Published on 2 May 2024
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Should local authorities reorganise? A review of the evidence

There's been a growing interest in local government reorganisation from both the Conservatives and Labour. However, the case for reorganisation needs further investigation, with evidence suggesting it could be costly, piecemeal and undermine service performance, write Jack Shaw and Patrick Diamond.

In recent months, a cross-party consensus has begun to emerge around the idea that local government reorganisation should be a priority in the next Parliament. The current Minister for Local Government, Simon Hoare, has encouraged authorities at risk of financial collapse to reorganise. Meanwhile, his Labour counterpart, Jim McMahon, agreed with the idea that reorganisation needs to be reconsidered. They are among a number of influential figures including former Communities Secretary, Greg Clark, and Lord Heseltine, advocating reorganisation. This growing interest follows previous flirtations with reorganisation, not least by the Welsh Government following the Williams Commission in 2015 and New Labour’s Local Government Act of 2007 which culminated in the establishment of eight new unitary authorities (Chandler, 2009).

Since the Municipal Corporations Act of 1835, piecemeal reorganisation has been a feature of the history of English local government. In the nineteenth and early twentieth centuries, authorities evolved from bodies focused upon a single area of provision to multi-purpose institutions. Increasingly, local government became an arm of the national welfare state, focused primarily on reducing poverty. And as the twentieth century progressed, authorities were responsible for delivering and procuring a growing number of public services – even if their responsibilities in areas like utilities, universities and further education were steadily dismantled.

Into the twenty-first century, authorities’ role as ‘place-shapers’ responsible for convening actors within and across their communities became more evident, though in recent decades these authorities have been overlooked in favour of new city-regional institutions. At the same time, policymakers in Whitehall have come to view authorities exclusively through the lens of, and as vehicles for, economic growth. 

As the spectrum of services authorities oversee has widened, debates about their optimal geographical reach have become increasingly contentious. Evidence suggests that larger, more populous single-tier authorities benefit from economies of scale, specifically in relation to administrative overheads. Whitehall has repeatedly expressed a preference to deal with unitary authorities, rather than the two-tier regime, in part so that authorities are more ‘legible’ to policymakers. New Local Government Network reported savings from reorganisation indicating a causal relationship between the number of two-tier, district authorities abolished and the savings potential – although evidence suggests that transitional costs were higher than anticipated, casting some doubt on proposed savings. Given that both government and local authorities have emphasised the savings arising from reorganisation, high transition costs significantly undermine this case.

This scepticism is supported by anecdotal evidence that the ‘opportunity cost’ of such reforms is not cost-neutral. The recent merger of eight local authorities into North Yorkshire Council involved integrating 55 IT systems – requiring significant additional capacity. Likewise, Cumbrian authorities raised concerns that reorganisation required significant institutional bandwidth that has impeded them from striking a devolution settlement with the Government.

Turning to policy outcomes, there is also inconsistent evidence about the relationship between the optimal size of authorities and their productivity. Research carried out in the United States questions whether reorganisation actually improves productivity. Professors George Boyne and Rhys Andrews go further, observing that reorganisation has “disruptive effects on organisational outcomes”, with the performance of some services deteriorating (see also Wilson and Game, 2011).

Evidence from Denmark, the Netherlands, Norway and the United Kingdom indicates that public satisfaction is higher with authorities that are smaller in size. In Poland, civic engagement is higher in smaller authorities. And local government is already larger, on average, in the United Kingdom than the rest of Europe.  

International comparative analysis raises serious questions about the scale of reorganisation that is politically achievable. For example, it took Norway six years to reduce the number of authorities by 16 per cent – from 426 in 2014 to 356 in 2020. England has a political tradition of incremental reform and for this reason, it is likely that structural change will be a long, drawn-out process with only a small number of English authorities likely to volunteer to reorganise (as was the case in 2009). This raises questions about how much benefit will be generated by reorganisations and whether, in light of its disruption, they will facilitate economic growth and improve performance in public services.

It is unlikely that many authorities will accept reorganisation if it is a quid pro quo for the establishment of new devolved authorities. Indeed, the reluctance to concede powers to sub-regional or regional institutions has often been an obstacle to new devolution settlements. And there is evidence to suggest that there is a counter-current internationally to plans to merge authorities. In federal Australia’s New South Wales, legislation has been introduced to enable authorities to ‘de-merge’. Labor’s Ron Hoenig, Minister for Local Government, described the “forced amalgamation” of New South Wales’ authorities as “a failed and expensive experiment.” One conclusion to draw from the Australian experience is that policy-makers in England would be mistaken to assume that once reorganisation has taken place, disputes about such changes, and the prospect of further policy churn, will disappear.  

There is some evidence to suggest that reorganisation leads to poorer frontline services and limited efficiency savings. Analysis of public management reform across a wider set of institutions suggests that they rarely deliver what they promise.

And beyond the evidence undermining the case for reorganisation, there is a fundamental question about the purpose of local government which the discourse on reform tends to overlook. In one respect, reorganisation sits within a broader utilitarian framework outlined by Jeremy Bentham in the nineteenth-century that was preoccupied with reducing the costs of governing, as captured in Bentham’s telling phrase “aptitude maximised, expense minimised”. But competing narratives of local government draw on pluralist theories of democracy (advanced by political theorist R.A Dahl) and liberal theories (advanced by Alexis de Tocqueville) which frame local governance as a counter-weight to national government and as key to the expression and recognition of local identities and civic cultures.

While the prevailing assumption in Westminster is that authorities should be structured to facilitate local economic growth, it is important to recognise that this is in some ways a recent preoccupation. In particular, the focus on growth risks obscuring long-held welfare and democratic functions of local government.   

For example, the current focus on growth fails to adequately recognise the importance of identities and place. The 2007 Lyons Review made the compelling argument that the fundamental role of local government lays in strengthening and shaping local places. Reorganisation will lead to larger authorities that are more appropriate for their economic geography, but are perceived as increasingly ‘remote’ from citizens and less able to represent distinctive identities and communities.

While there is considerable evidence to suggest that the search for optimal geographies and the benefits of reorganisation may be misplaced, it is also true that overall English governance has become more opaque and fragmented. In this context, local government reorganisation is likely to remain an idea of great interest to key players in Whitehall and Westminster, even though there is a growing body of evidence that its impacts are much more limited than is often suggested.   

The views and opinions expressed in this post are those of the author(s) and not necessarily those of the Bennett Institute for Public Policy.


Jack Shaw

Affiliated Researcher

Jack Shaw is an Honorary Senior Research Fellow at the Mile End Institute and an Affiliated Researcher at the Bennett Institute for Public Policy. He works across regional economic policy, devolution...

Patrick Diamond

Patrick Diamond is Professor of Public Policy at Queen Mary University and Director of the Mile End Institute.

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