Responding to COVID-19: insight, support and guidance

The art of reorganisation

30-06-2021

By Joanne Pitt, CIPFA Local Government Policy Manager

Reorganisation is always an interesting topic for discussion, with our recent webinar on the subject being no exception. I was pleased to be joined by Lisa Quinn, who has been through the experience and lived to tell the tale. Her practical tips and observations were fascinating. We were also joined by Natalie Abraham from c.co who was able to take a different perspective and reflect on a broad range of transformation projects, pulling out key themes that appear in every project such as good communication and the need for detailed planning.

For my part I was asked to talk about the drivers that underpin reorganisation, so to start my preparation I began by looking backwards. We learn so much more about a topic if we understand a little of the history.

Reorganisation of local government has been an incremental process over time, lacking a strong strategic direction. Since the Municipal Corporation Act in 1835 there have been constant attempts to change and reshape the landscape of local government, continuing into the present day. Some, such as the 1888 Local Government Act, have had a significant and long-lasting legacy, allowing councils to levy rates, licence entertainment and mend roads in much the same way as counties do now. Others have had less influence.

The influences behind reorganisation remain similar today. The debate around local government reorganisation has been heavily influenced by the fact that, while Westminster knew it needed local government to make local decisions, it was never happy with the notion of localism when it conflicted with centralised decision making or political influence. 

This fear from SW10 of letting go of even small amounts of power and control is what has hindered reorganisation. Therefore, what we have seen have been ad hoc changes reflecting both the political and economic flavour of the time. What has been lacking is a strong grasp on what local authorities of the future need to look like and how they need to be funded.

Looking at the drivers for change I spoke about key drivers that included:

Cost savings 

This is frequently cited as the reason for reorganisation, with arguments that reorganisation will allow for scales of economy, a reduction in overheads and consolidation of some services. While it may well be the case that savings are made, there is not clear agreement on the size of the savings and, from a look at the research, it is not difficult to understand the scepticism. Perhaps improved outcomes through improved service delivery, which is also a key driver, would be a better measure?   

Financial resilience  

While this is closely linked with cost savings it is not the same thing. Resilience is about being able to ensure that the organisation can remain financially stable in the longer term. It requires the right combination of income, spend, reserves and capital, supported by good financial management and governance. It is about ensuring that the longer-term strategic decisions of the new organisation can be achieved. This should also lead to a reduction in risk as the organisation is more stable.   

Political voice and opportunity

Over the past 10 years we have seen that government has favoured larger organisations when it talks about reorganisation. There has been a natural transition towards this approach, although it is certainly not a one size fits all situation. We have seen mergers of districts with other districts, as well as mergers at a larger geographical level. With increased size, as well as savings and resilience, the desire is that the restructure will also amplify the voice of the new organisation, giving it greater presence both economically and politically. Discussions around funding for growth are often easier across these larger economic boundaries. Mayors such as Andy Burnham have a national profile strong enough to become an effective ambassador for more a more local approach to government.  
 
The webinar showed that the story of reorganisation is a complex one. We are nowhere near the final chapter, but we can learn lessons from what has happened in the past. Therefore, CIPFA will be producing an Art of Reorganisation publication in the Autumn to capture these lessons, speaking to those who have been involved and benefiting from their experience to improve the process for others.