By Lucy Phillips
18 February 2010
The controversy over unitary status for Exeter and Norwich councils was stoked this week after local government leaders criticised the plans as ‘financial madness’.
Last week, ministers at the Department for Communities and Local Government announced that the two-tier structures in both cities would be replaced by single authorities assuming responsibility for all council functions.
The decision went against advice given by DCLG permanent secretary Peter Housden, who warned that the move was likely to waste money. Leaked letters revealed that Housden sought ‘written instruction’ to implement the changes, which ‘would impact adversely on the financial position of the public sector as compared with the alternative course of action open to you’.
Local government leaders added their voice to the row. John Hart, Devon County Council leader, told Public Finance that the move was unaffordable, condemning it as ‘political gerrymandering at its worst’.
In 2007, start-up costs for the unitary authority were estimated at £25m, the equivalent of a £203 yearly increase in Band D council tax across Exeter, and these would be much higher now, he warned. County council reserves had dropped from £60m to £23m and city council reserves from £10m to £3m over the same period, Hart claimed, making the plans ‘financial madness’.
He added: ‘We have no money and I don’t see why the people of Devon should pay for something we are totally opposed to in the first place.’
Devon and Norfolk county councils are seeking a joint judicial review of the decision, which was also opposed by the Boundary Committee and other independent advisers.
Housden’s letter warned that the chances of the decision being successfully challenged in court proceedings were ‘very high’. The letter will form a crucial part of county councils’ legal argument.
‘If a civil servant from the other side says that, we would be mad not to go for a judicial review,’ Hart said.
But leaders of Exeter and Norwich City Councils, who have long been pushing for unitary status, were ‘jubilant’ at the announcement.
Glyn Bellerby, Exeter City Council’s director of corporate services, told PF that unitaries were ‘more efficient and more focused’. While admitting there would be initial costs, he said ‘going unitary would be the best protection for Exeter in the future’.
He added: ‘I don’t see that short-term costs should really determine what we do in the long term. These costs are simply an investment’.
Ministers claim the creation of nine new unitary councils last year, including Cornwall, Wiltshire and Shropshire, is saving £150m annually. But Michael Chisholm, an emeritus professor at the University of Cambridge and expert on local government reorganisation, accused the government of ‘jiggling with data’.
He said the estimate did not account for ongoing costs – such as renegotiating contracts with neighbouring councils for sharing services – which he expected to equate to about half of the gross savings.
‘I’m in no way persuaded that the financial savings from unitary authorities are anywhere as big as ministers would like to believe. And they are small in relation to the economies local authorities
are being forced to make’, he told PF.
Chisholm, a former member of the Local Government Commission for England, said that the whole notion of moving to unitary authorities was ‘a rather misconceived priority with very few benefits’.
James Hulme, head of communications at the New Local Government Network, agreed that ‘the jury is still out’ on whether moving to unitary status led to financial savings.
But he said ‘it would be churlish to take unitaries off the agenda completely’, as pledged by the Tories, during a period of spending constraint.
‘In some areas it does make sense to rationalise services and go down the unitary route,’ he added.
A DCLG spokesman said it was not unprecedented for permanent secretaries to seek written authority from a minister, particularly when the government had not chosen the cheapest option.
‘Ministers believe there are compelling reasons for a unitary Exeter and Norwich to be created. Should any legal challenge be brought against our decisions, this question will be for the courts to decide,’ he added.
The Exeter and Norwich proposals have been a source of controversy since 2006 and were rejected by previous ministers.
They must be approved by Parliament before becoming effective from April next year. The structure of local government outside the city boundaries will remain the same.
18 February 2010
The controversy over unitary status for Exeter and Norwich councils was stoked this week after local government leaders criticised the plans as ‘financial madness’.
Last week, ministers at the Department for Communities and Local Government announced that the two-tier structures in both cities would be replaced by single authorities assuming responsibility for all council functions.
The decision went against advice given by DCLG permanent secretary Peter Housden, who warned that the move was likely to waste money. Leaked letters revealed that Housden sought ‘written instruction’ to implement the changes, which ‘would impact adversely on the financial position of the public sector as compared with the alternative course of action open to you’.
Local government leaders added their voice to the row. John Hart, Devon County Council leader, told Public Finance that the move was unaffordable, condemning it as ‘political gerrymandering at its worst’.
In 2007, start-up costs for the unitary authority were estimated at £25m, the equivalent of a £203 yearly increase in Band D council tax across Exeter, and these would be much higher now, he warned. County council reserves had dropped from £60m to £23m and city council reserves from £10m to £3m over the same period, Hart claimed, making the plans ‘financial madness’.
He added: ‘We have no money and I don’t see why the people of Devon should pay for something we are totally opposed to in the first place.’
Devon and Norfolk county councils are seeking a joint judicial review of the decision, which was also opposed by the Boundary Committee and other independent advisers.
Housden’s letter warned that the chances of the decision being successfully challenged in court proceedings were ‘very high’. The letter will form a crucial part of county councils’ legal argument.
‘If a civil servant from the other side says that, we would be mad not to go for a judicial review,’ Hart said.
But leaders of Exeter and Norwich City Councils, who have long been pushing for unitary status, were ‘jubilant’ at the announcement.
Glyn Bellerby, Exeter City Council’s director of corporate services, told PF that unitaries were ‘more efficient and more focused’. While admitting there would be initial costs, he said ‘going unitary would be the best protection for Exeter in the future’.
He added: ‘I don’t see that short-term costs should really determine what we do in the long term. These costs are simply an investment’.
Ministers claim the creation of nine new unitary councils last year, including Cornwall, Wiltshire and Shropshire, is saving £150m annually. But Michael Chisholm, an emeritus professor at the University of Cambridge and expert on local government reorganisation, accused the government of ‘jiggling with data’.
He said the estimate did not account for ongoing costs – such as renegotiating contracts with neighbouring councils for sharing services – which he expected to equate to about half of the gross savings.
‘I’m in no way persuaded that the financial savings from unitary authorities are anywhere as big as ministers would like to believe. And they are small in relation to the economies local authorities
are being forced to make’, he told PF.
Chisholm, a former member of the Local Government Commission for England, said that the whole notion of moving to unitary authorities was ‘a rather misconceived priority with very few benefits’.
James Hulme, head of communications at the New Local Government Network, agreed that ‘the jury is still out’ on whether moving to unitary status led to financial savings.
But he said ‘it would be churlish to take unitaries off the agenda completely’, as pledged by the Tories, during a period of spending constraint.
‘In some areas it does make sense to rationalise services and go down the unitary route,’ he added.
A DCLG spokesman said it was not unprecedented for permanent secretaries to seek written authority from a minister, particularly when the government had not chosen the cheapest option.
‘Ministers believe there are compelling reasons for a unitary Exeter and Norwich to be created. Should any legal challenge be brought against our decisions, this question will be for the courts to decide,’ he added.
The Exeter and Norwich proposals have been a source of controversy since 2006 and were rejected by previous ministers.
They must be approved by Parliament before becoming effective from April next year. The structure of local government outside the city boundaries will remain the same.
