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Political reporter Joshua Nevett has uncovered that the UK government did not conduct its own analysis regarding the cost implications of the largest reorganization of councils in England in decades. Deputy Prime Minister Angela Rayner suggested that merging councils in 21 areas into single authorities could result in significant cost savings. The Ministry of Local Government based its cost estimates on a report from 2020 commissioned by the County Council Network (CCN), which initially indicated potential savings of £2.9 billion over five years. However, the CCN has since revised its analysis and now suggests that the reorganization may not yield any savings and could even incur costs in certain scenarios.
Tim Oliver, the chairman of the CCN, emphasized that local government reorganization has the potential to unlock billions in efficiency savings that can be reinvested in frontline services if executed at the appropriate scale. While the CCN supports the government’s reforms, there are concerns about the possible costs of reorganization, particularly when proposals call for the replacement of the current two-tier system with multiple small unitary councils. Councils involved in the reorganization process have been submitting plans to establish new local authorities in their respective regions. In some cases, such as Essex, the county council has proposed the creation of three new unitary authorities.
The government will evaluate the proposals and intends to notify most councils of its decisions next year. Despite the concerns raised, a government spokesperson has affirmed that the reorganization will enhance services and generate savings for taxpayers. However, financial shocks may occur, as Ministers have highlighted the potential to save money as a key benefit of local government reorganization. Rayner mentioned in June that the reorganization would lead to improved outcomes for residents and significant cost savings that could be reinvested in public services. The government’s cost estimates were derived from data provided by PwC and analysis from the CCN, indicating potential savings of £2.9 billion over five years based on the replacement of all two-tier councils with single authorities.
In contrast, updated analysis by the CCN this year revealed that reorganization could actually cost £850 million over five years and produce no savings if 58 new councils with a minimum population of 300,000 were created across all 21 two-tier areas. The Councils’ Network raised concerns about the creation of “mega councils” with populations exceeding half a million people, citing funding pressures and financial struggles faced by many existing large councils. The District Councils’ Network called for independent analysis on the optimal size of councils to maximize potential savings. The Ministry of Housing, Communities and Local Government emphasized that consolidating services under one roof can provide residents with seamless support when needed and clarification on service delivery responsibilities. Additionally, councils will develop their own proposals to tailor the reorganization to their specific areas as part of the government’s Plan for Change
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