A note on how potential savings from local government reorganisation are being calculated

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.

Let’s look at the method:
To allocate assumed savings as percentages from aggregated data (interestingly, assuming Districts merge into Counties). Broad brush and assumption-based. Interestingly they calculate the costs of change at up to £0.7bn — my back-of-an-envelope estimate is £0.5–1bn, excluding redundancy costs and other amortisation and write-offs etc.

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) — and while some things (fewer senior leaders*, fewer buildings) are self-evident, others (overall efficiency of spend through scale?) are questionable.

*I think they 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.

In the comments, I’ll put their method (without comment), and disclaimer.

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.