Reorganisation can damage front-line services

Rhys Andrews questions whether reduction of Welsh local authorities will achieve the desired results

Senior politicians in Wales are increasingly vocal in their desire to consider a reduction of the 22 Welsh local authorities. It is argued that fewer councils will save money by doing the same with less.

Since the Beecham Review local government has been urged to ‘join-up’ and make the connections with each other to enhance service delivery. However, policy-makers remain concerned that such voluntarism has yet to really take hold. Invariably, where voluntary compliance is perceived to be failing, central governments turn away from ‘softer’ measures and draw upon legislative powers to mandate structural change.

Reorganisation of local government has long been a default response of UK central government to the aspiration to improve coordination of public services. While the coming era of fiscal austerity will undoubtedly increase the pressure towards local government reorganisation, numerous questions about the effects of such large-scale restructuring remain. Can the costs of the process of reorganising be recouped? Are bigger units of government really more cost-effective? What are the implications for local democracy?

The optimum organisational size for the delivery of public services is one of the most enduring issues in the theory and practice of public administration. Policy-makers across the world continually debate the merits of alternative local government structures in terms of their consequences for costs and performance.

In recent times, central governments in several countries have enacted or considered reorganisations of local government on the grounds of efficiency. For example, in Denmark, the number of local government units was recently reduced from 270 to 98, and there is on-going discussion about another reduction in the future. Similarly, in Australia and Canada, debates have long raged about the amalgamation of local governments. In Eastern European countries, such as Poland and the Czech Republic, municipal consolidation has also become a common aim of central policy-makers.

All of these reforms assume that the scale economies accruing to bigger units of government translate into better, less expensive services. However, despite the proliferation of programmes for local government reorganisation, politicians’ rhetoric on cost-savings and service improvement is rarely backed up by hard evidence.

Several studies have examined the transition costs associated with reorganisation. Research by Michael Chisholm, a member of the Local Government Commission in the 1990s, showed that the financial cost of the 1994-5 reorganisation of English local authorities was greatly underestimated and that it was unclear whether this was ever recouped through any subsequent efficiency savings. A recent study by Cardiff Business School suggests that the recent voluntary process of restructuring amongst some English county councils led to a rise in expenditure of about one per cent and a corresponding decline in service standards of about 5 per cent.

It is possible therefore that the main risk of restructuring is the damage to front-line services rather than the impact on council budgets. Medium-term or long-run gains in performance simply may not be sufficient to compensate for the losses associated with the reorganisation process.

Although there is strong evidence to suggest that bigger units of government benefit from lower administrative overheads, empirical studies published around the time of the last round of local government reorganisation in the 1990s present inconsistent evidence on size and council effectiveness. A recent report by Cardiff University’s Centre for Local and Regional Government on behalf of the Department of Communities and Local Government found the relationship between population size and local authority performance in England to be a complex mosaic of insignificant, positive, negative and non-linear effects. For some local services bigger may be better, while for others small may be more beautiful – at least in terms of effectiveness.

Even if the hypothesized scale economies reaped from reorganisation were uniform, there is another influential strand of literature on local government size that suggests that as scale increases important virtues of local democracy are lost. Theorists of participatory democracy have long asserted that small scale government is best for citizen engagement with politics and policy-making.

Indeed, a commitment to making local services more citizen-centred has been at the heart of the Welsh Government’s public service reform agenda. To be truly democratically responsive, the argument goes, councils, or rather councillors, must be close enough to the communities that they serve for each to develop a healthy familiarity and respect for the other. Survey data from several West European countries points towards a strong negative relationship between council size and community-orientated outcomes. Citizen satisfaction, trust in government and participation are all higher in smaller units of government.

Thus, although it is conceivable that larger councils may be able to devote more resources to building community capacity or empowering local people, it is likely that these efforts will be focused on overcoming a democratic deficit that may simply be absent in smaller authorities.

So what does all this mean for the prospects for local government reorganisation in Wales? First, it indicates that a long-term perspective is required to assess whether the short-term financial and performance costs of reorganisation are likely to be recouped. The multiple reorganisations of Local Health Boards in Wales serve as a reminder that structural change is too often a default response to short-lived political priorities.

Secondly, if, as the available evidence implies, economies of scale vary across services then it may be the case that alternative structures are required to reap the benefits of large or small size for each of the major local public services for which the Welsh Government is responsible.

Finally, and perhaps most importantly, all of this highlights that political judgements about trade-offs between efficiency and democracy are inevitable. The extent to which those judgements reflect the will of local citizens is a matter of political leadership, both from the centre and the local community.

Rhys Andrews is a Senior Research Fellow at Cardiff Business School. This article appears in the current issue of Agenda which is available to IWA members here.

2 thoughts on “Reorganisation can damage front-line services

  1. Many important considerations in the future debate on local government reorganisation here.

    I’d add that one of the great difficulties for England is the number of different systems they operate (five by my count; London Boroughs, Metropolitan Boroughs, Counties and Districts, Small Unitaries and Big Unitaries)

    From my own area of experience in Cardiff, there are certainly things that suggest a change is needed (the Local Development Plan issues being a prime example) but it needs to be properly thought out and draw the lines that need to be drawn, not the ones that are already there (reinstating South and Mid Glamorgan would be disastrous!)

  2. The point is unitary authorities were a mistake. The old sytem of UDCs or RDCs aligned with local interests and identities beneath a county council worked better, the move to reduce tiers of government was counterproductive in a modern, complex society but was driven by the British distaste for politicians and the desire to minimise their numbers. But democracy is rule by politicians. That is exactly what it is. Our current fashon for larger units and fewer politicians in the interests of efficiency will lead us to a form of fascism. We think our history insures us against that outcome. Pure hubris. We’ll find out. You can’t love democracy and hate politicians. In a democracy the public gets the politians it deserves. In Wales and the UK we have a politically lazy and uninterested public. They get what’s comng to them.

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