In an examination of the costs of reform, the institute said that upfront costs could be offset against potential savings of £65m a year across the county after a three-year period.
The Reforming Local Government report comes after the Welsh Government set an April 2018 deadline for reforms to reduce the number of authorities from 22.
In September, Welsh public services minister Leighton Andrews said he would give councils until the end of November to devise their own plans for mergers before imposing any solution.
CIPFA’s report, commissioned by the Welsh Local Government Association, the Society of Local Authority Chief Executives and Senior Managers Wales and the Society of Welsh Treasurers, represents the first detailed study on the potential costs of reform.
It estimated that moving to a new system of 12 authorities could cost between £160m and £268m, with the higher estimate reached as a result of costs including redundancy (£27.5m), spending to harmonisation pay and grades across authorities (£81m), and council tax coordination (£56.9m).
This could be offset by around £65m in annual cost reductions that could be made after a three-year period. This includes £35m in savings earmarked from back office integration, with a further £27m projected from a merger of frontline services.
Setting out the findings, CIPFA chief executive Rob Whiteman said the assessment of the financial implications of restructuring was based on a thorough evaluation of the current cost and staffing profiles of the councils.
‘The evidence suggests that the finance profession in particular will need to be keenly aware of the risk management issues of undertaking large structural change whilst simultaneously continuing to deliver on prolonged reductions to council budgets,’ he said.
‘If council mergers are to deliver for the public, politicians must undertake thorough due diligence and provide a rigorous evidence base for decision-makers to determine the robustness of the Welsh Government’s ambitions.’
The report has conducted its analysis on the basis of 12 councils, after the Williams Commission recommended cutting their number from 22 to between 10 and 12.
The report assumed that Powys, Carmarthenshire and Swansea authorities to were unchanged, with the following authorities merged:
- Flintshire and Wrexham
- Ceredigion and Pembrokeshire
- Caerphilly, Blaenau Gwent and Torfaen
- Rhondda and Merthyr Tydfil
- Cardiff and Vale of Glamorgan
- Gwynedd and Anglesey
- Conwy and Denbighshire
- Monmouthshire and Newport
- Neath Port Talbot and Bridgend
