Wales faces its third local government reorganisation in 40 years. But rather than tinkering with structural issues, it would be better to focus on dealing with poor performance and improving both cultural and managerial effectiveness
George Santayana, the American philosopher, was famously quoted as saying that ‘those who cannot remember the past, are condemned to repeat it’. Maybe this could be applied to the restructuring of Welsh local government.
The state of local government in Wales has been a concern for some time. Pressures from financial austerity and growth in service demands are piling on top of a situation where a number of Welsh local authorities have already been managed by external commissioners (for some or all of their services). It suggests a structure of local government that is unsustainable.
This came to a head in April 2013 when the Welsh Government created the Commission on Public Service Governance and Delivery, with Sir Paul Williams as chair. Williams was charged with the task of examining all aspects of governance and delivery in the devolved public sector in Wales.
Of the many recommendations contained in the commission’s report this week, the most eye catching is the proposal to reduce the number of local authorities in Wales from 22 to 12. Of the 12 proposed local authorities, three already exist in current form while nine will involve mergers of existing local authority units.
If these mergers take place, this will be the third reorganisation of Welsh local government in just over 40 years. In 1974, the complex local authority structure was rationalised to a binary system comprising eight county councils and 38 district councils with a distribution of functions similar to that in England. In 1996 a further reorganisation took place involving the abolition of those existing authorities and their replacement by a structure of 22 unitary authorities based largely on the boundaries of the existing district councils.
As someone who was directly involved in both of these mergers, I look at this unfolding scene with interest and some trepidation. During the 1974 reorganisation I was an employee in a Welsh county council, while during the 1996 reorganisation I was a management consultant advising Welsh local authorities on their new organisational arrangements.
The 1996 arrangements with 22 local authorities, which were significantly smaller in terms of population than English or Scottish local authorities, were criticised heavily at the time of the reorganisation. Many of us preferred a system of unitary authorities based on the eight county councils.
There were concerns that such small local authorities could not deliver services efficiently and would have difficulty in adequately resourcing specialist services. Furthermore, the 1996 arrangements left a lack of co-terminosity between local authorities and other public bodies in Wales including health boards and police authorities. This lack of co-terminosity is often argued to be a major inhibitor of effective strategic planning.
Subsequently, these concerns have been debated endlessly in academic circles, but what has really thrust Welsh local government into the limelight are the twin issues of financial austerity and poor service performance.
In future years, Welsh local authorities can expect small increases in the cash amount of grants but this still implies significant reductions in real-terms funding. However, in England, councils are facing cash reductions significantly larger than being felt by the hardest hit authorities in Wales. Even so the impacts of such reductions in Wales have major implications for organisations used to receiving annual growth in resources.
A number of options present themselves as a means of resolving the problems of Welsh local government including the following:
- Abolition – abolition of local government in Wales with the Welsh Government directly managing all existing services directly. This is not as outlandish as it might seem because Wales is a small country. A variation on this theme might have been 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 the Welsh Government. This was never really a starter. I doubt if the Welsh Government would have the ability or will to directly manage locally-based services in an effective manner and ministers would not then be able to blame local councillors for failings in such services as they do at present.
- Collaboration and consortia - this would aim to overcome the problems of small size by developing collaborative arrangements (often formalised into some form of consortia) for the delivery of certain specific and possibly specialised services over a number of local authority areas. However, in practice, so many of these initiatives seem to run into problems of various kinds including: lack of public understanding, dubious governance arrangements, lack of benefits realisation, poor cost control and political acceptability.
- Mergers – this would involve taking the existing local government units and merging them into a smaller number of larger units without amending any existing boundaries or service responsibilities. The relatively simple approach is basically that favoured by the Commission on Public Service Governance and Delivery.
- Complex restructuring – this would involve creating a smaller number of local authorities but possibly with boundaries significantly redrawn to reflect changing circumstances such as population size and mix, economic profiles, population movements and income base. Also consideration might also have been given to the transfer to local government of some public services (eg public health) currently the responsibility of other public authorities.
There has been considerable support in Wales, for some time, 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. This approach would probably be popular with the public as it would involve a reduction in the number of paid councilors but is also often beloved of politicians because it gives the impression of doing something to deal with a major problem.
Remember the words of the Roman courtier Gaius Petronius who some 2,000 years ago said: ‘We trained hard ... but it seemed that every time we were beginning to form up into teams we would be reorganised. I was to learn later in life that we tend to meet any new situation by reorganising; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralisation.'
Unfortunately, even though reorganisation is an idea dear to the hearts of many politicians in Wales, there are potentially serious issues that cannot be ignored. These include:
- Unrealistic cost savings - because of the long-winded way such mergers are conducted in the public sector (as opposed to the more brutal approaches in the private sector) the predicted cost savings from merger never actually materialise. Research by Michael Chisholm, a member of the Local Government Commission in the 1990s, showed that the financial cost of the 1994-5 reorganisation of English local authorities was greatly underestimated and that it was unclear whether this was ever recouped through any subsequent efficiency savings. Research I did some years ago on the merger of further education colleges produced a similar picture.
- Disruption – those of us who were involved in previous local government reorganisations will clearly remember the level of disruption involved and the impact on service provision. Apart from the monumental workload associated with tasks such as: harmonising working practices, creating new structures, establishing staff terms and conditions, dealing with redundancies etc there will be a huge element of ‘taking your eye of the ball’. Once the mergers are confirmed, many people, particularly those in senior positions will (quite understandably) spent a lot of their time jockeying for position in the new organisation rather than managing existing services to the best of their ability.
- Residual weaknesses - There is an old adage (especially in the commercial sector) that if you merge two weak organisations you end up with one (larger) weak organisation. In the private sector the most likely approach is for a strong company to take over a failing company and turn it around. This would involve kicking out the existing management, quickly changing the way things are being done in the weak company, promptly realising savings and ensuring that the merger resulted in a strong merged company. Unfortunately in the commission’s proposals there are a number of glaring situations which involve the merger of weak organisations and it is not clear how this will play out in practice.
- Lack of improved performance - the killer issue is that the research available suggests there is little evidence to link size of local authority with performance. While this may be strange and unexpected, what I have anecdotally 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.
- Politicisation of structures – in the 1970s, the proposed configuration of restructured local government in South Wales involved the creation of two large county councils (West Glamorgan and East Glamorgan) both of which would have had solid Labour Party control. At the last minute, the incoming Conservative Government changed the plan so that South Glamorgan (Greater Cardiff) was split off from East Glamorgan (thus leaving Mid-Glamorgan). South Glamorgan was much more likely to be Conservative controlled, meaning that the capital city was not under the political control of the Labour Party. Hence, in the current day, one must be cautious that the configurations of the new local authorities proposed by the commission are not altered by the ruling party on the basis of calculations as to the likelihood of them exerting political control in various areas.
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 (eg 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, the problem would best be addressed by directly dealing with poor performance. We would be better of 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; political and managerial leadership; and performance management.
Unfortunately, these are issues that don’t really excite politicians, so don’t expect the structural debate to go away any time soon.
