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local government re-organisation: how and why use a unitary model?

17 August 2018

This article is taken from August's public matters newsletter. Click here to view more articles from this issue.

Local government re-organisation has become somewhat of a hot topic over the last few months, especially in light of the Northamptonshire County Council Best Value Inspection Report which recommended the moving to a unitary authority model in Northamptonshire. Furthermore, several other local government areas such as Nottinghamshire and Leicestershire have begun considering this route, and moving away from the more traditional two tier system of county and district councils.

This article, the first in a series of local government re-organisation articles, seeks to explain some of the reasons why, in the current political climate, local authorities are beginning to consider re-organisation, the legal framework which underpins this, and some key factors local authorities should consider when looking to re-organise.

Why re-organise?

The unitary model was established under the Local Government Act 1992 and is effectively where there is a single tier local authority which is responsible for all local government functions within a certain area.

The idea of local government re-organisation in to a single tier model is not a new one. In 2009, five shire counties moved from a two tier system to unitary authorities. Furthermore, report from Lord Heseltine in October 2012 titled ‘No stone unturned in pursuit of growth’ recommended that all two tier English local authorities looked to move towards a unitary model. The report went on to say that council members of those new unitary authorities should be elected using the same electoral cycle across England at the same time every four years. However, in recent months there has been a renewed focus on reorganisation and the challenges and benefits that it might bring.

The principle driver of these discussions and decisions is one of rationalisation and cost savings. The idea is simple at a high level; one larger authority taking on the role of several smaller district and county councils will ultimately lead to cost savings due to streamlining, economies of scale and reduced administration resources. Numerous proposals made by local authorities in the past have been accompanied by reports which show that ongoing savings can be made. For example, PwC estimated £13-£14 million of savings in the first year from a unitary option in Hampshire, which could rise to £38-£40 million in the third year. Furthermore, Deloitte stated in their May 2011 report ‘Sizing-Up: Local Government Mergers and Service Integration’ that over a 24 month period there was a savings total of 13.4% on services within the scope of their analysis for unitary authorities compared to a 2.1% increase in service costs over the same period for those authorities remaining in a two tier system. This report compared those unitary authorities created in 2009 against those which remained as two tier areas. In the current climate where cuts to local government spending continue to occur, the prospect of making significant savings is a persuasive one.

There is also an argument that having a single tier local government will result in residents receiving a more joined up suite of public services due to the responsibility of those services falling on a single authority. This also has potential additional benefits of allowing for greater innovation and strategic decisions to be made with regards to services, due to the fact that only one authority is responsible for decision making.

It also has the opportunity to lead to a more joined up and coherent approach for local government. Often disagreements between the tiers of local government can detract and get in the way of the real arguments that need to be had with central government. If that layer of disagreement is removed then local government can speak with more of a one voice which could be more powerful in discussions with Whitehall. This is particularly the case at a time when calls for greater freedoms and powers for local government need to be made.

However, careful consideration needs to be given in relation to any re-organisation decision as there are also a number of potential pitfalls. Firstly, the proposal itself can be inherently divisive within local authority areas. This can be demonstrated most recently by the Nottinghamshire County Council decision to prepare a business case for a new unitary authority which faced dissent from its own council members and perhaps unsurprisingly from some of the district councils. Secondly, there is an argument that creating larger authorities actually results in a greater separation between the authority and the communities they are meant to serve and represent. Thirdly, there is a danger that the projected savings that a unitary model is meant to lead to do not always materialise in practice and may be outweighed by the costs incurred in establishing the new unitary authority. Fourthly, it is worth noting that unitary authorities can still suffer from spending problems, for example Torbay Council who recently announced an immediate moratorium on all urgent non-expenditure in response to a £2.8 million overspend.

To summarise, in the ever darkening financial climate for local authorities, the desire to streamline in to a larger single tier authority or authorities may make sense on the surface, but there are numerous economic and local factors which need to be investigated on a case by case basis to ensure it presents a workable and economically beneficial proposal which also actually benefit the communities they serve.

How can local authorities re-organise to a unitary model?

Moving from a two tier system to a unitary authority structure has been made substantially easier due to the Cities and Local Government Devolution Act 2016. This act granted the Secretary of State the power to make regulations prescribing the governance arrangements, the constitution or membership, or the structural and boundary arrangements for local authorities. Essentially this power allows the Secretary of State to make regulations which allows for the moving of electoral boundaries, the creation or abolition of local government areas, the abolition of an existing local authority, and the transfer of functions from district councils to county councils (or vice versa). In essence, they have the power to pass regulations to allow them to deal with all of the practical things that would need to be done in order to restructure an area in to a unitary model. This power has already been used several times including, for instance, in May 2018 whereby a regulation was passed to create a single tier of local government for Dorset, Bournemouth and Poole with effect from April 2019.

Furthermore, until 31 March 2019, the act also allows for these regulations to be made by the Secretary of State notwithstanding the fact that not all effected local authorities may agree with the proposals. In fact, to the extent the changes apply to a non-unitary district council area, regulations may be passed provided they are supported by a non-unitary district council whose area is, or forms part of, the non-unitary district council area or a county council whose area includes the whole or part of the non-unitary district council area. The proposals do not need universal approval from all district councils.

Factors to consider in a re-organisation

Making the decision to restructure an area of local government is clearly a major decision which requires a lot of thought, research and analysis. However, the below list highlights some of the key considerations that it may be worth having in mind:

  • consider the geographical features of the area as this will have a bearing on potential boundaries. Where are the major economic hubs? How is the area divided in terms or urban and rural areas? How big is the population and how is this divided within the area?
  • consider the financial effects of the re-organisation. How much is it going to cost to actually conduct the re-organisation? How does this compare to any projected savings that can be made?
  • consider the political effects of the re-organisation. How much support from other councillors does the idea have? Are the other councils that may be involved on board with the proposal? How do residents feel about the proposal?

If you have any further queries about local government re-organisation generally, or you are interested in exploring potential re-organisation routes in your local government area, we would be happy to assist you. Please contact our specialist public sector team.

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