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ANALYSIS - BREAKING UP IS HARD TO DO

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>> Ministers fudge some county battles...
>> Ministers fudge some county battles

>> Total efficiencies could reach£700m

>> IT plans must focus on policy goals and be kept simple to avoid costly errors

Alex Khaldi

Director, PricewaterhouseCoopers local government practice

Chris Buttress

Partner, PricewaterhouseCoopers local government practice

Almost all competitions create winners and losers and, by definition, the sense of triumph and disconsolation that implies. So it is only natural that last month's local government reform announcements by the secretary of state should provoke passion, especially when one considers the civic and professional pride that went into the development of so many well argued business cases.

The announcement of the 16 unitary bids to go forward to stakeholder consultation has as many different interpretations as there are commentators. But looking at the detail of the statements and documents it is possible to take three strategic messages from the decision.

First, there seems to be greater government appetite for unitary councils than anticipated. The large number of high-scoring bids is some indication that it believes the unitary approach will be robust and effective. This is tempered by what some see as a fudge in Cheshire, Northumberland and Bedfordshire where mutually exclusive options are still in play. Although it remains to be seen whether the list will be rationalised, there is some sense that the government is prepared to inject more ambition into this programme.

Second, it appears the government has not yet reached a conclusion on the dominant model. What has emerged is a more mixed economy of counties, sub-county unitaries and city unitaries. That raises the possibility of a mixed group of ultimately successful councils, although by implication there might also be knock-on issues for two-tier working in a number of the areas. However, it is clear the county bids scored higher than the districts against the five criteria set out by the Department for Communities & Local Government (DCLG).

Third, it appears the intended savings have already been announced. It is interesting that the accompanying ministerial statement explicitly sets out the aggregated financial benefit of the proposals as£200m. Those who read last year's local government white paper in detail will appreciate the government's view that all councils will be subject to the same funding assumptions, whether they submit business cases or not. It might well be that a further£500m could be taken out of the remaining two-tier sector. If so, the announcement is perhaps some indication of the scale of local government efficiencies in the eyes of ministers. It also signals the importance of levering financial benefits above other key criteria.

Whatever the prioritisation of the stated criteria, DCLG now needs to turn its attention towards realising the intended benefits. But what has not been clarified to date is the policy instruments the government intends to employ. This situation is made even harder to read given the policy transition towards devolution and the inevitable speculation about the tone to be set by a new prime minister.

At the softer and supportive end of the scale, the tools might include capacity building, government office engagement and 'affinity groups' - councils around the country sharing ideas on how to tackle common problems. At the more challenging end of the scale, ministers could simply choose to reduce grant at source, issue directions or re-draw the capping regime. It is vital to select the right combination of policy instruments. While local government will want and accept a measure of clear national vision and challenge, it will also seek more practical added value from a range of central and regional bodies.

It is important that central government now demonstrates a steely resolve in ensuring the remaining steps are completed. A focus on working together is needed to give districts and counties a sense of shared enterprise for the challenge ahead.

If central government has a grand and complex strategy to develop, the issues at a local level are a little more prosaic. The 16 bidders need to focus on the realities of a stakeholder consultation process and, without tempting fate, begin to plan the challenge ahead. For those that have started this planning process, a few challenging issues are beginning to emerge.

They must appreciate that the timetable is getting tighter. Of course, anyone can change nameplates overnight, but delivering real benefits takes time and resources. Doing this well will not be easy, and somehow councils have to find a way of fast-tracking transition and/or transformation.

Sadly they will find out that harmonisation is anything but harmonious. They must very skilfully chart a course between paying for harmonisation and risking major discontent. The starting point will be to capture the best possible understanding of the technical issues and to set tough parameters on costs.

It is apparent that councils do not know enough about the services they are going to have to provide.

For many chief executives, the services provided by the other tier of government are not always appreciated. But used in the right way, this fact can be an advantage. It encourages top teams to think hard about the best practice they want to see - not what they already have. The challenge may be in applying the same fresh, simple perspective to existing responsibilities.

Participating councils may realise their asset base is not understood. Property assets are just one example of where some detailed work on data is needed. An accurate knowledge of exactly what assets they have is going to provide the foundations on which financial and service strategies are set. So, if the assumptions are wrong at the beginning, the whole house might fall down.

Getting information and communications technology to work for one organisation is hard enough but when councils merge it will prove even harder. Most people with a passing understanding of ICT project management know that if strategy becomes a slave to technology, the project could well fail. Equally, if the hopes of a new unitary rest on ambitious ICT transformation, it too will fail. Given a limited transition budget, the overriding priority is to design the services based on high-quality analysis of data and evidence. The ICT switchover should fall behind that design and focus on simple, necessary steps in the short term.

Localism is easy to talk about but much harder to do. Most of the 16 unitary councils now recognise that the high-level commitments in their business cases need definition at the next levels of detail. This is important since so many other project workstreams, including human resources, finance, service delivery, front office, constitutional, councillors, ICT and property rest on an understanding of what the localism proposals really mean. Localism is a fusion of politics, delivery, measurement, engagement and circumstances. As such its definition will be changeable, but defined it must be.

The issues we are raising, for both local and central government, are significant but not irresolvable. Bold decisions by government are required to see this process through. And although there is still a great deal of uncertainty, the prize - better and more efficient local government - is now within reach.

The unitary consultation process is tilted against districts, argues James Hehir

The announcement by the secretary of state of the shortlist for unitary proposals has major implications for the future of districts. It is therefore important that all councils have an equal opportunity to put or defend their case.

All 10 county councils that submitted a bid have been shortlisted. If the proposals go through then more than 50 districts could be dissolved, radically changing the structure of local government in England.

Unfortunately, there is not a level playing field in the consultation arrangements, which end on 22 June. The purdah period places a limitation on debate in district councils before their elections while counties have no such restrictions. This is particularly harsh for those districts within a county seeking unitary status.

The five criteria on which bids have been judged include affordability, and all the successful bidders were scored either highly likely or reasonably likely to meet it. No district is able to meet a score above reasonably likely as districts cannot match the total cost saving of a single unitary county. In fact, districts can and do meet the affordability criterion level, for instance, meeting the costs of change from their own resources and not increasing council tax.

Conversely, there is no criterion based on place shaping. This lies at the centre of the government's priorities, and districts throughout the country meet these objectives through local pride and a sense of ownership by the community. Many of the districts now under review have a strong sense of place, and this should be fully recognised in any assessment of the local government framework. There is a clear difference between the views of the Treasury and the objectives of the Department for Communities & Local Government.

If districts do not get unitary status this time then there is little chance for other districts in the future. But where is the logic when places such as Blackburn, Hartlepool, Reading and Peterborough are already successful unitaries? The message to districts seems clear - size is everything - but how does this relate to bringing the government closer to people? All councils should be given an equal opportunity to determine their own future, whether it be becoming single unitary, combining with other councils or remaining in a two-tier system.

James Hehir Chief executive, Ipswich BC and chair, District Chief Executives Network

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