Reorganisation could create larger versions of dysfunctionality, warns independent report

Local government reorganisation (LGR) risks reinforcing the status quo by creating “bigger, suboptimal organisations”, which fail to bring about a step change in public service reform.

The “short term cost-saving exercise through the creation of a small number of large councils” being undertaken in many places is insufficient response to intensifying challenges including stagnant growth, fiscal restraint, rising inequality, intergenerational poverty and loss of trust in institutions, a major new report (which is attached) says.

“At worst it will be a hugely costly and disruptive process that will simply create larger versions of semi-functional or dysfunctional arrangements that aren’t delivering for those that need it the most or for the nation as a whole,” the independent ‘Growth, Reform and Trust’ report by Inner Circle Consulting for the District Councils’ Network says.

You can read the Inner Circle Consulting report for DCN here

The English Devolution White Paper, published in December, demanded the 164 English district councils are merged with county councils to create unitary councils, each with populations in excess of half a million people.

The Government imposed a rapid timetable, with interim LGR proposals due by 21 March and new councils covering a total of 20 million people due to be up and running by 2028. The speed demanded adds to a lack of “bandwidth” in local government to develop ambitious proposals. Often the “the outcome could be driven by risk aversion rather than innovation, and a mistaken conclusion that it would be simplest just to consolidate things as they are into the most basic model of something ‘new’.”

“The greatest risk is losing momentum and settling for change that isn’t change. Instead, LGR must focus on a meaningful renewal and reform – driving economic growth, improving public well-being, and restoring faith in the local state,” the report says.

“Now is the time for optimism and action. By prioritising sustainable reform over short-term fixes, LGR can reshape local government into a dynamic, effective force that truly serves the people and places it is here to serve.

“The returns to the public purse from growing economies, building housing, preventing future needs and restoring trust are far more significant than the short-term savings that accrue from consolidating existing functions.” It urges proposals to demonstrate how such objectives will be delivered through geography, operating model, design, leadership, capability and fit with new or existing institutions or partnerships.

The report backs flexibility over the 500,000 minimum population size limit so that the Government looks “beyond the lure of theoretical cash savings” set out by those arguing that fewer councils means greater savings to listen to ambitious proposals for smaller councils.

“A place-based approach is vital, as is understanding that places all need different approaches. And so it follows that differences in size and scale are a necessity, not an indulgence of parochial interests.” It states that “what works for city regions is not the same as what works for new towns or for cathedral cities or university towns”.

“Leaders should also appreciate the danger of losing the voices and power situated in towns or smaller cities in predominantly rural settings, for to do so would pose a real risk to the government’s growth agenda. Any savings from reductions in the overall number of councils must be weighed up against the economic cost of sub-optimal growth that might then follow.”

It calls for proposals to set out at the outset how delivery models will become more preventative, tackling “upstream” factors that cause people to need expensive treatment or support. “We must make a clear and decisive move away from developing services that tackle only the manifestation of need, to build those that can alleviate the risk factors triggering it.

“Tackling the wider determinants of health or root causes of demand into statutory services requires a thoughtful placemaking and an intentionally place based approach.”

In response to the report, Cllr Sam Chapman-Allen, Chairman of the District Councils’ Network, said:

“The insightful report contains much food for thought for those who believe that simply by merging existing councils into mega councils we’ll somehow create sustainable local government.

“I wholeheartedly back any local government reorganisation that retains the local in local government and transforms public services around the unique needs of our communities, but we need to raise our game beyond merely consolidating existing structures to radically rethinking them so that they meet the needs of our communities in the coming decades.

“It’s going to take more than mere mergers to bring about growth, end the crisis of trust in local institutions and to move the focus of services from reactive to preventative. To reorganise without determining how we transform is likely thwart central and local government’s shared aim of promoting growth, jobs, housing and prevention.

“The proponents of mega councils of at least half a million people have been quick to claim they’ll lead to huge savings. But these savings are largely theoretical and need to be set against far greater efficiencies and service improvements resulting from more ambitious public service reform.

“This report also adds to the evidence that the Government needs to be flexible when we determine the size of new councils. The danger is that so many places – but small cities and rural areas – are likely to be held back if subsumed into a far wider area.

“District councils want to work with the Government, our county partners, local business and, in particular, our communities to devise a new system which is sustainable and equipped to respond to the intensifying challenges we face.”

Chris Naylor, Managing Director at Inner Circle Consulting, said:

“Local Government Reorganisation offers a vital opportunity to address the challenges of growth, preventing upstream demand, tackling inequality and poverty, and restoring trust. These are the real drivers of financial sustainability and must be prioritised over short-term fixes based on consolidating spreadsheets and maps.

“LGR success depends on co-production and commitment. Reform should build local capacity, confidence, and resilience rather than merely rearrange structures. Establishing independent design and transition teams and drawing expertise from across existing councils, can ensure reforms are strategic, innovative and effective.

“Districts are a crucible for positive change, optimism and action and must play a vital role in the design and implementation of new local government institutions.”

• The report is being launched on Thursday, 13 March at the District Councils’ Network Annual Conference in Windsor.