Oflog) has brought a new layer of performance scrutiny, with benchmarking dashboards and public-facing metrics that expose weaknesses in leadership, service delivery, and financial management. Simultaneously, the Department for Levelling Up, Housing and Communities (DLUHC) has become more interventionist, particularly in councils showing signs of governance failure or financial distress.

Chief Executives are now expected to ensure not only that decisions are lawful and procedurally sound, but that they are transparent, inclusive, and defensible under public scrutiny. The rise in external investigations, best value inspections, and statutory interventions has created a climate of heightened risk, where reputational damage can be swift and severe. As one Monitoring Officer recently noted:

“Governance isn’t just about compliance anymore it’s about confidence. If our governance fails, everything else follows.”

Solution: To meet this challenge, the Local Government Association (LGA) has embedded governance support at the heart of its sector improvement offer. Councils are encouraged to undertake independent governance reviews, drawing on models used in health, education, and housing sectors. These reviews assess decision-making structures, member-officer relationships, scrutiny effectiveness, and risk assurance frameworks.

Key elements of the LGA’s governance support include:

• Governance peer challenges, where experienced senior officers and elected members provide constructive feedback and recommendations.

• Governance diagnostics, tailored to the council’s context, identifying systemic risks and opportunities for reform.

• Top-team development, focusing on political-administrative alignment, ethical leadership, and shared purpose.

• Support for Monitoring Officers, including mentoring, legal briefings, and access to peer networks.

Councils are also being encouraged to adopt values-led governance, where organisational culture, integrity, and public service ethos underpin every decision. This includes embedding codes of conduct, whistleblowing protections, and citizen engagement mechanisms that go beyond statutory consultation.

In an era of declining trust in institutions, robust governance is not just a safeguard it is a strategic asset. It enables councils to make bold decisions, manage risk intelligently, and maintain legitimacy in the eyes of residents, partners, and regulators. As Professor Colin Copus has argued:

“Good governance is the difference between surviving and thriving in local government. It’s not just about doing things right it’s about doing the right things.”

3. Leadership Burnout and Capacity Gaps

Challenge: The role of the Chief Executive has become increasingly unsustainable for many. The pandemic created a seismic shift in local government leadership, accelerating retirements, career changes, and internal restructures. What followed was the rise of “super directorates” consolidated portfolios that stretch senior leaders across multiple high-risk service areas, often without the necessary support infrastructure. Chief Executives are frequently pulled into operational firefighting, responding to crises in housing, adult social care, and community safety, while simultaneously managing political tensions and external scrutiny. Strategic reflection, innovation, and system leadership are often sacrificed in favour of short-term survival.

The emotional toll is significant. Many leaders report feelings of isolation, exhaustion, and moral injury particularly when forced to make decisions that conflict with their public service values due to financial constraints. As one Chief Executive shared anonymously in a SOLACE roundtable:

“I’m not sure we’re burning out we’re burning through.”

Solution: To address this, the Local Government Executive Leadership Programme has emerged as a vital resource. Delivered in partnership with sector experts, the programme offers a structured development pathway focused on:

• Resilience and wellbeing, helping leaders manage stress, maintain perspective, and build personal sustainability.

• Collaborative leadership, fostering cross-boundary working and shared problem-solving.

• Insightful thinking, encouraging strategic foresight, adaptive leadership, and values-led decision-making.

As Samantha Mowbray, Chief Executive of Swindon Borough Council, reflects:

“The programme helped me to reflect on, and then develop, my leadership and self-management at a critical time in my career.”

In addition to formal programmes, councils are investing in executive coaching, peer mentoring, and leadership networks to support Chief Executives and their senior teams. There is also growing interest in succession planning, talent pipelines, and flexible leadership models that allow for shared or interim arrangements during periods of transition.

Ultimately, the sector must recognise that leadership capacity is not infinite. Investing in the wellbeing, development, and strategic space of Chief Executives is not a luxury it is a necessity for organisational survival and transformation.

4. Devolution and Reorganisation Complexity

Challenge: The publication of the English Devolution White Paper has triggered a new wave of local government reorganisation. From county deals to combined authorities, the landscape is shifting rapidly, and Chief Executives are at the heart of navigating this complexity. The challenge is multifaceted. Leaders must manage the transition to new governance models, negotiate with neighbouring authorities, align political priorities, and maintain service continuity all while engaging communities and staff in the process. The creation of shadow authorities, mayoral structures, and shared services introduces new risks and demands a high level of political and managerial dexterity.

There is also a cultural dimension. Reorganisation often brings together councils with different histories, values, and operating styles. Building a coherent identity and shared purpose across newly formed entities is a delicate and time-consuming task. As one Chief Executive involved in a recent county deal observed:

“It’s not just about structures it’s about relationships, trust, and the story we tell our communities.”

Solution: The Local Government Association (LGA) has developed a comprehensive support offer for councils undergoing devolution and reorganisation. This includes:

• Facilitation and mentoring for Chief Executives and senior teams, helping them navigate political negotiations and organisational change.

• Top-team development workshops, focused on building alignment, trust, and shared leadership across new structures.

• Community engagement toolkits, enabling councils to involve residents meaningfully in shaping the future of local governance.

• Shadow authority support, offering practical guidance on governance, finance, HR, and communications during transition periods.

• Critical friend reviews, providing external challenge and assurance throughout the reorganisation process.

The LGA also supports councils in developing place-based narratives, ensuring that devolution is not just a technical exercise but a genuine opportunity to empower communities, improve outcomes, and drive inclusive growth. As the sector moves forward, Chief Executives must balance pragmatism with ambition ensuring that reorganisation delivers not just efficiency, but legitimacy, equity, and local pride.

5. Planning, Housing, and Infrastructure Pressures

Challenge: The Labour government’s pledge to deliver 1.5 million homes over five years has placed local authorities under unprecedented pressure. While the ambition is welcome, the reality on the ground is far more complex. Councils are grappling with high land acquisition costs, nutrient neutrality regulations, and planning departments that are chronically under-resourced both in terms of staffing and digital capability. The planning system itself is often cited as a barrier. Lengthy consultation processes, fragmented infrastructure funding, and inconsistent national policy guidance have created bottlenecks that stall development. Meanwhile, the demand for affordable housing continues to outstrip supply, exacerbating homelessness and temporary accommodation pressures.

Infrastructure delivery is equally challenging. Councils must coordinate utilities, transport, schools, and health services often across multiple agencies and funding streams. The lack of joined-up investment planning means that housing growth is frequently disconnected from the infrastructure needed to support it. As one Director of Place recently commented:

“We’re being asked to build homes at scale, but without the tools, the people, or the powers to do it properly.”

Solution: To meet these challenges, councils must adopt a strategic, place-based approach to planning and infrastructure. Key levers include:

• Advocating for planning system reform, including streamlined processes, greater local discretion, and investment in digital planning tools.

• Leveraging the One Public Estate (OPE) programme, which enables councils to unlock surplus public land, co-locate services, and coordinate infrastructure delivery across government departments.

• Strengthening partnerships with housing associations and private developers, underpinned by robust governance frameworks that ensure transparency, accountability, and community benefit.

• Investing in planning capacity, through recruitment, training, and shared service models that allow councils to pool expertise and resources.

• Using infrastructure funding creatively, such as Section 106, Community Infrastructure Levy (CIL), and Homes England grants, to align housing growth with transport, education, and health provision.

There is also growing interest in modular and off-site construction, which can accelerate delivery and reduce environmental impact. Councils are exploring local development corporations, housing delivery vehicles, and joint ventures to take a more proactive role in shaping their housing markets. Ultimately, the challenge is not just to build homes but to build communities. That means ensuring that housing growth is inclusive, sustainable, and supported by the infrastructure and services that residents need to thrive. As the Chief Executive of a London borough recently put it:

“We don’t just need more homes we need better places. That’s the real test of leadership in planning.”

6. Digital Transformation and Citizen Expectations

Challenge: The pandemic accelerated digital adoption across every sector, and local government is no exception. Citizens now expect the same level of responsiveness, personalisation, and accessibility from their council as they do from banks, retailers, and tech platforms. However, many councils are still operating on legacy systems, fragmented databases, and outdated infrastructure that cannot meet these rising expectations.

The challenge is twofold: delivering seamless digital services while safeguarding against cyber threats, which have become more frequent and sophisticated. Councils are custodians of vast amounts of sensitive data from housing and benefits to social care and electoral rolls making them prime targets for ransomware and phishing attacks.

Digital transformation is also a workforce issue. Staff need the skills, tools, and confidence to operate in a hybrid environment, yet digital literacy varies widely across departments. Without investment in training and change management, transformation efforts risk stalling or failing. As one Head of IT in a metropolitan borough put it:

“We’re not just digitising services we’re redesigning relationships with our residents.”

Solution: The Local Government Association (LGA) has developed a suite of digital and technology support programmes to help councils modernise service delivery and build cyber resilience. These include:

• Cyber resilience support, offering diagnostics, training, and incident response planning tailored to local authority contexts.

• Communications improvement programmes, helping councils enhance digital engagement, accessibility, and user experience.

• Digital peer networks, enabling councils to share best practice, co-develop solutions, and learn from digital exemplars across the sector.

• Innovation hubs and shared platforms, such as iStandUK and LocalGov Digital, which promote open standards, reusable code, and collaborative development.

Councils are also investing in digital inclusion strategies, ensuring that vulnerable residents are not left behind. This includes device lending schemes, community Wi-Fi initiatives, and partnerships with voluntary organisations to support digital skills.

Ultimately, digital transformation is not just about technology it’s about culture, leadership, and trust. Councils that succeed will be those that embed digital thinking into every aspect of their organisation, from frontline services to strategic planning.

7. Staff Morale and Organisational Culture

Challenge: Staff morale across local government is fragile. Years of austerity, rising workloads, and constrained pay progression have taken their toll. The pandemic added emotional strain, while the current financial crisis has led to restructures, redundancies, and uncertainty. Recruitment and retention are increasingly difficult, particularly in high-demand areas like social care, planning, and finance. Organisational culture is under pressure. Hybrid working has changed team dynamics, and many staff report feeling disconnected from their colleagues and their council’s mission. Diversity and inclusion efforts are uneven, and neurodiverse staff often face barriers to progression and wellbeing. As one HR Director recently shared:

“We’re asking our people to do more with less, in harder conditions, and still bring their best selves to work. That’s not sustainable.”

Solution: Councils are responding by investing in workforce development, leadership support, and organisational culture change. Key interventions include:

• Councillor and officer mentoring schemes, fostering cross-role understanding, personal growth, and succession planning.

• Top-team development programmes, focusing on values-led leadership, psychological safety, and strategic alignment.

• Inclusive workplace initiatives, including neurodiversity policies, flexible working arrangements, and employee resource groups.

• Staff engagement and listening exercises, using pulse surveys, town halls, and feedback platforms to understand and respond to workforce concerns.

Many councils are adopting values-based recruitment and appraisal frameworks, ensuring that behaviours and culture are prioritised alongside technical competence. There is also growing interest in employee value propositions (EVPs) articulating what makes a council a great place to work, and aligning that with staff experience.

Embedding a culture of care, inclusion, and purpose is essential for long-term resilience. Councils that invest in their people will be better equipped to navigate complexity, deliver quality services, and retain the talent needed to lead transformation.

Conclusion: Reinvention Through Collaboration and Insight

Chief Executives in local government are no longer simply managing organisations they are leading systems through volatility, complexity, and transformation. The challenges of 2025 and beyond demand more than operational competence; they require visionary leadership, emotional intelligence, and strategic courage.

From financial collapse to governance reform, digital disruption to workforce fragility, the sector is being reshaped in real time. Yet within this turbulence lies opportunity: to redefine what local government stands for, how it operates, and how it connects with communities.

The future will belong to councils that embrace collaborative leadership, where Chief Executives work across boundaries geographical, political, and institutional to co-create solutions. It will depend on strategic governance, where transparency, accountability, and values-led decision-making are embedded at every level. And it will be sustained by resilient cultures, where staff feel valued, included, and empowered to innovate. As Professor Steven Griggs notes:

“Leadership in local government must evolve through insight, resilience, and collaboration to meet the demands of a changing world.”

This evolution is already underway. It is being shaped by leaders who listen deeply, act boldly, and build trust in the face of uncertainty. Reinvention is not a distant aspiration it is the work of today.