Geoff Wild has shared an update to the PwC report for the County Councils Network on economies of scale in English local government – the original was a major source quoted in the ‘Devolution’ White Paper in December.
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Let’s look at the method:
The methodology here is to allocate assumed savings as percentages from aggregated data (interestingly, assuming Districts merge into Counties). So this is very broad brush and assumption based. Interesting that they calculate the costs of change at up to £0.7bn – my back-of-an-enceloped estimate is £0.5-1bn, excluding redundancy costs and other amortisation and write-offs.
I give the categories as from the report below – ‘percentages’ were derived presumably from comparing data and making professional estimates. So these are well-informed (and potentially motivated) guesses.
The methodology does NOT cover:
- comparison of capitated/absorption-cost-modelled spend by size of authority in practice (i.e. this does not attempt to answer the question: are large authorities more efficient, on the whole, or not?)
- the track record of previous predictions of costs of transition and savings in moving to unitary status (do, please do a quick google on how that’s worked out, and is working out)
- the inflationary / market impact of attempting to reorganise the whole of the country at the same time
- the current government model of reorganisation across the country
And there’s obviously nothing about the quality of outcomes achieved.
Therefore, many caveats are needed – and PwC do give a whopping caveat – don’t rely on this report without taking your own professional advice – I share this lower down.
And while some things (fewer senior leaders*, fewer buildings) are self-evident, others (overall efficiency of spend through scale?) are questionable.
*thought the wider point is true, I think they do make a simple methodological error here in assuming all District senior roles go, since some of these are in specialist functions not carried out by Counties; so this isn’t about absorbing a smaller version of the same organisation – it’s about absorbing an organisation doing – by definition – different core functions entirely.
Here’s the method, without comment:
- Staff: Percentage reductions were applied to front office, service delivery, and back office full-time equivalent (FTE) positions to reflect efficiencies gained from removing duplicated activities. Additional benefits were calculated from the removal of District senior leadership posts.
- Third-Party Spend: The addressable third-party spend was calculated and percentage reductions were applied due to greater purchasing economies of scale gained through consolidation. These reductions were higher for a single unitary authority and revised down for multiple unitary scenarios.
- Property: A percentage reduction was applied to the property baseline to estimate property benefits, focusing on ongoing running costs rather than one-off sales or rental income.
- Democracy: Savings were calculated from reduced councillor allowances and fewer elections required due to consolidation. “By aggregating Districts into one or more unitary authorities, fewer councillors will be required and therefore a saving can be made from base and special responsibility allowances.”
(If it were my report, I would probably choose pretty much any circumlocution over giving ‘democracy’ as one of the major savings categories).
This is no doubt a sensible first-brush attempt to look at the savings side with very broad assumptions – but without answering any of the questions above, let’s take PwC’s disclaimer seriously and understand that it does not tell the whole story. It also does not mention the opportunity cost of time spent on this topic, the loss of senior staff and knowledge and capability through reorganisation, or the very real challenges of maintaining local knowledge and democratic legitimacy.
My very real fear is that – unless done very well and this is taken very seriously – this will alienate communities from democratic public services and undermine all the good that local government can do, and lead to populist grass-roots and astroturfed movements that, in the name of democracy, are undemocratic.
There is no argument to be had about whether unitarisation is a good or a bad thing – it is happening. But how we do it requires real nuance and understanding of the complexity involved.
Also interesting that the broad disclaimer hasn’t change much if at all since my time in PwC 2004-7 – though it has moved from the front page to the back page:
“This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.”
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My interest in this is presumably well known, but for the avoidance of doubt, my consultancy, RedQuadrant, exists precisely to help local government to navigate these kinds of changes – and we are available and willing to do so.
And the social enterprise, The Public Service Transformation Academy, exists to help public services leaders to build capability to do this kind of work. If you’re interested to explore and make sense of the true complexity here, join our sensemaking group – first meeting next Wednesday, 12 March, 2-3:30pm
https://sensemaking.groups.io/g/group
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Oh, and here’s what council leaders think:
“A large portion of council leaders fear a major shake-up of local government will not solve the financial pressures their authorities are facing, a survey has suggested.”
chosen path 