When I read the 2020 PWC report ‘Evaluating the importance of scale' I was struck by how little it held understanding of the real value created by local government.
I see that its perspective rests on a mechanistic, spreadsheet-driven logic — one that prizes economies of scale. This model, a concept suitable for only highly standardised and simple transactional processes, fails to capture how councils operate and what they actually do.
Local authorities operate in two spheres; service delivery and value creation. While waste collection and other transactional services can be directly costed, the greater share of energy and budget goes into creating public value — enabling people and communities to live well.
Local knowledge, embedded in relationships with residents, provides the ability to create lasting outcomes in a locality. That knowledge only becomes valuable when acted upon, and in my experience, smaller authorities contain greater effective local knowledge. Especially when they have staff, like local housing officers, that are employed to engage directly to listen people and their needs to help resolve them.
Consider the council officer who spends three hours supporting a single parent, in financial difficulty. If that support reduces dependency on the public purse, and accelerates their ability to find employment, that is the value created. When tackling complex needs, it has always been known that £2 spent in an early activity, saves £10 later on. Local engagement, prevention and early help that results in the absence of future cost — often invisible in accounts — are where public value resides.
Long term costs are tied to prevention, and prevention is tied to the ability of the public sector and a community to support individuals and families. This complex relationship is precisely why smaller authorities can often be far more effective.
Local knowledge, embedded in relationships with residents, provides the ability to create lasting outcomes in a locality. That knowledge only becomes valuable when acted upon, and in my experience, smaller authorities contain greater effective local knowledge. Especially when they have staff, like local housing officers, that are employed to engage directly to listen people and their needs to help resolve them.
If we compare management roles in smaller authorities, I find that their managers frequently hold broader, more hands-on roles, mentoring staff and shaping cohesive teams.
I watched as a planning manager in a small authority was both a manager and a support for less experienced staff, who she would be overseeing and mentoring. After the reorganisation, she was unable to get to know her larger staff team in the same way, and the development of staff and team cohesion got lost. The best staff began to leave the organisation.
Following reorganisation into larger structures, this role erodes as their remit widens. Staff become distanced, process-driven, and collaborative working falls away. Therefore the simple comparison of the number of managers in a hierarchy is far too simplistic a logic to be realistic.
The consequences are visible in workplace culture. Time and again, when visiting reorganised authorities years later, I have observed diminished morale, rigid hierarchies, and less effective collaboration. By contrast, small teams in smaller authorities often communicate better across departments, make swifter decisions closer to the frontline, and respond more flexibly to complex community needs. Silo working is consequently minimised. These types of value rarely show up in the spreadsheets.
The cycle of restructuring and its upheaval carries its own heavy costs. This integration often lasts around two years, followed by years of cultural dissonance. Go into any authority and we find staff are exhausted and demoralised by continued imposed change. Not only does this cause many good staff to leave, this change prevents genuine reform with our communities from occurring.
My conclusion is that the spreadsheet logic and mindset behind this report is at odds with the reality of local government. It misses out the true value created by local government. The danger, then, lies in mistaking efficiency for effectiveness. Economies of scale may appear to trim costs in the short term, but they do not address the underlying drivers of demand. Ultimately, what we have learned from the impact of Austerity is that this approach actually increases cost and demand.
Reducing costs and demand is obtained through real reform that requires leadership at the highest levels, that brings communities, all public services, and partners together. This can be achieved by collaborating together without the need for large scale reorganisation.
The question we must ask those that are embarking on reorganising, are they considering the whole of what local government does? And is LGR potentially distracting us from the reforms that matter most?
John Mortimer is a systems transformation lead
