Single-tier local government reorganisation is cursed with being understandable, broad, and largely right.
It is understandable, because the idea of a single council making and implementing strategy makes sense to casual observers. It is broad, because rather than one main use case, there are many ways it would be an improvement over the current mille-feuille. It is largely right, in that while it would be more efficient, the real utility is in having powerful, large-scale authorities.
The result is that single-tier local government has largely gone in the ‘too difficult’ pile for a number of years. Our new report Devo 2.0 - The Case for Counties, argues that the big challenges – huge wealth disparities between regions, a housing crisis that needs councils who can build en masse, and flatlining productivity that requires the local state to play a more entrepreneurial role than ever before – demands we end the status quo.
The current system fails local people in two ways. First, it comes with a host of difficult dynamics, conflicts, structural barriers and problems. Second, it has proved unable to agree and manage the devolution of powers. The gains the city-regions look set to make in skills, transport, and investment therefore remain off-limits.
The first issue is not a stale debate about structure, since institutions and incentives really do matter. Look no further than the significant effort the government and corporate procurement goes to, in everything from the Olympics to Crossrail, to design contracts with shared benefits and costs.
No amount of warm words about collaboration will fix the fundamental problem when costs are driven by one authority, but the tab picked up by another. For example, in home-to-school transport, counties pick up the £1,500 yearly cost for every child living in a new home built by districts in areas without school spaces.
It is only rational for councillors to resist housing targets seen to be imposed from the county level if councillors’ prospects of re-election will be damaged.
If meeting the needs of other organisations means spending your own budget, there isn’t much incentive to keep spending. Ultimately, the way for multiple organisations to achieve outcomes as efficient as a single one, is to become a single one.
The second failure is one of political dynamics. It remains the case that, aside from the Cambridgeshire metro-mayor deal, no two-tier area has managed to agree a devolution settlement. Whether desirable or not, current policy has created competition for political influence and funding. The metro-mayors are developing their capability, profile and links to government, while the counties have yet to cross the starting line.
For similar reasons, the two-tier system is poor at providing an equal partner to business, which can understand their needs, and make and deliver on credible commitments. That’s why EEF, the manufacturers organisation, are fully behind our proposals.
Add to this the government’s ‘constructive ambiguity’. Districts are given mixed messages about the advisability or legality of joining neighbouring combined authorities, while some attempt to argue down growth targets by ‘shopping’ between different, overlapping local enterprise partnerships. The result is a great deal of uncertainty and wasted effort for all concerned.
Our solution is to solve these problems simultaneously. Devolution is needed as an incentive to go unitary, and at the same time only reformed single councils will have the stability and right incentives to hold devolved powers and budgets.
To get there, the system needs a lot more clarity at all levels, to end the second-guessing and vague signals. If the Department for Communities & Local Government can publish a devolution ‘menu’, therefore, it will provide the certainty that local politicians and MPs need that central government will reciprocate their efforts.
We believe the result would be potential combined savings of £40bn over five years, and with some retained for reinvestment, gross value added growth of £31bn. Lesser savings would be available with a ‘halfway house’ solution of a joint county-district cabinet with unanimous decision-making and some devolved powers, which we call a ‘strategic authority’.
That’s not the end of story. A crucial condition of getting rid of one-tier of local government is that parish and town councils find new freedoms and responsibilities appropriate to their size and economic scale. While services like waste collection would benefit immensely from county-scale commissioning, where borough councils are delivering innovative changes and investment in their towns, we want them to continue as town councils, focusing on where they can make a real difference.
The local government sector can be insular, but how people relate to the state where they live, and how it makes and shapes markets, is absolutely central to the country’s political economy. So we hope you’ll find Devo 2.0 an interesting and provocative contribution.
Tom Follett, policy and projects manager, ResPublica