Structural reform is on the agenda for Welsh town halls, but we would be better off focusing on how to make existing arrangements work better through improvements in culture and management effectiveness
Historically, local government in Wales had been organised through a binary system of eight county councils and 36 district councils, with a distribution of functions similar to that in England. However, in 1996 this structure was abandoned in favour of 22 unitary authorities based largely on the boundaries of the existing district councils or some amalgamation of those smaller district councils.
These arrangements left a legacy of concerns. Firstly, it is generally the case that Welsh local authorities are significantly smaller in terms of population than English or Scottish councils, Also, they display a wide range from Cardiff (population 336,000) to Merthyr Tydfil (population 55,000). This situation generates concerns that such small local authorities cannot deliver services efficiently and have difficulty in adequately resourcing some specialist services.
Secondly, there is a lack of co-terminosity between local authorities and the various other public bodies in Wales including health boards and police authorities. It is often argued that this is a major inhibitor of effective strategic planning.
Thirdly, the local government arrangements coupled with the absorption of the former Welsh Development Agency into the Welsh Assembly Government (WAG) left a lack of clarity about the critically important issue of economic development in Wales.
For some years now various multi-agency partnership arrangements have been in existence in Wales (similar to those in England) aiming to overcome some of these concerns and to improve the in coordination of the delivery of services, but this has had limited success.
Fast forward now to 2011 and we hit the consequences for Wales of the UK fiscal and public debt crisis. The revenue support grant settlement announced by WAG left Welsh local authorities in 2011 with an average reduction in grant of 1.4%, ranging from a rise of 0.1% in Cardiff to a ‘floor’ of -1.7% for most other authorities.
In future years, Welsh town halls can expect small increases in the cash amount of grants but this still implies significant reductions in real-terms funding. In England, councils are facing cash reductions significantly larger than that being felt by the hardest hit authorities in Wales, but even so the impacts of the reductions in Wales have major implications for organisations used to an annual growth in resources.
In the light of this, not surprisingly, there has been much debate about where Wales should go with regard to local government. A limited number of options seem to present themselves:
Abolition/Curtailment of functions
One radical option might be to abolish local government in Wales and have the Welsh Assembly Government manage all existing services directly. This is not as outlandish as it might seem because Wales is a small country. In England there are already several local authorities serving populations of around 1.5 million people compared with the population of Wales of around 2.9 million people.
A variation on this theme might be to retain local authorities with a service profile similar to English district councils but transfer the delivery of major strategic services, such as education and social care, to WAG.
It has to be said, such a proposal does not even seem to be on the horizon. I doubt if WAG, with its civil service culture, would have the ability or will to directly manage locally based services in an effective and efficient manner and ministers in Wales would not then be able to blame local councillors for the failings in such services.
Enlargement of functions
This is effectively the opposite of the previous approach and would involve Welsh local authorities expanding their role by taking on responsibility for other existing public services. The obvious example here would be for responsibility for the Welsh NHS to be transferred from WAG to Welsh local authorities. In theory this might improve multi-agency working between health and other public services and could improve efficiency since certain central overheads (such as finance and IT) could be spread over a much larger base.
However, the chances of this happening are nil. The NHS is such a politically hot topic that WAG would not want it handed over to local government in any circumstances. Also, the current local government arrangements in Wales mean that there would still be a lack of co-terminosity with the boundaries of the health boards.
When I was a young researcher with the Royal Commission on the NHS in the 1970s, I remember being told that the medical profession would never countenance the health service being part of local government. They could never accept the idea of doctors being accountable to councillors. The way in which the medical profession has just demolished the UK government’s planned health reforms for England shows the immense political power the medical profession still has. They are unlikely to allow the NHS in Wales to become part of local government
Organisational Mergers
There is considerable support in Wales for there to be a merger of many of the existing local authorities in order to create a smaller number of bigger units that might overcome the alleged problems of small size. The end result could be a reduction of Welsh local authorities to around a dozen organisations.
Unfortunately, even though this is an idea dear to the hearts of many politicians in Wales, there are some serious problems. Because of the way such mergers are conducted in the public sector the process tends to be rather long winded, disruptive and immensely expensive. Moreover, quite often the merger options developed are (for political reasons) completely the wrong options and no-one should subsequently be surprised that they do not produce the benefits intended.
The killer argument is that unfortunately what research is available suggests that in practice there is little evidence to link size of local authority with performance. While this may be strange and unexpected, what I have observed is that when such larger units are created the lack of a market discipline leads them to introduce much more elaborate and complex management structures the costs of which outweigh any savings that might otherwise be made.
Consortia arrangements
The fourth option is basically to stick with the existing structure of local government in Wales but to develop a network of consortia, involving several local authorities, for the delivery of certain specific services. This would aim to overcome the problems of small size. This is not a new idea and has been undertaken in various parts of the UK and several consortia already exist in Wales. It currently seems to be the preferred way ahead in Wales with various consortia springing to life covering a wide range of services.
However, like so many of these initiatives, there does sometimes seem to be a certain lack of thinking around the creation of such consortia. For example: what benefits should the consortia generate and how are these to be realised? Wishful thinking won’t do it.
Furthermore, while they may be merit in such consortia, it is probably better if they grow organically, building on existing relationships rather than being forced from on high by unwilling partners.
In conclusion, it doesn’t seem to me that any of the above options are likely to deal with the problem of squaring increasing demands for local government services (such as a consequence of the ageing population) with a declining resource base.
As a former management consultant, I was always taught that structure should follow process and culture and not the other way around. Thus, rather than tinker with structural issues in Welsh local government we would be better off focusing on how to make the existing arrangements work better through improvements in culture and management effectiveness.
The focus, as always, should be on the triple issues of vision, leadership and performance management. Unfortunately, these are issues which don’t really excite politicians so don’t expect the structural debate to go away any time soon.
