Merging district and county councils into single unitary councils could save £2.94bn over five years, reduce complexity and maximise economic growth, a study published by the County Councils Network has claimed.
Undertaken by PricewaterhouseCoopers (PwC), the study looked at different approaches to reorganising local government in areas where there is a two-tier system of county and district councils.
PwC's research suggests that the introduction of a single unitary council in these areas would offer savings and a more efficient means of delivering services at a time when councils are facing billions in rising costs and the added financial impact of COVID-19.
The report suggests replacing county and districts with two unitary authorities in each area would reduce the financial benefit by two-thirds to £1bn over five years, with the establishment of three unitary authorities delivering a net loss of £340m over the same period.
It warns that separating care services could result in different councils competing over scarce care providers, potentially destabilising local adult social care markets already under additional strain due to COVID-19.
The report also suggests that the establishment of multiple unitary authorities in each area creates the risk of disruption to the safeguarding of vulnerable children, while 'instability' in care markets could impact on the quality and availability of support packages and care home placements.
The study suggested that in this scenario, the creation of a children's trust might mitigate the effects of fragmentation. But, the financial benefit of reorganisation would lessen, and further complexities would be introduced to "an already crowded system".
Cllr David Williams, chairman of the County Councils Network, said the consequences of COVID-19 has made councils look again at how local government is structured in their area.
He added: "This government has already signalled that it wants to see many more unitary councils created and it is important we get it right for our residents – we do not want to look back on this period as a missed opportunity.
"The findings from PwC show there is a compelling financial case for the creation of more unitary counties where councils seek reorganisation. They will provide significant savings to support frontline services and the stability needed to safeguard care services as we continue to mitigate the impact of Coronavirus. Crucially, it will create councils of the necessary size to support local economies to recover from the pandemic and drive forward the devolution and levelling up agendas.
"In contrast, an arbitrary population threshold that limits the size of any new council will cap our areas' ambitions and create significant risks in delivering care services. This evidence shows it would mean a worse deal for local taxpayers, create confusion, costs, and complexity, and potentially deliver a postcode lottery for local services and the economic recovery.
"Unitary counties won't lead to a democratic deficit. Rather, as evidenced by authorities that have already made this journey, they have the potential to bring services closer to residents, developing new ways for residents to engage and shape service provision more effectively and enhance local democratic participation with empowered town and parish councils".
In a tweet, the District Councils' Network finance lead, Sharon Taylor said: "Centralising local services ...is entirely wrong, [Britain already has the] least representation at local level of anywhere in Europe."
The study claims that merging authorities into a single unitary authority would give communities a single unified voice to government, however, as it would provide a "clear point of contact" for residents, businesses and a platform to 'maximise' the benefits of strategic economic growth and housing policy; integral to the 'levelling-up' agenda and securing devolution.
Cllr John Fuller OBE, Chairman of the District Councils' Network, criticised the report as being based on a "false and unproven premise with CCN's further use of a numbers and spreadsheets approach assuming councils are just transactional entities".
He added: "It ignores the fact that residents want local decisions made by local people and the saving of a few pence per week does will make them poorer if they are taken still further from those who make decisions for them in local communities across the country.
"We are not out of the woods on COVID-19 so not only is now the wrong time for major reorganisation, it will force us to choose between reorganisation at huge financial cost or recovery, which should be the most important current priority. This what our residents, businesses and governments want us to do and need us to focus on."
Cllr Fuller said: "The coronavirus crisis has made it abundantly clear that bigger is not better and local works best for vulnerable people and local business. Our district councils operate at a grassroots level which our communities understand. Our districts have the financial, regulatory and statutory powers to build the national economy one local economy at a time.
"We are the most trusted level of local government. England remains one of the most centralised countries in the western world, and scale has limits. Let's hear about the government's plans for devolution but in the meantime further centralisation that takes control even further away from voters should be resisted."
To read the full report please click here.