Chester districts unitary bid has financial flaws

4 Oct 07
Local Government Secretary Hazel Blears is under pressure to reject a proposed overhaul of council services in the Northwest, after auditors representing one of the nine bids for unitary status expressed serious financial concerns.

05 October 2007

Local Government Secretary Hazel Blears is under pressure to reject a proposed overhaul of council services in the north-west, after auditors representing one of the nine bids for unitary status expressed serious financial concerns.

Blears will shortly be approached by representatives from Cheshire County Council, who are demanding that she reverses her decision to support splitting the county into two unitary authorities.

The Department for Communities and Local Government published Blears' preferred list of nine new unitary authorities in July, but asked the four district-based bids – those including the cities of Bedford, Chester, Exeter and Ipswich – to undertake further financial work and report back this week.

Officials asked the districts backing Chester City Council's bid – dubbed 'People and Places' – to provide extra details on specific arrangements for splitting Cheshire into two unitaries: accommodation, ICT, the closure of existing districts, communications, future elections and contract negotiations.

Chester published detailed plans for east and west Cheshire unitaries on October 1. But in an accompanying report, Chester's own auditors, Deloitte, defined 18 out of 23 key financial assessments as carrying above risks deemed above 'normal'.

Jeremy Taylor, chief executive of Cheshire CC, told Public Finance: 'The districts' own auditors have exposed serious areas of concern. There are half a dozen points that make us think that the people that currently receive our services and the money that's around to pay for services in Cheshire are not safe.

'One or two of the financial claims are quite extraordinary.

Three of Chester's financial proposals - including plans to merge the constituent authorities' IT systems – have been classified as 'high risk'.

Officials representing People for Places believe that there will be no one-off costs for IT overhauls but Deloitte reported that 'is not consistent with other submissions nor experience of previous organisations.'

In addition, auditors criticised the districts' plan to set aside just £200,000 for contingencies relating to the restructuring plan, which would see seven constituent councils merged into two.

'The level of contingency, at 1.2% of total one off costs, is lower than comparable submissions,' Deloitte reports.

In all, just five of the 23 assessments were deemed 'normal' risks and Deloitte's study concludes that Chester's overall plan carries 'intermediate' risks.

'The combination of a zero total for one-off ICT costs and low contingencies…are things that worry us a great deal,' Taylor told PF. He also expressed concerns over Chester's plans to manage legacy 'major projects' - such as private finance initiative deals, extra care housing and road building – deemed by Deloitte to carry an 'intermediate' risk.

Cheshire now has until October 24 to respond to the proposed reorganisation. But Taylor said that, amid concerns over a potential general election in November – which could delay the Local Government Bill introducing more single-tier authorities - he would respond to Blears' team sooner.

He called on Blears to revert to Cheshire's own bid for unitary status, which he claims met all of the DCLG's requirements but was dropped in favour of the districts' blueprint this summer.

It is believed that Blears favours the districts' blueprint because dividing the county into east and west unitaries would also dovetail with government plans for city regions.

Supporters claim that west Cheshire would feed the Merseyside city region, while east Cheshire would feed Manchester's. Taylor claims that division is 'false' and misunderstands the local economy.

However, local district leaders condemned Cheshire's campaign to derail Chester's bid.

Justin Madders, leader of Ellsmere Port and Neston Borough Council, said the Deloitte study had 'validated' the bid.

'It is a strong one as judged against all the criteria set by the government – not just finance.

'But it is irresponsible of the county to say that we have failed to justify our financial claims…[which] show that two authorities will save £30m each year across Cheshire.'

A spokeswoman for the DCLG said that, barring an election disruption, Blears' would make a final decision in November. Bedford, Exeter and Ipswich also published their revised proposals on October 1. Bids from Cornwall, Durham, Northumberland, Shropshire and Wiltshire county councils are also under consideration by Whitehall officials.


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