News analysis Council cull is inevitable, admit Scottish Fds

17 Nov 05
David Scott reports from the Public Finance /Marsh debate held in St Andrews on November 10

18 November 2005

David Scott reports from the Public Finance/Marsh debate held in St Andrews on November 10

A narrow majority of directors of finance in Scotland believe that the Executive's efficient government agenda will inevitably lead to a reduction in the number of councils north of the border.

This was the outcome of a dinner debate organised by Public Finance at the Macdonald Rusacks Hotel in St Andrews last week. The FDs reached their decision after listening to the opposing views of former Edinburgh council leader Keith Geddes and the president of the Convention of Scottish Local Authorities, Councillor Pat Watters.

The motion – 'This house believes that the efficient government agenda will inevitably result in fewer Scottish councils' – was carried by just ten votes to nine, illustrating the divided views of Scottish finance directors.

But the outcome is significant. The debate, the first time that the opinion of finance directors has been tested on the issue, comes when the Scottish Executive is committed to a thorough review of public services and an efficiency programme aimed at achieving £1.25bn in savings by 2007/08.

As Public Finance disclosed recently, the Executive and Cosla are carrying out a joint 'modelling' project, which includes the idea of creating 'super-councils' to run all, or the majority of, public services.

Finance Minister Tom McCabe has stressed that various options will be considered. While stating that a full-scale reorganisation of councils is not on the agenda, he has questioned whether there is a need for 32 chief executives and 32 directors of finance.

The debate, chaired by Highland finance director Alan Geddes and sponsored by Marsh, the risk and insurance services firm, began with opening statements by the two speakers. Arguing in favour of a reduction in the number of councils, Keith Geddes underlined his belief that Scotland is over-governed with 32 councils, 15 health boards, 23 local enterprise companies (Lecs) eight police forces, eight fire brigades and numerous quangos.

Since 1999, there had been continuous additions to this 'veritable bureaucratic feast', including regional transport partnerships, city and region planning structures and criminal justice boards, he said. 'All of these have been added without much thought given to the cumulative impact on the overall government of Scotland. This represents ad hoc governance, inimical both to strategic planning and to efficient service delivery.'

Geddes added that Scotland could not afford to maintain the cost of paying for the current levels of governance and number of public sector institutions. Savings had to be made.

He asked: 'Will these savings come from reduced services to local citizens or from a much needed reduction in the number of councils? Can anyone, apart from those interested in preserving the status quo, really argue against the inevitable?'

Geddes maintained that a smaller number of larger strategic councils would stop the upward drift of power and responsibility to Holyrood. A stronger system of local government would not only provide a counterbalance to the Executive, but would be likely to secure creative policy initiatives coming from local authorities rather than initiatives being imposed on it from above.

Opposing the motion, Pat Watters said change was an opportunity only if improvements could be made. 'If we're saying that change comes at the price of governance or at the price of democracy, I don't believe that's an improvement. I believe that's a backward step,' he said.

While Watters agreed that change was inevitable, he said it had to be accompanied by reforms that made the whole of the public sector more democratically accountable. Local government spends only a third of public sector expenditure, with the rest accounted for by health and by the 131 quangos.

'The opportunity to look at the whole of the public sector and at governance is something we should take beyond the argument about the future of local government,' he added.

Changing the structure and redrawing the boundaries of councils would not by itself bring efficiencies, as had been proved in the last shake-up.

Watters acknowledged that there were too many chief executives heading different bodies throughout the public sector and questioned why there was a need for so many Lecs operating in the same areas as councils. He also agreed that there was a case for more partnership working and for looking at joint backroom services, but said this should apply to all public bodies.

During a lively question and answer session, members of the audience challenged the speakers on a range of issues, including the risk of a democratic deficit if larger councils were created, the implications for rural authorities and whether the sharing of services would be enough to meet Executive efficiency targets.

The most forthright view was put by Donald McGougan, director of finance for City of Edinburgh Council. He said: 'It is inevitable we will have fewer councils. I think that will possibly help us in the longer term by having more powerful councils that will have a bigger role in relation to health boards and enterprise companies and other people.'

He did not think attempts to share services, including merging backroom and front-office functions, would deliver results quickly enough to satisfy politicians after the 2007 elections. 'We're not doing enough. The agenda has been out there for nearly two years now. We've only got to the stage of loading money into consultants' pockets for feasibility studies,' he said.

Robin Bennie, director of finance for Dumfries & Galloway Council, said rural authorities, while willing to share the 'pain and gain' of efficiency savings, wanted a political map that would allow them the freedom and ability to develop local policies appropriate to their needs.

In reply, Watters raised the possibility of creating bodies such as a Western Isles Plc, in which the elected body was responsible for all public services.

Geddes said the issue was whether different models could be adopted for different parts of Scotland. He understood a current review of Scottish Enterprise would result in a reduction in the number of Lecs and the creation of a new model based on city regions.

Alex Jannetta, director of finance for Falkirk Council, said that when Scotland had large regional councils, regional councillors were sometimes seen as being remote from their electorates. He asked: 'If there is a reduction in the number of authorities, is there a danger that there will be a democratic deficit again in terms of the relationship between local politicians and their electorates?'

Geddes argued that the former Strathclyde Regional Council had been a massive success in equalising services across the region. Larger councils could keep in contact with their electorates by forming local area committees.

Watters said surveys had shown that voters believed their councillors were already more accessible than MPs or MSPs – the result of bringing services closer to the people.

Alan Logan, head of finance for West Lothian Council, questioned whether the Executive's efficiency targets could be achieved as a result of the sharing of services and modernised working practices. 'If councils deliver savings in this way, is the Executive likely to be satisfied or is there a preconception there will be fewer authorities?'

Watters said councils had already been successful in delivering efficiency targets and that redrawing boundaries alone would not improve services. 'Structure is not the problem, it is duplication of services that is the problem,' he stressed.

Both speakers voiced their strong opposition to any moves that would create a national education service for Scotland, claiming it was a service that had to remain with local government.

In his summing-up, Geddes said that while he disagreed with Watters on the way ahead, he believed there was agreement between them on one issue.

'I think we both agree that by 2011 something significant will happen. It's important that all of us with an interest in local government try to set that agenda and not respond to an agenda set by somebody above.'


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