William Eichler 09 November 2016

The pitfalls of local government transformation

Local government reorganisation is one way councils are able to deal with Whitehall-imposed financial pressures. Huge savings can, potentially, be made by merging local authorities.

A recent study, commissioned by the County Councils Network (CCN), supports this notion; they found transforming all remaining two-tier areas into county-based unitaries could save the sector nearly £3bn over five years.

But, as with any upheaval, there are risks, and the case of Taunton Deane and West Somerset appears to highlight a number of the pitfalls. Both councils have agreed to a merger which would, effectively, mean the end of the former borough council as it is absorbed by the latter. The business case, they argue, is sturdy. The two councils already have a single staff structure serving both and so they claim it makes sense to go all the way and become a single local authority.

This decision is, however, being challenged. A group of 15 residents and councillors have applied for a judicial review from the High Court to quash the decision to merge on the grounds that there was insufficient consultation with the residents of Taunton Deane and that the business case does not add up.

I spoke to Ian Morrell, a Taunton Deane councillor and the author of the application to the High Court, to find out more.

‘I for one am not opposed to transformation, improving services and, indeed, saving money,’ he reassures me. ‘I think the problem we’ve got at Taunton Deane is that this is the third—if not fourth—reorganisation in the last decade or so.’ The other attempts were, in Cllr Morrell’s words, an ‘utter calamity’ and he is not optimistic about the most recent try either.

The two neighbouring councils already work closely together. Since 15 November 2013 they have engaged in an inter-authority agreement and a shared management services programme named Joint Management & Shared Services (JMASS). The intention behind this move was to enable both to make savings, and it has also encouraged them to explore further options relating to transformation.

In March of this year, Taunton Deane councillors instructed JMASS officers to develop a business case exploring three transformation options: 1. one team supporting two councils (the current arrangement); 2. one team supporting a merged council; 3. two councils progressing their own transformation agendas. JMASS concluded that option 2 was the best option, and in July Taunton Deane’s councillors approved it, as did West Somerset’s the following September.

Cllr Morrell is not happy with the manner in which the decision to merge was taken. ‘The wider community hasn't been consulted at all,’ Cllr Morrell explains. He acknowledges council staff were consulted, but he argues the ‘people on the ground and organisations that may have an affinity or connection with Taunton Deane’ have been left out of the loop despite the fact they too would be affected by the proposed merger. As the judicial review application puts it: ‘There has been no consultation with the Defendant’s community (Taunton Deane), council tenants, other tiers of local government, neighbouring authorities and other interested parties.’

A motion proposing a consultation was put to Taunton Deane council in August. However, as Cllr Morrell points out this was after the decision to merge was approved in July. Furthermore, this consultation would only be about option 2 and would not involve the other options. Legally, this is problematic. According to a precedent from R (Moseley) v London Borough of Haringey [2014] UKSC 56, cited in the judicial review application, ‘consultation must be at a time when proposals are still at a formative stage’, i.e. long before any decision is taken.

A related issue Cllr Morrell believes needs addressing is to do with the council’s corporate strategy. Between July 2015 and February 2016 Taunton Deane undertook a ‘Vision and Priorities’ project. This involved engaging with the various stakeholders who work with the council and it led to Taunton adopting a corporate strategy on 23 February. The proposed merger with West Somerset undermines this. ‘If that corporate strategy were to be dismissed,’ Cllr Morrell argues, ‘then the consultation that ensued for it ought to then have been revisited and that has not occurred.’

The second major concern outlined in the judicial review application regards the business case JMASS worked up for the councils. ‘No financial or operational modelling was undertaken assessing the business case and Option ii in accordance with the Defendant’s [Taunton Deane] adopted Corporate Strategy,’ according to the application to the court. Cllr Morrell is less diplomatic in person. The business case, he says, was done on the ‘back of a fag packet.’

‘I cross examined the deputy chief executive - who’s also the finance director - only a month ago and they openly admitted there hadn't been any logical workings on the finances at all,’ Cllr Morrell explains, exasperated. ‘If it is going to cost Taunton Deane more money those financials need to be clearly expressed and expressed with evidence and frankly the people who pay for it, the tax payer and the like, need to be made aware of the implications involved.’

Asked to comment on Cllr Morrell’s accusations, a spokesperson for Taunton Deane and West Somerset denied any wrongdoing. ‘We cannot and will not make any detailed comment about the judicial review – for legal reasons – other than to say that we will vigorously defend our position at any and at all stages as we believe both councils have properly followed due process to date.’

Whatever the High Court decides, this case highlights a number of potential problems when transforming local government. A wide-ranging consultation, done at an early stage, and a fully worked out business case is absolutely essential.

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