Written evidence from Professor Amelia Hadfield[1] (EDE 19)

Public Administration and Constitutional Affairs Committee

The Evolution of Devolution: English Devolution

English Devolution: pros, cons and Surrey-specific examples

Decisions leading to changes to local government in relation to devolution need to bear in mind a number of issues. This briefing note spells out a number of these issues, as well as enumerating opportunities and risks. It was assembled on the basis of individual research on the topic of English devolution.

Care and Context

• The UK Government have confirmed that a Recovery and Devolution White Paper will be published at some point in 2020 (or possibly later). This will have implications both for the longer-term future shape of local government in England, as well as the more immediate county-level Covid-19 recovery plans.
• It is crucial however that the business case for this proposed change (at both local and national level) reflect both the prospective opportunities and envisaged drawbacks in a critically thoughtful way, and on the basis of clear needs of residents, businesses and communities.
• Apart from the role of English devolution within the Brexit debate and the 2019 General Election, the issue of devolution in general, and the optimal size and shape of local authorities in England is not solely concerned with the shift in the balance of power between central government and local authorities, but about the genuine needs of residents and the most suitable structure by which to address those needs.

Goodness of Fit

There needs to be a proven ‘goodness of fit’ between local government’s ability to plan and deliver services locally, based first and foremost on the specific local needs of its residents, via an appropriate form. There is a tendency to conflate devolution (i.e. strictu sensu the actual redistribution of policies and powers from national to local levels) with extant or envisaged changes to local government (into unitary, dual or triple authorities). If changes are deemed to be required, national government needs to spell out the merits of devolution from a systemic perspective (top-down), while local governments need simultaneously to argue the case for/against alteration from a fundamentally placed-based perspective (bottom-up). The two can only meet in the middle on the basis of a guarantee to categorically deliver improved rather than merely ongoing outcomes for residents, and preferably, at less cost.

In other words, there must be a nexus between power distribution issues that can be mitigated - and hopefully improved - via devolution, and simultaneously place-based quality of life issues at local level that can only be improved via local government changes. Devolution cannot itself be merely expedient to the cause to transforming the form and content of local government. The point of any public policy after all is to solve an observable problem. Arguments for and against the proposed ‘unitary’ authorities must therefore make the case that only a wholly new council composition, with augmented power, a widened remit and deepened oversight can indeed deliver the panoply of local services, rather than the current division of responsibilities (e.g. as found in Surrey’s 11 district and borough councils alongside Surrey County Council).

Reports

Two reports are instructive in this respect. First, the Report for County Councils Network: PWC, Evaluating the importance of scale in proposals for local government reorganisation, August 2020. Second, a recent report (November 2020) by the University of Surrey, entitled Charting Surrey’s Post-Covid Rescue, Recovery and Growth, looking ostensibly at the impact of Covid and Brexit on Surrey but which also contains instructive policy recommendations relating to local governance change. 

• The PWC report suggests abolishing 213 district/borough councils in England, and replacing them with 25 new, larger ‘single unitary’ authorities.
• The PWC report argues that the merging of district and county councils into a single, unitary structure (in a mid-sized county area) could potentially save taxpayers £126 million over 5 years, £2.94 billion nationally.
• The creation of two or three authorities are forecast to bring fewer overall and long-term savings.
• The UniSurrey report contains a number of ‘strategic’ asks from key stakeholders in business, aviation, healthcare and the knowledge economy, who collectively argue that growth-based post-Covid recovery rests on “an urgent need for a practical and impactful model of local government able to deliver courageous rescue packages where needed, sustainable growth in high-value areas, more robust networks, creative innovation, and capacity-building including skills development” (p. 207).

Pros and Cons

In shifting from a two-tier to a unitary system, the basic pros and cons represent a combination of structure, size (economies of scale) and needs.

Pros

Pros include reducing the arguably complex nature of the current system found in many areas of England by amalgamating districts and boroughs into three, two or a single unitary authority. The outcome of the latter would be a single unified structure, and a single unified voice for the county itself.

• There are clear benefits to be had from a structural perspective. Reducing duplication, cost via economies of scale take the finance boxes.
• From the perspective of decision-making, a slimmed down/beefed-up unitary authority (particularly if single rather than dual) reduces at a stroke the number of chief executives, councillors and planning teams and thereby the complexity and cost.
• In some vital areas – i.e. children’s social services and adult social care – a large number of entities and departments likely undermines and complicates the system.
• Providing additional ‘joined-up’ capacity to genuinely streamline public services is a key positive; as is ensuring that a single overarching authority can capture and bring together the huge range of business needs, and community interests – which will able – could visibly and permanently benefit from a more organised structure to ensure they work better together to common ends.

Reducing duplication, speeding up the provision of services, and enhancing their overall quality must therefore be the watchwords of all such attempts.

Cons

The drawbacks are uncertainties as to which structure best represent the voices, needs and changes of each county, at district, borough, and parish level. Unitary authorities may have the virtue of streamlining key services and enhancing provisions, but there is no guarantee that this could be done swiftly in the short term or efficiently in the long term. Critics suggest that overly-large authorities would be as unwieldy as smaller ones are complex, as undemocratic as smaller ones are fragmented. The key is not therefore to ‘control all services in a given area’ but to ensure that the structure (whether large or small) entailing that control is fit for purpose in its form, and fully representative of the varying needs of its members in its content.

• Equally, there are serious drawbacks. If population limits are set arbitrarily, the needs-based logic of a larger authority more efficiently serving the requirements of a given area is weakened.
• Potential unevenness between areas within a county could be heightened, while altering historic county borders and/or the executive authority over them is no guarantee of a good deal in for local tax payers in terms of value for money as far as public services is concerned, or genuine representation and understanding of local needs at granular level.
• The sheer size of anticipated new single authorities may simply be too large to be effectively represented by one single council.
• While centralising works for some services, it may not support other needs, particularly where those needs are either changing (i.e. as a result of Covid), uneven (i.e. investment), or across county lines (i.e. integrated care facilities).

To this needs to be added the paradox of a centralised national government now opting to devolve powers to the counties but in a way that reinforces those same centralising tendencies at local level, perpetuating the ongoing paucity of local representation, both in Britain and more broadly within Europe.

Needs-Based Decision-Making

County councils in England need first to indicate that they manage their current tasks well enough to take on new ones (e.g. education, social services and waste). They secondly need to demonstrate that they can not only undertake the roles of district councils (e.g. rubbish collection, housing and planning), but do so more efficiently. In some parts of the country (e.g. cities and larger towns), unitary authorities have done a good job in the provision of all local government services. In others, the results are less even. The outcome therefore is that local democratic and representative dynamics are likely to be reduced with the disappearance of district and borough government, with local citizens less able to navigate an increasingly large and complex structure, and less able to have local needs recognised and responded to. The final point of course is whether such changes afford any real cost savings. Local authorities were pared to the bone as a result of austerity budgets; some anticipated further fallout as a result of Brexit; all have felt the massive impact of Covid, which – despite initial injections of cash from national injection – will in the very near future produce serious shortfalls likely to last 5 years at the least. With financial pressure now so acute across the entire system of English governance, the timing of managing the substantial disruption to the system that such changes will entail may simply not be right. 

A Critical Reappraisal of Cost, Risk, Resilience, Performance and Place

The August 2020 PWC report identifies four generic categories of cost, risk and resilience, performance, and place implications, plus the changes wrought at local level by Covid-19. While largely positive about the implications for change towards a unitary authority, rather than disaggregation to two or three authorities, or no change at all, some additional perspectives can be added.

Cost

The PWC report argues that “increasing the scale at which a local authority operates will realise financial benefits through economies of scale” (PWC, 2020, p. 6). This is likely to be the case in terms of reduced duplication in services, front/back office functions, senior and middle management structure, as well as material costs (e.g. property, supply chain, tenders), and operational benefits (e.g. waste and planning). In addition, it is likely that a single, larger entity can better meet current and rising service costs (e.g. adult and children’s services, waste services) rather than a series of interconnected smaller entities.

However, much depends upon the swift and efficient nature of the reorganisation in order to capture these costs in real terms. The report is also likely correct to argue that the establishment two or three unitary authorities in a given county, which it classifies as ‘disaggregation’ could “result in additional costs being incurred” flowing both from the impacts of the administrative changes undertaken, and the “opportunity costs associated with not maximising the potential benefits on offer”. While some districts and boroughs have done well across England to accrue a range of realisable benefits in key areas, there is some scope to argue that reworking a two-tier system into a two or three group authority area could add additional complexity and undermine the scope of cost savings in the medium-term. The other option, i.e. retaining a two-tier system and adopting only “non-structural reform” or undertaking various forms of “enhanced collaboration” sidesteps disaggregation costs, but similarly may not produce the overall aggregate savings, while continuing to require complex domestic setups and enhanced oversight.

Risk & Resilience

While the cost argument favours a larger structure, the report concedes that in terms of risk “there is no inherent connection between the scale of an organisation and its ability to manage risk in absolute terms” (PWC, 2020, p. 7). Risk here is entailed both in terms of identifiable sectors (i.e. critical care services) and unknowable threats (e.g. Covid-19). In addressing risk,  the criteria must therefore be on the enhanced ability of a given local authority to manage and foresee risk, in terms of additional capacity, augmented quality and improved safeguarding for the most vulnerable individuals and communities, and the most exposed business. Larger authorities need therefore to demonstrate risk-based improvements on the basis of enhanced size, via streamlined, swifter, responsive and even proactive systems. This is certainly possible, but requires intelligent planning prior to the overall structural changes, rather than in situ or ex post facto alterations which are likely to be hurried and not sufficiently focused on the spectrum of risk-related issues at the local level.

The report produces no evidence to prove that smaller organisations, where smaller teams “with multiple responsibilities” incur a “greater likelihood of single points of failure” (PWC, 2020, p. 7). Indeed, not only are large entities entirely capable of a multiplicity of risk-related failures, but smaller teams are more likely to work tightly, more efficiently in terms of their communication, goal-setting and response times, simply because there are fewer moving parts.  The report says little about resilience in concrete terms. There is some logic in arguing that breaking up the current two-tier system in favour of further disaggregation could increase risk in the local system, but the overall argument of avoiding “fragmentation of strategic oversight” in identifying and mitigating risk is not wholly made in favour of unitary authorities here.

Performance

As with risk, the report struggles to identify clear, causal links between “linking scale and local authority performance”, conceding the evidence is at present “relatively inconclusive” (PWC, 2020, p. 8). The logic for ‘larger is better’ here is therefore “the inherent implicitly associated with operating a single organisation responsible for all local government services in an area” rather than definable performance criteria. Again, larger councils, or those with ambitions to progress to single unitary authority status need at this point to demonstrate high quality or improving performance in core services, as well as those areas that would come newly under their authority from former district and borough entities.

The report however is likely correct to argue that increasing the overall scale of a local authority “has the potential to facilitate improvements in performance by providing opportunities for integration with other service providers”, acting as the linchpin to ensure joined-up provision. The onus is on large providers to demonstrate the critical size by which high performance can be reliably attained and maintained. Streamlined decision-making on housing, planning, investment and business rate for example, as well as long-term decisions on wider infrastructure, including their financing and delivery will likely benefit from joined-up government, itself more likely in larger entity, rather than a two-tiered system. Decision-makers equally need also to bear in mind that smaller organisations can frequently operate more swiftly and efficiently and that a ‘super authority’ is just as likely to be cumbersome and slow-moving as it is to be streamlined and efficacious in its service provision.

Place implications

Place is key. Each area has its particularisms, its unique selling points, its recognisably national and even international elements. Local government has an enormous duty of care to represent their own county internally, and reflect it externally. Certainly, larger authorities matched to clear, contiguous county boundaries stand a strong change of underwriting the ‘whole county’ message more effectively, whereby “strategic growth and planning can be maximised” effectively at scale “across a wider area”, allowing greater internal catalysis and externally, greater investment. (PWC, 2020, p. 9).

Coordination is vital. In relation to place-based issues, where the entire goal relates to projecting a “coherent voice for the place” coordination, joined-up management and county-based structures may make for a better overall formula that multiple authorities attempting to manage the whole system. Certainly externally, the logic holds: place positioning, lobbying for investment and business with investors, government and third parties is more likely to encounter success when dealing with a single, focused, joined-up entity rather than a series of disaggregated entities (even if they are all ultimately working towards the same goal). 

Arguably, counties that present potential supporters and investors with “a more complicated stakeholder landscape can lead to less efficient decision-making”, undermining both regional collaboration and individual relationships. Additional considerations include the role that larger vs. smaller administrations can play in tackling economic disparities found within a given county (e.g. East Surrey and West Surrey). Larger entities may prevent the concentration of economic disparities, but equally smaller entities may have a better local sense of these issues and more targeted remedies.

Again, the balance is between the net ‘clout’ wielded on behalf of a county via a larger authority and the way in which much county business is already spread across a multiplicity of different levels, LEPs, areas and associations that would not necessarily be soluble by, or within, a larger unitary authority. In addition, neither disaggregation into two or three authorities, nor the use of a concerted unitary entity would necessarily guarantee that systemically challenging issues like transport and housing would necessarily be easily solved. The report suggests that “increased scale does not necessarily mean a disconnection in communities”, yet neglecting this core concern could undermine the very rationale behind the push for unitary authority: to ensure that the full panoply of regional needs and local voices are heard, the full range of governance structures retained where possible (PWC, 2020, p. 10).

Devolution and Covid-19

The PWC report argues that operations running “at scale can enable more effective responses in times of crisis” including the responses to Covid-19 (PWC, 2020, p. 10). Ironically, while local governments have largely responded well, their larger national counterparts have produced mixed results, undermining to some extent the ‘size counts’ mantra in this respect. Local government “in both single and two-tier areas” have operated independently of national government, and also in tandem with local needs, largely irrespective of size, and more specifically on the basis of a committed and efficacious needs-based strategy by putting local requirements and risks at the forefront.

Neither the suggestion that deploying the power of “substantial data analytics” nor “more straightforward governance arrangements” has materially played out in local responses to Covid (PWC, 2020, p. 10). The former has been uneven at best and inaccurate at worst, and the latter were put in place by entities of all sizes across the country. Indeed, the report rather puzzlingly suggests that large, consolidated entities “typically benefit from a simplicity in governance”: this is clearly not representative of any aspect of either the larger local or national government entities.

A more robust argument is more likely to entail scaled-up entities that can genuinely improve the speed of response to a crisis, mobilising an effective hub-spoke structure ensuring wide-spread service delivery of disparate needs and different areas, and strategic planning for short, medium and long-term needs. In addition, attempts at disaggregation mid-crisis would indeed greatly reduce decent reorganisation and the ability to address “pre-existing funding shortfalls” and future needs, possibly worsening the “uneven distribution of local income streams” at least in terms of their Covid-impact financial status (PWC, 2020, p. 10).

Surrey Context

On balance, size is not necessarily the key variable here: rather, it is the shape, goals, distribution of tasks and overall skill of their implementation within the overall contours of any new unitary authority that will allow it to deal effectively or nor with factors like cost, risk, performance, place implications and threats like Covid. For counties like Surrey, transformations aiming at – for instance - a single unitary authority needs to be simultaneously large and local:

• Large enough to be strategically effective as an intuitional and impactful as a local government. This requires capturing the strengths, core excellences, cluster-based distinctiveness within the county visible in key areas (e.g. higher education, business, aviation and healthcare), while working to redress regional imbalances and sectoral weaknesses.

• Local enough to be relevant, to both support all that is best about genuine democratic representative at the parish, district and borough level, and mitigate short-term worries about unrepresentative and unwieldy outcomes of a newer form. Preserving opportunities for all local voices, catalysing local community Covid recovery and representation means building in an authentic role for local groups, societies and locales. Surrey’s place identity, its coherent voice, its various brands are all key levers that need to be supported internally in order attract investment (both inward and externally).

Service Delivery is at the Heart of English Devolution: All envisaged changes need to ensure that high quality services, joined-up connective structures bring together all aspects of the county supply chain, all the relevant inputs and outputs, to safeguard improved and sustained regional prosperity. Residents, communities, businesses are the fabric of the county, shaped into homes, societies, and enterprises. Doing so resourcefully, creatively, effectively and sustainably is above all, a partnership between the citizens of the county and their representatives. Not a mere redistribution of power.

November 2020