Large unitary councils “essential” and could save £1.8bn: County Councils Network

Establishing unitary councils covering 500,000 or more people is "absolutely essential" and could save almost £2bn over five years, the County Councils’ Network (CCN) has said.

The CCN also advised against creating smaller councils, arguing such a move could cost taxpayers "hundreds of millions".

However, the District Councils' Network (DCN) has cast doubt on the report, with its chair, Cllr Sam Chapman-Allen claiming "there is no way" £1.8bn can be found by merging councils "without ravaging the services local people most value to find savings".

The CCN report comes in response to the Government's reorganisation programme, which aims to end ‘two-tier’ local government, replacing 185 county and district councils with new unitary authorities in 21 areas. 

Announcing the scheme in December, ministers said that new unitary councils should have a population of 500,000 or more.

However, they have also suggested flexibility on this number, with district councils across the country subsequently proposing new councils with populations of 300,000 or lower.

According to the CCN report, which drew on new data produced by PwC, replacing the two-tier system with councils with minimum populations of 500,000 or more could save at least £1.8bn over five years.

However, the CCN report also warned that any savings from reorganisation would reduce if county and district authorities are replaced with multiple smaller councils.

The analysis 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.

Higher one-off transition costs and lower long-term efficiency savings would also contribute to the costs, the report said.

The report added: "In contrast, creating 29 new unitary councils based on a minimum population of 500,000 would save £1.8bn over five years, and an annual saving of £500m thereafter.

"This is because annual disaggregation costs reduce dramatically by almost three quarters (73%), while one-off transition costs are 28% lower."

Cllr Tim Oliver, Chairman of the County Councils Network, said: “It is absolutely essential that the government now stick to the statutory criteria they have set out, treating the 500,000 as a minimum not an optimum population scale."

He added: “The CCN is not being dogmatic over whether an area chooses to reform into one or more unitary authority.

“It is ultimately up to local areas to choose which option to pursue, considering both the financial implications and other impact factors. However, they must do so mindful of the costs and risks involved in the reorganisation process.”

Responding to the report, DCN chair, Cllr Chapman-Allen meanwhile argued that so-called 'mega councils' "take power away from communities and entail local government ceasing to be local".

He added: "There is no way that £1.8bn can be found by merging councils without ravaging the services local people most value to find savings.

“If such large councils are so efficient then why are so many of them warning of financial difficulties? Savings promised by past reorganisation have often failed to materialise – unlike the costs of such a major upheaval which have been fully apparent."

He also argued that the social care system should be overhauled, adding that it is "bizarre to claim that the only option is to transfer the current failing model to new places".

He said: "There’s huge potential to devise solutions such as social care trusts covering several councils, or partnership delivery, to avoid significant disaggregation costs.

“I firmly believe that highly localised solutions to care, with services built around the needs of local communities and individual service users, working with the voluntary sector, offer the best means of offering high-quality, cost-effective services.

“There is no evidence that bigger councils offer better social care and children’s services than their smaller counterparts as we see in London and in metropolitan councils."

Cllr Chapman-Allen called on the Government to commission independent evidence now on the optimal size of councils, "not just focusing on short-term savings but giving insight into the diseconomies of scale which can blight such large organisations".

The disagreement comes as West Lindsey District Council voted to reject proposals for a single county-wide unitary authority for Lincolnshire after councillors backed a motion that stated “mega-councils […] would diminish local voices and accountability”.

The motion also said “the financial crisis in local government has not been solved by unitarisation”, pointing to the financial situations of unitaries created in recent years such as Somerset and North Northamptonshire.

The CCN report also comes as the Local Government Information Unit (LGIU) published its annual State of Local Government Finance in England report, which found that only one in 10 believe they have been adequately involved in the process.

Adam Carey