Agenda item

The Commission considered a report and presentation from the Director of Corporate Resources which set out the methodology used to calculate the savings arising from a unitary structure of local government for Leicestershire, drawing on the considerable evidence around the country of the savings achieved from establishing unitary councils.  A copy of the report marked ‘Agenda Item 9a’ and the slides forming the presentation is filed with these minutes.

The Chairman welcomed Mr N J Rushton CC, Leader of the Council and Mr J B Rhodes CC, Deputy Leader and Cabinet Lead Member for Resources, to the meeting for this item.

Arising from discussion and questions the following points were raised:-

(i)          A few national commentators had suggested that a global recession was likely in the next few years.  Locally, this would have an impact on both demand on council services and the financial position of the County Council.

(ii)         The analysis of the benefits of a unitary structure, compared to a shared services arrangement, had been undertaken using a management consultancy toolkit to provide a framework.  The analysis focused on savings relating to overheads and management.  It was not intended to undermine the democratic process or provide commentary on the quality of front line services in either structure.

(iii)       The benefits of a shared service model when compared to a unitary structure were limited.  It would be unusual to have full alignment of priorities and approaches across eight organisations, meaning that compromises would have to be made which reduce the overall level of financial benefit.  Governance arrangements were also like to be more complex, reducing the speed of implementation.  This had been the case with the Lightbulb Programme.

(iv)       It was confirmed that the business case for a unitary structure of local government for Leicestershire would be externally reviewed by a well-known company with a good reputation in that area.

(v)        Some concern was expressed that the level of savings achieved by existing county unitary authorities, such as Wiltshire Council and Durham County Council, were smaller than that achieved by the County Council over the same period of time.  However, the Commission was reminded that organisations tailored the level of savings that they needed to achieve to their funding envelope.  For example Baroness Scott, Leader of Wiltshire Council, had confirmed to the Commission that she had not had to consider closing libraries or children’s centres because her Council could achieve a balanced budget without doing so.  In addition, it was difficult to make a direct comparison between authorities because they all presented information differently. The saving proposals for a unitary authority for Leicestershire were in line with the savings made in the 2009 conversions and those proposed in recent business cases.

(vi)       In response to a query, the Leader of the Council advised that he had attempted to invite unitary authorities which were struggling financially to give evidence to the Commission but had not been successful.  The Director of Corporate Resources advised that analysis of publicly available information indicated that only a small number of unitary authorities were in financial difficulties and these tended to be smaller in size and therefore unable to achieve economies of scale.  Poor leadership and management was also a significant factor.  In comparison, a far greater number of upper tier authorities were in financial difficulties; these difficulties also tended to be more serious.

(vii)     A member requested spreadsheets providing a more detailed breakdown of how the £30 million annual savings would be achieved by a unitary structure of local government for Leicestershire. The Cabinet Lead Member for Resources advised that officers had undertaken a management accounting exercise, rather than a financial accounting exercise, which involved looking at the overall picture, comparisons and estimates.  The assumptions that had been made had been triangulated against other authorities that had already been through the transition to a unitary structure.  There was therefore a good degree of confidence in the figures.

(viii)    In response to a concern regarding how the cost of implementation had been calculated and whether the savings would be realised as quickly as expected, the Leader of the Council reminded the Commission that the principle that a unitary authority would deliver substantial savings was sound.  He was confident that the figures set out in the report were realistic.  How the savings would be delivered and the speed at which they would be realised would be for the new authority to decide.  He was of the view that it would be best to transition to the new council before deciding on the best way to transform services.  All assets and liabilities would automatically transfer to the new council.

(ix)       In response to a query regarding the cultural services that would be provided by the new authority, the Leader of the Council confirmed that he anticipated no changes to service provision during the transition to a unitary authority.  Once that authority was in place it would be able to look across the totality of cultural services currently provided by the County and District Councils and identify the best service offer for Leicestershire.

(x)        It was queried whether the projected level of savings in Members’ Allowances could be achieved.  Information from Wiltshire Council suggested that any savings realised in this area were negligible.  The Commission was advised that, in calculating the savings, both County Council and district council expenditure needed to be taken into account.  This area of savings had been calculated with a reasonable degree of certainty using publicly available information.  In this regard it should be noted that savings assumed from Members’ Allowances were a very small contribution to the overall savings projected.

(xi)       In response to a request for a definition of back office services, the Commission was advised that this was set out on page 132 of the report and in the table on page 134.  Services which had direct contact with members of the public, including Revenue and Benefits services, had not been included.

(xii)     Some concern was expressed that the funding challenges facing statutory services such as adult social care could have a negative impact on the provision of non-statutory services.  The Cabinet Lead Member for Resources reminded members that, whilst it would be a matter for the new authority, it would be in all members’ best interests to protect and enhance services which were valued by the people of Leicestershire.  It was suggested that the business case for a unitary authority could identify priority non-statutory services for investment and re-investment.  The Cabinet Lead Member stated that the current funding position of the County Council, coupled with demographic pressures, made the protection of non-statutory services challenging.  A move to a unitary structure of local government for Leicestershire would provide immediate relief and put the new authority on an upward trajectory.  However, in the longer term national action was needed to halt and reverse the effects of austerity and improve the overall position for local government.  He did not expect that the outcome of the fair funding review or the business rates retention pilot would be sufficient in this regard. 

In concluding the debate, the Leader of the Council suggested that it was clear that, in financial terms, a unitary structure of local government was the best approach to ensuring that services remained sustainable.

RESOLVED:

That the report, presentation and information now provided be noted.