County Councils Network “remains concerned” about financial implications of local government reorganisation if it only creates small unitaries

The CCN's comments came following a BBC report about how the UK government had confirmed it had not carried out its own analysis of the potential costs and savings of its proposed programme.

In January this year the District Councils Network (DCN) had suggested there was "little evidence" behind the Government's requirement for all two-tier areas to reorganise into unitary councils covering a population of more than 500,000 people.

The DCN expressed alarm over the Ministry for Housing, Local Government and Communities' (MHCLG's) reliance on just one report from consultancy firm PricewaterhouseCoopers (PwC), which the DCN described as being "out of date", to base its policy on.

That report was commissioned by the CCN and published in 2020, although in March this year PWC updated its analysis.

The revised analysis suggested that establishing unitary councils covering 500,000 or more people could save almost £2bn over five years.

PWC also suggested that splitting two-tier areas into 58 new unitary authorities based on a minimum population of 300,000 would cost £850m over five years and deliver no savings, due to the cost of splitting up and duplicating county council social care services into multiple new authorities.

In a comment published today in response to the BBC coverage (29 August), Cllr Tim Oliver, Chair of the County Councils Network, said: "Analysis by PwC has shown that, if delivered at the right scale, local government reorganisation could unlock billions in efficiency savings to be reinvested in frontline services.

"However, we remain concerned over the potential costs of reorganisation where proposals seek to replace the two-tier system with multiple small unitary councils."

Cllr Oliver said it is "absolutely essential" that the Government scrutinises and rigorously evaluates all reorganisation proposals against their own statutory criteria, including ensuring new councils are the right size to achieve efficiencies, improve capacity and withstand financial shocks.

"Failure to do so could pile further strain on care services that are already under pressure and at time when many county and district authorities could see their funding reduced as part of the Fair Funding Review," he warned.

The District Councils Network meanwhile said it was "astonishing" that the Government is relying on one report for its reorganisation proposals.

Cllr Sam Chapman-Allen, Chair of the DCN, said: "Mega councils, with populations of half a million people or more, could be imposed on areas when there's no independent, up-to-date evidence to justify councils of this size, and many large councils created previously are struggling financially."

Cllr Chapman-Allen called on the Government to commission analysis on the optimal size of councils, focusing on how to avoid "diseconomies of scale which can occur in vast organisations".

He added: "The danger is that despite the huge expense that's going into reorganising local government, it will lead to poor results, failing to offer value to council tax bill payers, and diminishing vital services such as housing, leisure centres and parks, which face cuts to shore up social care.

"Reorganisation should be an opportunity to reform the entire local public sector, to drive growth, improve public wellbeing and enhance local democracy. If we go ahead without evidence of what works, we'll miss a rare opportunity to rethink the local state."

A spokesperson for MHCLG said: "Reorganisation will improve services and save taxpayers’ money. Councils across the country have also told us that bringing services together under one roof means residents get joined-up support when they need it most, while clearer structures mean people know exactly who's responsible for delivering their services.

“Councils will also develop their own proposals for how reorganisation works best in their areas, as we fix the foundations of local government through our Plan for Change.”

Adam Carey