Local government reorganisation: switch to unitaries ‘could save £2.9bn’

3 Nov 16

Creating 27 unitary councils across the whole of England could save as much as £2.9bn, according to an independent analysis of local government reorganisation options undertaken for the County Councils Network.

The report by consultants EY examined six different single and two-tier governance scenarios for county and district authorities, using existing county boundaries. Based on the analysis of national data, EY found that creation of unitaries along county boundaries could save between £2.37bn and £2.86bn over five years, and average up to £106m per county. The single unitary option has the shortest payback period, generating savings within two years and two months, according to the review.

Among the other options examined was a move to create two unitary authorities per county, which would establish 54 councils.

Under this proposal, savings worth £1.17bn and £1.7bn would be made in a five-year timeframe, only around 59% of the saving of the proposal to create unitaries along current boundaries.

A third approach considered abolishing county and district authorities and creating three unitaries per county. However, the creation of 81 new councils countrywide could result in a net cost to the taxpayer of £33m over five years, although the range could also include a saving of £526m, dependent on how senior management and councillors are structured across the authorities.

The review also considered reforming the current two-tier system through merging districts to reduce the average number in a county area from 7.4 to 3. Such a scenario could make savings of between £531m and £839m over five years.

A further scenario to create three unitary authorities and a combined authority, which would then deliver major services like adult social care, children’s social care and transport, was likely to cost between £36m and £366m over five years. Such an approach has been considered in areas such as Oxfordshire and Buckinghamshire, but EY highlighted the risks of this ‘untried and untested’ model of reorganisation.

In a statement, CCN said it was neither for nor against structural reform, but commissioned the study to inform decision making in the area. It said the evidence strongly suggests the most effective foundations for structural reform – whether unitary or two-tier – are those built on the scale and geography of county councils.

The research comes after the Cities and Devolution Act allowed local councils to propose reforms in their areas that would not require unanimous consent to be implemented. This has led to proposals for reform, which could split historical county boundaries, with reform plans being proposed in Oxfordshire, Buckinghamshire, Northamptonshire, Hampshire, and Dorset.

“This body of work will feed into the debate as to the most efficient and effective manner to deliver complex local government services in this country,” CCN chair and Kent County Council leader Paul Carter, said.

“If structural reforms were to take place, a single unitary model not only creates the most efficiencies for frontline services and the greatest scope to lower council tax bills, but also the best platform to transform local services so they are sustainable and fit for the considerable demands for the future.”

Maintaining county-sized authorities was also key to public sector reform, he added. This is because delivering services at scale, under clear governance, and within coterminous boundaries with key partners, would benefit health and social care integration and economic growth, as well as enhancing the sustainability of services.

“Sub-county unitary options would fragment the services that matter to residents, potentially worsening them at a time when we can ill-afford to with demand rising, and could be an ineffective use of public money,” Carter added. “Instead, residents who rightfully expect quality services could be left with the likes of social care and children’s services delivered in unproven and untested ways, while setting back progress on integration and growth.”

Darra Singh, the head of government and public sector at EY, said the findings aim to provide an evidence base to inform the debates around county areas.

“This discussion will be increasingly important given the growing demand for services, funding reductions, devolution and structural reform debates, as well as uncertainty of future funding arrangements for local authorities,” he stated.

However, responding to the report, District Councils’ Network chair Neil Clarke called for a focus on placed-based public service reform with clustering within or across county boundaries. This could better reflect economic geography and natural communities.

“As a network, the DCN is clear that when it comes to devolution it should be for local areas to determine what works best for their locality and many of our members have demonstrated an appetite for the transformation of local services where there is local need and consensus. One size does not fit all,” he added.

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