New unitary councils must contain at least 500,000 to see benefit

A new report by the County Councils Network (CCN) has backed up government proposals for the creation of new unitary councils in England, although new authorities must cover areas of ‘at least’ half a million people to save billions and free up investment.

This follows the government’s English Devolution White Paper, published last December, which outlined plans for overhauling council structures. The government has pledged to end ‘two-tier’ local government by replacing 185 county and district councils with new unitary authorities in 21 areas.

Ministers have explained that unitary councils should have a population of 500,000 or more, but they have also given leeway, with district councils across the country proposing new councils with populations of 300,000 or lower.

The new report by the CCN uses new data by PwC, and reveals that replacing the two-tier system with a series of councils with minimum populations of 500,000 could save at least £1.8 billion over five years.

But the report also shows that these savings are reduced significantly if county and district authorities are replaced with several smaller councils, which could potentially cost local taxpayers hundreds of millions.

The analysis shows that splitting two-tier areas into 58 new unitary authorities based on a minimum population of 300,000 would cost £850 million over five years with no savings, due to costs associated with ‘disaggregation’ — the process of splitting up and duplicating county council social. Care services into multiple new authorities.

CCN thus concludes that creating 29 new unitary councils based on a minimum population of half a million would have a greater financial benefit, with the level of savings to increase further if a minimum population threshold of 600,000 was applied, resulting in a net-saving of £2 billion over five years from creating 27 unitary councils.

 Councillor Tim Oliver, chairman of the County Councils Network, said: “Today’s new analysis by the County Councils Network (CCN) shows local government reorganisations could unlock billions in efficiency savings to be reinvested in frontline services. But it can only do this if new councils have populations of at least of 500,000 or more.

“While it may be necessary for some areas to create more than one new council, this analysis shows that splitting county councils into multiple small unitary councils with populations as small as 300,000 will create hundreds of millions of new unsustainable costs, piling further strain on already under pressure care services.

“It is absolutely essential that the government now stick to the statutory criteria they have set out, treating the 500,000 as a minimum not an optimum population scale. This will ensure we create new councils with the scale and capacity to deliver substantial savings to be reinvested in frontline services to the benefit of local taxpayers. Failure to do so could mean the government fall short in their promise to end the ‘two-tier’ financial premium.

“CCN are not being dogmatic over whether an area chooses to reform into one or more unitary authority. It is ultimately up to local areas to choose which option to pursue, considering both the financial implications and other important factors. However, they must do so mindful of the costs and risks involved in the reorganisation process.”