1 of 61 Confidential briefing note to the Chief Executive 8 April 2016 Subject: Local government in Basingstoke and Deane and wider Hampshire Status: Private Contact officer: Simon Christian, Policy and Performance Ext: 2183 Appendices: Appendix 1: Local government functions Purpose This note, requested by the Chief Executive, seeks to respond to points raised by members at the All Member Update held on 17 March 2016. The briefing explores options specifically relating to combined authorities and unitary local government in the absence of a devolution deal and satisfactory combined authority governance arrangements being achieved. This paper explores a range of options and alternative scenarios and does not seek to make any recommendations. This briefing paper should not be interpreted as representing any formal policy position of the council. 1 Executive summary 1.1 Government is fundamentally changing the way in which the country is run and the Budget Report, laid before the House of Commons in March 2016, highlights Government’s ambition to ‘rebalance the economy for the next generation through a devolution revolution’ and the creation of combined authorities. 1.2 Combined authorities are joint legal bodies established by two or more local authorities and can be set up with or without a directly-elected mayor under legislation contained within The Local Democracy, Economic Development and Construction Act 2009 and the Cities and Local Government Devolution Act 2016. 1.3 Following the General Election, the Chancellor, George Osborne, gave a speech in which he stated that in return for greater power and control over local transport, housing, skills, healthcare and ‘the additional levers needed to grow local economies’, it was only right for local areas to have a single point of accountability. In essence, additional powers must come hand in hand with an elected mayor 1 . 1.4 Once established, combined authorities can undertake functions transferred to them by Order of the Secretary of State and any functions that constituent councils agree to share. 1.5 Discussions on a pan Hampshire and Isle of Wight combined authority and devolution deal broke down in March 2016, with the 15 local authorities across 1 HM Treasury, “Chancellor on building a Northern powerhouse”, 14 May 2015
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Confidential briefing note to the Chief
Executive
8 April 2016
Subject: Local government in Basingstoke and Deane and wider Hampshire
Status: Private
Contact officer: Simon Christian, Policy and Performance Ext: 2183
Appendices: Appendix 1: Local government functions
Purpose
This note, requested by the Chief Executive, seeks to respond to points raised by members at the All Member Update held on 17 March 2016. The briefing explores options specifically relating to combined authorities and unitary local government in the absence of a devolution deal and satisfactory combined authority governance arrangements being achieved.
This paper explores a range of options and alternative scenarios and does not seek to make any recommendations. This briefing paper should not be interpreted as representing any formal policy position of the council.
1 Executive summary
1.1 Government is fundamentally changing the way in which the country is run and the Budget Report, laid before the House of Commons in March 2016, highlights Government’s ambition to ‘rebalance the economy for the next generation through a devolution revolution’ and the creation of combined authorities.
1.2 Combined authorities are joint legal bodies established by two or more local authorities and can be set up with or without a directly-elected mayor under legislation contained within The Local Democracy, Economic Development and Construction Act 2009 and the Cities and Local Government Devolution Act 2016.
1.3 Following the General Election, the Chancellor, George Osborne, gave a speech in which he stated that in return for greater power and control over local transport, housing, skills, healthcare and ‘the additional levers needed to grow local economies’, it was only right for local areas to have a single point of accountability. In essence, additional powers must come hand in hand with an elected mayor1.
1.4 Once established, combined authorities can undertake functions transferred to them by Order of the Secretary of State and any functions that constituent councils agree to share.
1.5 Discussions on a pan Hampshire and Isle of Wight combined authority and devolution deal broke down in March 2016, with the 15 local authorities across
1 HM Treasury, “Chancellor on building a Northern powerhouse”, 14 May 2015
Bre
Text Box
Appendix 5
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Hampshire and the Isle of Wight (HIOW) unable to reach agreement on whether any deal should accept the request of Government for a directly elected mayor.
1.6 As a result, alternative proposals were submitted to Government by Southampton, Portsmouth, Isle of Wight, Fareham, Gosport, Havant, Eastleigh and East Hampshire for a Solent Combined Authority.
1.7 Devolution is occurring in a dynamic policy environment and, whilst there may currently exist a lack of clarity as to its ultimate destination, it is becoming clear that those areas that are not included within devolution arrangements may be disadvantaged in terms of less favourable allocations in respect of government funding to support investment and growth, together with reduced influence with regard to wider public sector reform and transformation impacting upon local citizens.
1.8 Taking this into account, it is prudent for the remaining local authorities within Hampshire to explore further options for devolution within the county2. This note provides preliminary information and examines the case for a non-Solent combined authority. The analysis included assembles a wide range of supporting data to illustrate the possible structures and makeup of potential combined authorities, with constituent councils being the primary variant.
1.9 These options are intended to complement existing proposals and ongoing negotiations and do not preclude the continued development of the original plans submitted by the Hampshire & Isle of Wight devolution partnership.
1.10 Whilst pursuing an agenda of devolution, in areas that refuse a mayor as part of any proposals for a combined authority, Government has encouraged councils to submit proposals for fundamental structural reform. This could involve a reduction in councillor numbers; a move to all-out elections in areas where councils currently elect in thirds, district council mergers or the creation of unitary authorities.
1.11 Consistent with advice from Government and in the event that suitable governance arrangements cannot be arrived at for a combined authority in which Basingstoke and Deane Borough Council (BDBC) is a participant, further examination is included which begins to explore issues around local government reorganisation and the potential for the introduction of unitary arrangements.
1.12 The appraisal of these two propositions provides the foundation for additional more detailed work to be undertaken. To date, evaluation has focused principally on size and structure rather than functionality, as until likely membership is established, the implications on functionality, for a combined authority and/or any subsequent unitary authority, cannot be assessed in detail.
2 A formal deal for a Solent Authority is expected to be announced before the end of June 2016.
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Glossary of terms
Term Definition
HIOW Hampshire and Isle of Wight
BDBC Basingstoke and Deane Borough Council
DCLG Department for Communities and Local Government
GMCA Greater Manchester Combined Authority
GCGP LEP Greater Cambridge Greater Peterborough Local Enterprise Partnership
LGiU Local Government information Unit
HCC Hampshire County Council
CIPFA Chartered Institute of Public Finance and Accountancy
ONS Office for National Statistics
NEET Not in education, employment or training (young people)
SCA Solent Combined Authority
CLG SC Communities and Local Government Select Committee
NHNFCA North Hampshire and New Forest Combined Authority
NHCA North Hampshire Combined Authority
CA Combined authority
UKTI UK trade and investment
LEPs Local Enterprise Partnerships
GVA Gross Value Added
LGBCE Local Government Boundary Commission for England
NLGN New Local Government Network
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List of tables
Table Title Page
Table 1 HIOW: population size and area (hectares and square miles) 8
Table 2 HIOW: CIPFA baseline data 9
Table 3 HIOW: LA published balance sheet information - assets, liabilities and reserves
10
Table 4 HIOW: LA published balance sheet information - useable reserves 11
Figure 9 Number of single tier authorities (excluding London Boroughs) by population size
49
Figure 10 Council size: representation based on electors 52
Figure 11 Net assets (£ ‘000) of potential constituent councils 54
Figure 12 Long term liabilities (£ ‘000) of potential constituent councils 54
Figure 13 Total reserves (£ ‘000) of potential constituent councils 55
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MAIN CONSIDERATIONS
2 Background
2.1 In 1972, a major reform of local government structure established a two-tier system across England, with most areas divided into county councils (the upper tier) and district councils (the lower tier). Upper and lower tier authorities have distinct functions, though they overlap in some areas. A breakdown of the functions of county and district councils in two-tier areas can be found in Appendix 1.
2.2 Since 1972, a number of unitary (single tier authorities) have been established with the responsibility of carrying out all local government functions in that area. There are currently 353 local authorities in England, of which 27 are county councils, 201 are district councils, and 125 are unitary authorities. Of the latter, 32 are London boroughs and 36 are metropolitan boroughs.
2.3 The Heseltine report, No Stone Unturned, proposed a full unitary system of local government for England in late 2012. Government responded to this recommendation, stating that it would prefer “authorities not to be distracted by structural change”.
2.4 This reflected the views of the then Secretary of State, Eric Pickles, who opposed any suggestions of reorganisation during his tenure from 2010 to 2015. However, in September 2014 Stephen Williams MP, the Liberal Democrat Parliamentary Under-Secretary at the Department for Communities and Local Government (DCLG), called for reorganisation around ‘cities’ and unitary counties.
2.5 More recently, a number of combined authorities have been established across England and the first devolution deal was announced by Government and the Greater Manchester Combined Authority (GMCA) in November 2014. The GMCA is clearly established as the leading example of devolution, outside London, and on 1 April 2016 was handed control over the health expenditure in its area amounting to £6 billion per annum, so that this expenditure could be better targeted having regard to local priorities.
2.6 This further deal built upon the £476 million of government funding and the additional devolved borrowing powers received by the GMCA, in July 2014.
2.7 In September 2015, Government received 38 bids from areas wishing to follow in the footsteps of the Greater Manchester devolution deal, and by January 2016, eight deals had been agreed with Government.
2.8 A second round of deals was announced in March 2016, with the West of England, East Anglia, and Greater Lincolnshire to become the latest combined authorities to be covered by an elected mayor. At the same time, further deals with Greater Manchester, including a commitment to work towards the devolution of criminal justice powers, and a second devolution deal with Liverpool City Region were published.
2.9 There has been a mixed response, in the time since, from potential members of the announced deals: In East Anglia, Cambridgeshire County Council has now joined Cambridge City Council and the The Greater Cambridge Greater
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Peterborough Local Enterprise Partnership (GCGP LEP) in determining that the agreement is unacceptable in its current form. Opposition has focused on the elected mayoral form of governance, the East Anglia geography, and the relationship to existing city and local growth deals.
2.10 The Local Government information Unit (LGiU) has also reported on the considerable local opposition to the West of England deal from both councils and local MPs and Gateshead and Durham resolving to reject and seek renegotiation of the North East agreement.
2.11 Centrally devolved functions within these deals, such as consolidated transport budgets or a devolved approach to business support services, are expected to be implemented in 2016, through Orders under the Cities and Local Government Devolution Bill which, following agreement by the House of Commons and the House of Lords, received Royal Assent on 28 January 20163.
2.12 In addition to provisions for combined authorities, the Cities and Local Government Devolution Act 2016 permits an expedited procedure for creating unitary authorities. This includes a facility for reviewing ward boundaries and councillor numbers within local authorities or for the review of local authority areas. In areas where a new combined authority is to be created, this would enable the simultaneous creation of unitary authorities, if this was desired locally.
3 To date, devolution deals have been agreed in Greater Manchester, Sheffield City Region, West Yorkshire, Cornwall, North-
East, West Midlands, Liverpool City Region, North Midlands, West of England, East Anglia and Greater Lincolnshire.
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3 Local overview
3.1 The part of Hampshire administered by Hampshire County Council has a population of 1.35 million, making it the third largest shire county council (in terms of population) in the country. Southampton, Portsmouth and the Isle of Wight have a combined population of 593,500, bringing the HIOW area total to 1.94 million.
3.2 HIOW has three unitary authorities, 11 district councils and 261 parish and town councils across an area with 811,695 households. Residents are represented by 19 Members of Parliament, 78 county councillors4 and 684 unitary, district and borough councillors. As a baseline, Table 1 provides an overview of the local population and area covered by each authority across HIOW, in ascending order of population.
Table 1 – HIOW: population size and area (hectares and square miles)
Local authority Population
‘000
Hectares
‘000
Square miles
Gosport 84.30 2.53 9.77
Hart 93.30 21.53 83.13
Rushmoor 95.30 3.90 15.06
Fareham 114.30 7.42 28.65
East Hampshire 117.50 51.44 198.61
Winchester 119.20 66.10 255.21
Test Valley 119.30 62.76 242.32
Havant 122.20 5.54 21.39
Eastleigh 128.90 7.98 30.81
Basingstoke and Deane 172.90 63.38 244.71
New Forest 178.90 75.31 290.77
Hampshire CC (District Subtotal) 1346.1 367.89 1420.43
Isle of Wight (unitary) 139.10 38.02 146.80
Portsmouth (unitary) 209.10 4.04 15.60
Southampton (unitary) 245.30 4.99 19.27
Total 1939.60 414.94 1602.09
Source: Registrar General’s Estimate at June 2014 and CIPFA Finance and General Statistics 2015/16.
3.3 The following tables outline a broad range of baseline information used within the analysis in this paper. Data has been taken from sources such as the Chartered Institute of Public Finance and Accountancy (CIPFA), the Office for National Statistics (ONS) and data published by each individual local authority across the HIOW area.
4 County councillors do not represent those that live within the Southampton, Portsmouth and Isle of Wight area
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Table 2 – HIOW: CIPFA baseline data
Local authority Population
‘000
Average Band D
Equivalent £p
Revenue Support
Grant £’m
Net Current Expenditure
£’m
Net Revenue Expenditure
£’m
Gosport 84.3 1459.40 1.825 41.99 9.53
Hart 93.3 1470.01 1.115 28.16 10.897
Rushmoor 95.3 1440.66 1.756 50.83 10.682
Fareham 114.3 1396.81 1.449 29.78 9.25
East Hampshire 117.5 1458.49 1.39 45.99 15.43
Winchester 119.2 1452.15 1.728 49.05 21.252
Test Valley 119.3 1415.10 1.696 43.55 9.09
Havant 122.2 1449.37 2.457 46.54 13.08
Eastleigh 128.9 1449.83 1.878 42.97 14.13
Basingstoke and Deane 172.9 1379.33 2.222 66.43 15.243
New Forest 178.9 1482.31 2.964 71.05 24.645
Hampshire5 1346.1 116.721 1504.94 744.796
Isle of Wight 139.1 1547.40 26.103 269.44 128.20
Portsmouth 209.1 1390.24 38.538 377.08 143.64
Southampton 245.3 1532.26 42.864 448.65 179.08
Source: CIPFA Finance and General Statistics 2015/16
5 The Hampshire County Council Council Tax sum of £1037.88 is contained within each of the District Council’s Average Band D Equivalent
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Table 3 – HIOW: LA published balance sheet information - assets, liabilities and reserves
Total 105,557 746,179 22,378 16,250 189,940 119,920 1,200,224
Source: Local authority published balance sheet information, for the year ended 31 March 2015
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4 Hampshire & Isle of Wight devolution partnership
4.1 In August 2015 a Statement of Intent for a devolution deal was issued to Government by the 15 local authorities in HIOW. The statement marked the start of formal negotiations to see more powers and control devolved down from central government and its agencies to existing local councils.
4.2 As part of the original pan HIOW discussion, the prospectus submitted to Government requested that government departments devolve specific functions, programmes and projects in the following areas:
Raising productivity – This comprised of enterprise and business support, innovation, skills and employment and welfare.
Accelerating housing delivery – This covered accelerating delivery and managing community identity.
Investing in infrastructure – This focused on strategic transport connections, local transport opportunities, general infrastructure, broadband and utilities and energy.
Transforming local public services – This referred to public service productivity, health and social care and bringing services closer to communities.
4.3 56 detailed requests were put forward as part of these proposals and, as discussion with Government progressed, a number of specific points were identified as areas that ministers would not be willing to relinquish. These were:
Intermediary Body status, giving HIOW control of the EU programme;
Greater influence for HIOW over the Education Funding Agency, leading ultimately to a devolved system (which included the devolution of Education Funding Agency funding for local integrated commissioning of targeted activities to engage and progress young people not in education, employment, or training (NEET));
Freedom from the requirement to reduce council and housing association rents, with revenues from any increase ring-fenced for affordable housing;
Commitment of resources from the Homes and Communities Agency to support an expanded Hampshire Alliance for Rural Affordable Housing programme;
Exemption of rural exception sites from Right to Buy. These sites are only supported locally because they are intended for people with local ties;
Localise the national Concessionary Fares scheme in HIOW to support a new fund for wider bus service subsidies in areas where the commercial service is very limited; and,
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Extension of the Superfast (Broadband) Cities programme in Southampton and Portsmouth across the whole HIOW area.
4.4 At the outset, some districts within Hampshire had been keen to instigate a programme of double devolution as part of the wider HIOW discussions.
4.5 Double devolution is based on the ability for individuals, households and communities to co-design and co-produce services with their local authority, and in some cases, offered the opportunity to take over the running of services which otherwise will cease to exist. This form of community ownership and provision often works best when there is a planned transfer over time, the public body continues to provide specialist advice or resources, and some revenue support, for a transition period and often beyond.
5 Current position
5.1 In March 2016, with the HIOW devolution partnership unable to reach agreement on whether any deal should accept the request of Government for a directly elected mayor, the opportunity for county-wide devolution broke down.
5.2 Devolution is occurring in a dynamic policy environment and whilst there may currently exist a lack of clarity at its ultimate destination, it is becoming clear that those areas that are not included within devolution arrangements may be disadvantaged in terms of less favourable allocations in respect of government funding to support investment and growth, together with reduced influence with regard to wider public sector reform and transformation impacting upon local citizens.
5.3 Keen to utilise momentum, alternative proposals were submitted to Government by Southampton, Portsmouth, Isle of Wight, Fareham, Gosport, Havant, Eastleigh and East Hampshire for a ‘Solent Combined Authority’.
5.4 The prospect of a Solent Combined Authority (SCA) has compelled local councils, previously involved in pan Hampshire discussions, to re-evaluate the options available, outlined in section eight of this report, for devolution in the remaining areas of the county. This analysis does not preclude the original option for a pan Hampshire combined authority from progressing.
5.5 No formal announcement has been made on the deal ‘agreed’ with the constituent councils of the SCA.
6 Establishing a combined authority
6.1 There are two principal methods for establishing a combined authority; the original procedure, under the Local Democracy, Economic Development and Construction Act 2009, was for a local authority or a group of authorities to carry out a governance review.
6.2 The Cities and Local Government Devolution Bill 2016 now enables the Secretary of State to establish a combined authority, if councils in the relevant area consent.
6.3 Established combined authorities can be converted into a mayoral combined authority through a later Order made by the Secretary of State, which all
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constituent councils must agree. If an authority does not consent; the 2016 Act has a provision for the removal of those councils from the combined authority, when the elected mayor is established.
6.4 In January 2015, the Communities and Local Government Select Committee (CLG SC) launched an enquiry into the Cities & Local Government Bill, focusing on what could be learned from devolution to date and in particular, whether the model established for Greater Manchester’s devolution deal is suitable for other areas.
6.5 During evidence gathering, the enquiry found that the primary reasons promoted by Government for a mayoralty are ‘proper direct local accountability’ and the relative success and strength of place leadership by Mayors elsewhere in the world.
6.6 The first report of session 2015 to 2016 of the CLG SC, Devolution: the next five years and beyond, concludes that ‘directly elected mayors are likely to be better suited to urban areas, whereas in non-metropolitan areas the scale, geography and economic diversity means that elected mayors are unlikely to be an easy fit’. Importantly, the report states that ‘all local areas should be allowed to decide whether or not they wish to have an elected mayor’.
6.7 In those areas that have opposed a mayoralty, councils have been invited to propose alternative governance arrangements. This could involve a reduction in councillor numbers; a move to all-out elections in areas where councils currently elect in thirds, district council mergers or the creation of unitary authorities.
6.8 Progress to date indicates that the elected mayoral model is Government’s first choice when negotiating devolution deals. The deal agreed with the North Midlands Combined Authority, which was the first to cover a two-tier government area, includes the provision for an elected mayor. The Cornwall devolution deal ensured that provision was made for a council boundary review, which is expected to reduce the number of local councillors and will be taken forward by the Boundary Commission in 2017.
7 Powers and functions
7.1 Originally, under the 2009 Act, a combined authority could only take responsibility for Government functions exclusively related to economic development, regeneration or transport, or functions that its constituent authorities agreed to transfer upwards.
7.2 In 2016, the Cities and Local Government Devolution Bill removed this constraint and enabled the Secretary of State to transfer any statutory function or the functions of public bodies to combined authorities (Table 5). The 2016 Act also permits district or unitary authorities, when establishing a combined authority, to take on powers from a county council if some authorities within a county area have joined the combined authority but the county council has not. All constituent councils involved in a combined authority must agree to the scope of the new powers, and convince the Secretary of State that the outcome will be an improvement in the exercise of statutory functions in the area.
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Table 5 – Combined authority functions
Public service Vehicle
Further education and skills
Redesign post 16 fulltime education system
Apprenticeship Grant for Employers
Adult Skills funding by 2018-19
Transport
Devolved, consolidated transport budget
Bus franchising
Joint working with Highways England and Network Rail
Local roads network
Smart ticketing
Business support
Growth Hub to align local and national business support services
Joint working with UK trade and investment (UKTI)
Devolved approach to business support services from 2017
Employment support
Joint commissioning of support for harder to help claimants
Possible full joint commissioning from 2017
Land and housing
Public land commission
Housing Loan Fund
Compulsory purchase orders
Mayoral Development Corporation
Planning call-in powers
Statutory spatial strategy
Integration Commission / business plan for integration
Policing The role of Police and Crime Commissioner to be merged with that of the mayor
Fire service Mayor to take over responsibly for Fire Service
EU structural funds Intermediate body
Finance
Investment fund (per year)
Single funding pot
Retention of 100% business rates growth
Criminal Justice
Merging the role of Police and Crime Commissioner and Mayor
Greater role in the commissioning of offender management services
Custody budgets
Health Co-ordinating health and social care
7.3 As well as statutory functions, devolution deals agreed to date have also
included the transfer of a number of Government-funded programmes to combined authorities. For example, the recent further devolution to Greater Manchester includes a provision for the combined authority’s role in the Government’s national housing programme.
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8 Options analysis (combined authorities)
8.1.1 The following analysis assembles a wide range of supporting data to illustrate the possible structure and makeup of potential combined authorities, with constituent councils being the primary variant.
8.1.2 The options are predicated on the assumption that a Solent Combined Authority (SCA) continues to progress and would include, as a minimum, the following core councils; Southampton, Portsmouth, Fareham, Gosport, Havant, Eastleigh and the Isle of Wight.
8.1.3 It is important to note that the landscape of combined authorities is changing on what at times can seem a weekly basis. Comparisons within this analysis have been made on established combined authorities with agreed devolution deals but, even within these areas, the membership of constituent councils has been dynamic and subject to change.
8.1.4 Local authorities should be mindful that Government has asked for proposals to come forward that cover an entire area and has stated that it will not look positively on partial solutions or solutions which leave unviable options in other parts of the county, nor will it act on the views of one council acting in isolation from its neighbours.
8.1.5 By looking first at the potential variations of a SCA, a number of options become apparent for the remaining local authorities within Hampshire. These are highlighted in the maps across the following pages and in the table below.
8.1.6 Options have been modelled across all authorities in Hampshire (which include variations on the current SCA proposal) and are predicated on natural economic geographies and the local partnerships within these areas.
1 Basingstoke and Deane, Hart, Rushmoor, Test Valley, Winchester and New Forest
2 Basingstoke and Deane, Hart, Rushmoor, Test Valley, Winchester, New Forest and East Hampshire
3 Basingstoke and Deane, Hart, Rushmoor, Test Valley and Winchester
4 Basingstoke and Deane, Hart, Rushmoor, Test Valley, Winchester and East Hampshire
5 Basingstoke and Deane, Hart and Rushmoor
6 Basingstoke and Deane, Hart, Rushmoor, Southampton, Portsmouth, Isle of Wight, Fareham, Gosport, Havant, Eastleigh, East Hampshire, New Forest, Winchester and Test Valley
8.1.7 This exercise has been undertaken for modelling purposes only. Options contained within this appraisal are intended purely for illustrative purposes and to date, no discussions have been had with partners within the HIOW area.
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Option 1
Solent CA (SCA)
Southampton, Portsmouth, Isle of Wight, Fareham, Gosport, Havant, Eastleigh and East Hampshire
2021 Population:
1,207,700
GVA: £28 Billion
Option 1
Basingstoke and Deane, Hart, Rushmoor, Test Valley, Winchester and New Forest
2021 Population:
817,081
GVA: £22 Billion
Source: ONS 2012 based Subnational Population Projections for 2021, ONS regional gross value added 2014 and mixture of ONS regional gross value added and BDBC calculations 2014
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Option 2
Solent CA 1 (SCA1)
Southampton, Portsmouth, Isle of Wight, Fareham, Gosport, Havant and Eastleigh
2021 Population::
1,085,200
GVA: £25 Billion
Option 2
Basingstoke and Deane, Hart, Rushmoor, Test Valley, Winchester, New Forest and East Hampshire
2021 Population:
939,500
GVA: £24 Billion
Source: ONS 2012 based Subnational Population Projections for 2021, ONS regional gross value added 2014 and mixture of ONS regional gross value added and BDBC calculations 2014
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Option 3
Solent CA 2 (SCA2)
Southampton, Portsmouth, Isle of Wight, Fareham, Gosport, Havant, Eastleigh, East Hampshire and New Forest
2021 Population:
1,394,900
GVA: £31 Billion
Option 3
Basingstoke and Deane, Hart, Rushmoor, Test Valley and Winchester
2021 Population:
629,900
GVA: £18 Billion
Source: ONS 2012 based Subnational Population Projections for 2021, ONS regional gross value added 2014 and mixture of ONS regional gross value added and BDBC calculations 2014
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Option 4
Solent CA 3 (SCA3)
Southampton, Portsmouth, Isle of Wight, Fareham, Gosport, Havant, Eastleigh and New Forest
2021 Population:
1,272,400
GVA: £29 Billion
Option 4
Basingstoke and Deane, Hart, Rushmoor, Test Valley, Winchester and East Hampshire
2021 Population:
752,300
GVA: £21 Billion
Source: ONS 2012 based Subnational Population Projections for 2021, ONS regional gross value added 2014 and mixture of ONS regional gross value added and BDBC calculations 2014
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Option 5
Solent CA 4 (SCA4)
Southampton, Portsmouth, Isle of Wight, Fareham, Gosport, Havant, Eastleigh, East Hampshire, New Forest, Winchester and Test Valley
2021 Population:
1,641,800
GVA: £39 Billion
Option 5
Basingstoke and Deane, Hart and Rushmoor
2021 Population:
382,958
GVA: £10 Billion
Source: ONS 2012 based Subnational Population Projections for 2021, ONS regional gross value added 2014 and mixture of ONS regional gross value added and BDBC calculations 2014
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Option 6
Option 6 (HIOW)
Hampshire, Basingstoke and Deane, Hart, Rushmoor, Southampton, Portsmouth, Isle of Wight, Fareham, Gosport, Havant, Eastleigh, East Hampshire, New Forest, Winchester and Test Valley
2021 Population:
2,024,700
GVA: £50 Billion
Source: ONS 2012 based Subnational Population Projections for 2021, ONS regional gross value added 2014 and mixture of ONS regional gross value added and BDBC calculations 2014
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8.2 Geographical boundaries and constituent councils
8.2.1 At this point there is no guidance on the optimum size (membership) of a combined authority however, Government are keen for proposals to be based on rational economic areas and local partnerships.
8.2.2 In areas such as Hampshire, where there are two-tier local government arrangements in place, a combined authority must comprise two or more local government areas. The area covered by a combined authority cannot include any area that is part of another combined authority. This means that a district (or borough) council can only be within the area of one combined authority and can therefore only be a constituent council of one combined authority.
8.2.3 In contrast, a county area can include more than one combined authority and the county council can be a constituent council of each combined authority whose area includes one or more districts within the county.
8.2.4 This principle enables combined authority boundaries to echo functional economic areas and removes the barrier of local government geographies that are not aligned with functional economic areas.
8.2.5 The area covered by established combined authorities varies greatly; Liverpool City Region is the smallest combined authority in the country and covers an area only 10,000 hectares larger than Basingstoke and Deane. East Anglia, by comparison, is the largest proposed combined authority, likely to cover an area equivalent to 9% of the entire country6.
8.2.6 The following chart highlights each of the established combined authorities, the relative population and the area covered by each devolution deal.
Figure 1 – Established combined authority size: population and area
Source: BDBC grouped data based on CIPFA Finance and General Statistics 2015/16
6 Based on the assumption that Cambridgeshire County Council ultimately agree to full membership of
the East Anglia devolution deal
548
1061 1104
1366
1518
1896 1952
2447 2469
2733 2808
356
698
133 155 72
478
778
1257
230 128 90
0
500
1000
1500
2000
2500
3000
Population ‘000
Area in hectares ‘000
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8.2.7 Similarly to geographical size, the number of constituent councils differs vastly by deal (Table 7).
Table 7 – Established combined authority size: population, constituent councils and local authority structure
Combined authority Population ‘000
Constituent councils
LG structure7
Cornwall 547.60 1 1 UA
West of England 1104.30 4 All UA
Sheffield City Region8 1365.80 4 All MD
Liverpool City Region 1517.50 5 4 MD - 1 UA
West Yorkshire 2468.80 6 5 MD - 1 UA
North East9 1952.40 7 5 MD - 2 UA
West Midlands 2808.40 7 All MD
Greater Lincolnshire 1060.50 10 1 CC - 2 UA - 7 DC
Greater Manchester 2733.00 10 All MD
North Midlands 1895.50 19 2 CC - 15 DC -2 UA
East Anglia10 2446.50 22 3 CC - 18 DC - 1 UA
Average 1809.12 9
Source: CIPFA Finance and General Statistics 2015/16 and information included within published deals.
8.2.8 A cornerstone for the success of a combined authority is effective working relationships between local authority constituent partners and between local authorities and the relevant Local Enterprise Partnerships (LEPs).
8.2.9 On this basis, some district councils, such as Bassetlaw District Council, have recently sought to join combined authorities outside their county area.
8.2.10 The original 2009 Act gave county councils a constitutional right to block district councils from doing this. The 2016 Act removed this veto, enabling a county or a district to join any combined authority.
7 LG structure: UA: Unitary Authority MD: Metropolitan District CC: County Council DC: District Council
8 Excluding Bassetlaw District Council
9 Including Gateshead Metropolitan District and Durham
10 Including Cambridgeshire County Council
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8.2.11 To provide a clear illustration of potential size, the population, based on the 2012 ONS Subnational Population Projections for 2021, for each combined authority option would be as follows.
Figure 2 – HIOW combined authority options: population projections for 2021
Source: ONS 2012 based Sub-National Population Projections
8.2.12 The population of a non-Solent combined authority could range from 383,000 to 939,500 residents and would cover an area between 88,800 and 344,000 hectares.
8.2.13 By contrast, the SCA population could range from 1.08 million to 1.64 million people and potentially cover an area between 71,000 and 326,000 hectares.
8.2.14 Table 8 provides an illustrative example of how these population sizes compare to other established combined authorities across the country.
Table 8 – HIOW combined authority options compared, by population, to established deals
Combined authority Population ‘000
Option 5 382.96
Cornwall 547.60
Option 3 629.89
Option 4 752.34
Option 1 817.08
Option 2 939.54
SCA1 1085.21
West of England 1104.30
SCA 1207.67
SCA3 1272.41
Sheffield City Region11 1365.80
SCA2 1394.86
Liverpool City Region 1517.50
SCA4 1641.79
HIOW (Option 6) 2024.75
West Yorkshire 2468.80
North East12 1952.40
West Midlands 2808.40
Greater Lincolnshire 1060.50
Greater Manchester 2733.00
North Midlands 1895.50
East Anglia13 2446.50
11
Excluding Bassetlaw District Council 12
Including Gateshead Metropolitan District and Durham 13
Including Cambridgeshire County Council
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8.3 Dwellings
8.3.1 Many devolution deals have, to begin with, focused on how housing delivery can be accelerated across a specific area and the Hampshire and Isle of Wight devolution partnership was no different.
8.3.2 It was recognised within the original HIOW bid document that ‘providing adequate, suitable housing to meet the current and future needs of our growing population and workforce is an important component of maintaining prosperity in the county’.
8.3.3 Local authorities in Hampshire and Isle of Wight currently plan to deliver 76,000 new homes in the next 10 years14.
8.3.4 Small area population forecasts provide details of dwellings with planning permission that are likely to come forward between 2014 and 2021 and therefore provide a balanced forecast of growth across the region. The chart below outlines forecast growth across all options15.
8.4.1 Productivity and growth has been a principle driver for the Government’s devolution programme. Building on initiatives such as the ‘Northern Powerhouse’ and the ‘Midlands Engine’, devolution deals have sought to enable jobs, support industries and increase trade and investment.
8.4.2 Hampshire has a complex and dynamic economic landscape; large urban towns and cities contrast with vast areas of countryside, interspersed with smaller market towns and villages. This landscape, at the same time as providing a robust foundation for economic growth, highlights variations in productivity, educational attainment, employment, housing and health.
8.4.3 Hampshire has two LEPs, Enterprise M3 and Solent, both with the same ambition of fostering growth, but with different emphases reflecting the diversity of the areas they seek to support.
8.4.4 Excluding London, Enterprise M3 has the fourth highest level of GVA in the country, only surpassed by South East, Leeds City Region and Greater Manchester. Gross Value Added (GVA) is one of the key economic indicators. It measures the performance of each individual producer or industry and their input to the economy.
8.4.5 The Office for National Statistics (ONS) use GVA to measure the increase in the value of the economy due to the production of goods and services. The ONS calculate GVA using the difference between the value of goods and services produced (output) and the cost of raw materials and other inputs which are used up in the process of production (intermediate consumption).
8.4.6 Before looking in more detail at the potential economic strength of various combined authority models, it is worth noting the regional levels of GVA across the south east.
Figure 4 – 2014 South East regional GVA £ Billions
Source: ONS regional gross value added, 2014
£80
£74
£50
£0
£10
£20
£30
£40
£50
£60
£70
£80
£90
Berkshire, Buckinghamshire andOxfordshire
Surrey, East and West Sussex Hampshire and Isle of Wight
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8.4.7 Figure 5 breaks down the 2014 regional levels of GVA by local authority within HIOW. The GVA calculations produced by BDBC for Hampshire’s districts and boroughs are created by distributing the GVA for Hampshire County overall, using workplace gross weekly earnings and workplace employees’ estimates16.
Figure 5 – 2014 HIOW GVA £ Billions
Source: ONS regional gross value added 2014 and a mixture of ONS regional gross value added and BDBC calculations
8.4.8 Regional gross value added is the value generated by any unit engaged in the production of goods and services. It is not, however, a measure of regional productivity.
8.4.9 GVA per head is a more useful way of comparing regions of different sizes and the aspiration for North Hampshire should be to target the same level of GVA per capita achieved by Berkshire and Surrey as our neighbouring areas.
Table 9 – GVA per head index
Source: ONS regional gross value added, 2014
16
Not for Portsmouth, Southampton or the Isle of Wight as their figures are published by ONS
1.20
2.30
2.34
2.61
2.86
3.07
3.19
3.43
3.60
3.72
5.13
5.22
5.38 5.78
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00
Gosport
East Hampshire
Havant
Hart
Fareham
Isle of Wight
Test Valley
Rushmoor
Eastleigh
New Forest
Winchester
Basingstoke and Deane
Portsmouth
Southampton
Authority Name Regional GVA per head £p
GVA per head
Index (UK = 100)
Isle of Wight 22,074 89.7
Southampton 23,572 95.8
South Hampshire 24,568 99.8
Hampshire 25,578 103.9
Portsmouth 25,735 104.5
Central Hampshire 26,479 107.6
North Hampshire 28,118 114.2
East Surrey 30,429 123.6
West Surrey 33,254 135.1
Berkshire 34,230 139.1
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8.4.10 As with previous factors, the GVA of existing combined authorities varies greatly. The average GVA across all combined authorities with agreed devolution deals is £37.4 billion. Cornwall has the smallest GVA, measuring £9.4 billion and Greater Manchester has the highest level of GVA at £57.4 billion.
Figure 6 – Combined authority 2014 GVA Billions £
Source: ONS regional gross value added 2014 and a mixture of ONS regional gross value added and BDBC calculations
8.4.11 The graph below outlines the various options with locally calculated GVA per head indexed to the UK average (UK = 100).
Figure 7 – GVA per head index
Source: ONS regional gross value added 2014 and a mixture of ONS regional gross value added and BDBC calculations
8.5.1 How much is produced for a given input, such as an hours work, is directly linked to living standards. A country’s ability to improve its standard of living over time is nearly exclusively reliant on productivity growth.
8.5.2 Productivity is also an essential determinant for the long-term growth rates of an economy. Stronger productivity growth leads to stronger GDP growth. This, in turn, increases tax revenues and lowers budget deficits. Of course, lower productivity growth results in the opposite: lower GDP growth and higher budget deficits17.
8.5.3 Generally, the measure of productivity is calculated by:
Labour productivity =
Gross Value Added
(output per hour) Total number of hours worked in economy
8.5.4 UK productivity has historically grown by around 2% per year, but since the recession in 2008/2009 it has stagnated, and, although the HIOW economy represents over 20% of the South East output, the county wide devolution prospectus highlights that on average it is 6% less productive per head than other regions.
8.5.5 Sub regional productivity by Local Enterprise Partnership, displayed in the following chart, highlights that productivity growth in the Enterprise M3 region has, on average, outperformed the Solent region since 2007.
Figure 8 – Regional productivity (by LEP)
Source: ONS Sub regional Productivity: Labour Productivity (GVA per hour worked and GVA per filled job) indices by Local Enterprise Partnership, March 2016
8.5.6 In July 2015, Government published its 15-point productivity plan: Fixing the foundations: Creating a more prosperous nation.
8.5.7 The plan aims to improve the UK’s transport and digital infrastructure, increase investment in the economy, enhance the skills of the workforce, build
17
Parliamentary Briefing Paper, Productivity in the UK, February 2016
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Enterprise M3
Solent
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more houses, move people off welfare and into work, encourage exports, and rebalance the economy away from London.
8.5.8 As a baseline, Table 10 outlines the economic activity and relative GVA for each combined authority option.
Option 1: Basingstoke and Deane, Hart, Rushmoor, Test Valley, Winchester and New Forest 19
Option 2: Basingstoke and Deane, Hart, Rushmoor, Test Valley, Winchester, New Forest and East Hampshire 20
Option 3: Basingstoke and Deane, Hart, Rushmoor, Test Valley and Winchester 21
Option 4: Basingstoke and Deane, Hart, Rushmoor, Test Valley, Winchester and East Hampshire 22
Option 5: Basingstoke and Deane, Hart and Rushmoor 23
Option 6: Hampshire, Basingstoke and Deane, Hart, Rushmoor Southampton, Portsmouth, Isle of Wight, Fareham, Gosport, Havant, Eastleigh, East Hampshire New Forest, Winchester and Test Valley
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8.6 Summary
8.6.1 As demonstrated in the analysis; the population, area covered and economic strength of established combined authorities varies greatly. This is, of course, consistent with Government’s approach of establishing these deals across rational geographical (economic) areas, rather than alongside traditional local government boundaries.
8.6.2 Taking this into account, and considering the rational areas within Hampshire, there is a strong economic and strategic case for a non-Solent combined authority, in the event that the SCA proceeds. Proposals should complement the plans for a Solent Combined Authority and vice versa; each making the other stronger, not weaker.
8.6.3 Given that details surrounding a pan HIOW combined authority have widely established this model (option 6) has been included as a reference point.
Option 6
8.6.4 Looking purely at rational economic geographies and balance in terms of population size and economic strength; option 1, which is founded on the current SCA model, and options 2, 3 and 4 should be outlined as ‘preferred options’.
8.6.5 These options will need to be refined through further evaluation in terms of composition, rural/urban split, transport links and the practicalities of establishing a common vision and shared objectives amongst constituent councils.
8.6.6 By shifting to a model where Hampshire is covered by two devolution deals, rather than one, the opportunity for greater precision presents itself. Each theoretically able to negotiate a logical deal that compliments an areas plans for growth and improved delivery of public services.
8.6.7 There is a renewed opportunity to learn and build upon the process followed as part of the original devolution discussions.
8.6.8 Furthermore, the emerging view that those areas not included within devolution arrangements may be disadvantaged (in terms of less favourable government funding allocations to support investment and growth, together with reduced influence with regard to wider public sector reform and
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transformation impacting upon local citizens) only strengthens the requirement for local authorities to be proactive in the approach to securing a devolution deal.
8.6.9 The Communities and Local Government Committee has recommended that the public should be engaged in the preparation of devolution proposals, insofar as possible during the negotiations and once the results of a deal have begun to make an impact, and communicated to throughout the process.
8.6.10 Proposals should also be underlined with clear and measurable objectives.
Option 1
Option 2
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Option 3
Option 4
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9 Implications on local government structure
9.1 As introduced in section 2 of this note, in areas that are opposed to a mayoralty, local authorities have been encouraged to propose alternative governance arrangements as part of their devolution bid. This guidance will be exercised in a variety of ways across the country.
9.2 The CLG SC has stated that ‘those areas which do not want an elected mayor should be allowed to propose an equally strong alternative model of governance’.
9.3 The committee acknowledged that the Secretary of State did not wish to address the structure of local government as part of the devolution process with a blanket approach, but that this was a point that would need to be addressed in the long term, possibly by moving to more unitary authorities.
9.4 The following pages explore Basingstoke and Deane Borough Council’s involvement in a single tier unitary authority and models the possible options available within the same functional economic geography as a non-Solent combined authority.
10 Changing from two-tiers to a single tier of local government – Unitarisation
10.1 The process for changing to one single tier of local government, a unitary authority, can be found in Part 1, Chapter 1, Section 1 to 7 of the Local Government and Public Involvement in Health Act 2007.
10.2 The Secretary of State may invite a county or district council to make proposals to become unitary either by themselves or as a group of local authorities. As part of this proposal, the Local Government Boundary Commission for England (LGBCE) can be asked for advice on any matter related to becoming a single tier, but there is no formal requirement to do so.
10.3 In the last structured round of creating unitary authorities, during 2006 to 2009, Government published the invitation to councils in England to make proposals for future unitary structures24. This invitation provided criteria, outlined in the points below, on which Government would accept applications for unitary status:
1 the change to future unitary local government structures must be:
affordable - in essence, that the change itself both represents value for money and can be met from councils’ existing resource envelope; and,
supported by a broad cross section of partners and stakeholders.
2 future unitary local government structures must:
provide strong, effective and accountable strategic leadership;
24
DCLG, Invitation to councils in England, 2006
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deliver genuine opportunities for neighbourhood flexibility and empowerment; and,
deliver value for money and equity on public services.
10.4 Recently, the DCLG issued the following guidance to Dorset County Council, as part of the county’s work exploring options for the future of local government in Bournemouth, Dorset and Poole25:
The DCLG considers the optimum size for a unitary council to be between 300,000 and 700,000 residents. These are not absolute rules, but Government will ask searching questions of proposals of fewer than 300,000 and more than 700,000 residents;
Proposals should complement economic geographies. Appropriate governance is a major determinant of an area’s economic prospects, so a successful submission for local government reform will need to demonstrate that any proposals are in the best economic interest of the area;
Government will look for proposals to come forward that cover the whole area and will not look positively on partial solutions or solutions which leave unviable options in other parts of the county, nor will it act on the views of one council acting in isolation from its neighbours;
If more than one new council is created, those councils will be created at the same time;
The Secretary of State will look for a solution to be delivered through agreement / consensus;
Councils should submit devolution proposals and proposals for local government reform as part of a single package;
Agreeing a new unitary structure should enable authorities to submit more ambitious devolution proposals;
Looking to alter district boundaries in advance of any reorganisation will add a considerable amount of time to the process;
Councils need to be mindful of the next general election in 2020, and avoid running into the election period as the point of change; and,
To meet a potential change date of 2019, DCLG’s preferred date for the submission of proposals on devolution and local government reform is January 2017;
10.5 In addition to becoming a unitary authority, a separate procedure is available, in sections 8-10 of the 2007 Act, should two district councils wish to become a single district council.
25
Report to County Council, Exploring Options for the Future of Local Government in Bournemouth, Dorset and Poole, 10 March 2016
10.6 Recently, instigated as part of the ongoing devolution proposals, Suffolk Coastal and Waveney District Council have produced a business case for a merger which would make it England’s largest district council by population, at some 240,000 residents.
11 Local accountability
11.1 Local government has two fundamental roles. First, to ensure there are the public services available required by residents in accordance with the law and within the constraints of available resources. Second, to represent the views of citizens and enable them to participate in the decisions that affect them and their local communities. Their democratic mandate gives councillors and councils the opportunity to act as community leaders26, and in so doing act as custodians of place.
11.2 Local authorities are under a general Duty of Best Value to make arrangements to secure continuous improvement in the way in which their functions are exercised, having regard to a combination of economy, efficiency and effectiveness27.
11.3 Within the existing structure, there is the potential for important local issues that negatively impact upon place to fall between the two-tiers of local government, and not get resolved.
11.4 A new unitary council would have end to end accountability for all local government decisions and services; such that any inaction could not be excused by organisational constructs.
11.5 The creation of a unitary authority provides councils with the opportunity to radically redesign and simplify the delivery landscape of local services using a whole systems approach. By their very nature unitary authorities;
reduce the number and layers of local government that residents and businesses have to deal with in a particular locality of delivery partners;
remove the barriers and challenges associated with the separation of service budgets and agents; and,
are incentivised to ensure that services are designed and delivered as close to the resident as possible.
11.6 Proposals for unitary status in other areas have focused on how any reorganisation could enable an environment that is sympathetic to the integration of services, rather than just consolidation or pushing a model focused on centralised control.
11.7 Any potential structural reorganisation would create an opportunity to introduce a decision-making and consultative structure that is aligned to the principal of an area’s natural communities; the formation of a new council
26
The way forward: an independent review of the governance and organisational capabilities of Birmingham City Council, Sir Bob Kerslake, December 2014 27
Section 3 of the Local Government Act 1999 (as amended by s137 of the Local Government & Public Involvement in Health Act 2007)
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could directly involve local communities in shaping the way that the new council works from the outset.
11.8 A recent article in the Local Government Chronicle explored the experience of Wiltshire Council, restructured into one single tier in 2009, and emphasised not just the cost savings available through reformation, but also the levels of service improvement achieved by getting local authority functions closer to the customer.
11.9 When developing a case for change, Wiltshire Council underline the need for a robust and clear vision and highlight the value they gained by empowering their local communities through the creation of local area boards.
11.10 This approach was mirrored by Durham Council, who introduced area action partnerships and strengthened the role of the parish councils and Shropshire Council, who instigated a vigorous localist agenda, to be achieved similarly through its town and parish councils.
11.11 More locally, Surrey County Council and Woking Borough Council established a joint committee, in June 2014, with the aim of strengthening local democracy; reducing duplication of governance arrangements; improving partnership working; and simplifying decision making.
11.12 This joint committee has provided the foundation for successful collaboration between authorities in areas such as education, resulting in the provision of a new secondary school, and also a positive approach to a variety of Agency Agreements with on street parking, verge maintenance, highway trees, and town centre management.
11.13 Although this paper does not propose a detailed solution for building upon local democratic accountability, potential models, should options for a unitary authority progress, could include a stronger role for parish and potential town councils, or the creation of a joint committee or locality forums shaped around natural areas of association.
12 Better value for money
12.1 The New Local Government Network (NLGN) paper As Tiers Go By, published in October 2014, states that, if done on a large enough scale, unitary status authorities can save significant amounts of money.
12.2 Following invitation from Government in 2009, areas moving to a single tier structure estimated that the reorganisation of local government would save on average £16 million per annum.
12.3 In the time since, these savings have been substantially exceeded, with new unitary authorities reporting savings from £14 million to nearly £40 million a year, in comparison with previous two-tier arrangements.
12.4 The average saving for each reorganised area is slightly more than £25 million and the size of the financial dividend appears to be closely related to the number of councils that were abolished.
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12.6 Table 11 highlights the relationship between reported savings, the number of constituent councils and population.
Table 11 – Relationship between reported savings and the number of constituent councils as part of structural reorganisation
Net Current Expenditure
£’m
Average savings
per annum
£’m - %
Constituent councils
Population ‘000
Wiltshire 685.14 £14 2% 1 CC – 4 DC 483.1
Shropshire 453.99 £20 4% 1 CC – 5 DC 310.1
Cornwall 865.15 £25 3% 1 CC – 6 DC 545.3
Northumberland 559.06 £28 5% 1 CC – 6 DC 316.0
Durham 987.04 £38 4% 1 CC – 7 DC 517.8
Source: As Tiers Go By, NLGN, October 2014
12.7 In those areas where recent and comprehensive proposals for single tier authorities have been developed; Oxfordshire, Buckinghamshire, Leicestershire and Bournemouth and Poole, potential efficiencies have been identified in the following areas:
Chief officers
Restructuring and streamlining middle management
Reduction in member numbers and associated costs, including election costs
Accommodation and the rationalisation of property and assets
Corporate services (restructuring back office functions)
Frontline services (service optimisation)
12.8 Should the council choose to further develop options for a unitary authority in north Hampshire, each of the areas above should be assessed and potential savings validated across the available options.
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13 Options analysis (unitary modelling)
13.1.1 Notwithstanding the points outlined in earlier sections of this paper, there is no fixed principle for the reorganisation of local government into a single tier.
13.1.2 The Heseltine report in 2012 stated that if central government is asked to consider proposals, whether to become a unitary or form a combined authority, it should be important that such collaborations align with the boundary of the relevant Local Enterprise Partnership (LEP) and therefore serve a functional economic geography.
13.1.3 Additionally, other local authorities evaluating a potential reorganisation have identified the following factors which they have deemed to be critical:
Improving service efficiency based on the premise of eliminating the organisational and bureaucratic barriers which often encumber delivery and planning;
Upholding and improving democratic representation and political accountability by streamlining the role of elected members but ensuring that they remain close to the community infrastructure across the area which they serve; and,
Predicating any new structural options on the basis of geographic and cultural identity ensuring that natural and historic communities are recognised and protected.
Reducing the cost of back office and administrative functions which are often duplicated in two-tier structures;
13.1.4 Options explored across the following pages, and listed in the table below, have been identified using the recommended council size mentioned in section 10, and the pre-existing logical geographic split of north, central and southern Hampshire. The information provides introductory analysis and baseline information to inform future discussion.
Table 12 - Unitary authority options
Option Constituent councils
A Basingstoke and Deane, Hart and Rushmoor
B Basingstoke and Deane, Hart, Rushmoor, Test Valley and Winchester
C Basingstoke and Deane and Test Valley
D Basingstoke and Deane and Winchester
E Basingstoke and Deane, Test Valley and Winchester
13.1.5 This exercise has been undertaken for modelling purposes only. Options contained within this appraisal are intended purely for illustrative purposes and to date, no discussions have been had with partners within the HIOW area.
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13.1.6 The rationale for a single tier authority consisting of Basingstoke and Deane, Hart and Rushmoor (Option 1) is centred on the existing partnerships between these councils and their geographic location.
13.1.7 The option for BDBC to become a unitary authority on its own has not been explored as part of this analysis. This is because of two fundamental points; firstly, the population size of Basingstoke and Deane alone falls well below the current DCLG recommend size (of 300,000 to 700,000 residents). Secondly, in assessing the viability of a new unitary authority it is important to understand how feasible similar proposals are for those remaining authorities not included within each option and therefore, it was not clear that suitably viable options remained for those authorities neighbouring the borough.
13.1.8 In addition to exploring unitarisation with Hart and Rushmoor, four further models (Options 2 to 5) have been examined using the majority of Basingstoke and Deane’s neighbouring authorities as potential constituent councils.
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Option A
Constituent councils
Basingstoke and Deane, Hart and Rushmoor
2021 Population:
382,960
GVA: £10 Billion
Source: ONS 2012 based Subnational Population Projections for 2021, ONS regional gross value added 2014 and mixture of ONS regional gross value added and BDBC calculations 2014
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Option B
Constituent councils
Basingstoke and Deane, Hart, Rushmoor, Test Valley and Winchester
2021 Population:
629,890
GVA: £18 Billion
Source: ONS 2012 based Subnational Population Projections for 2021, ONS regional gross value added 2014 and mixture of ONS regional gross value added and BDBC calculations 2014
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Option C
Constituent councils
Basingstoke and Deane and Test Valley
2021 Population:
309,320
GVA: £8 Billion
Source: ONS 2012 based Subnational Population Projections for 2021, ONS regional gross value added 2014 and mixture of ONS regional gross value added and BDBC calculations 2014
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Option D
Constituent councils
Basingstoke and Deane and Winchester
2021 Population:
314,000
GVA: £10 Billion
Source: ONS 2012 based Subnational Population Projections for 2021, ONS regional gross value added 2014 and mixture of ONS regional gross value added and BDBC calculations 2014
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Option E
Constituent councils
Basingstoke and Deane, Test Valley and Winchester
2021 Population:
435,130
GVA: £13.55 Billion
Source: ONS 2012 based Subnational Population Projections for 2021, ONS regional gross value added 2014 and mixture of ONS regional gross value added and BDBC calculations 2014
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13.2 Population and optimal council size
13.2.1 The study Size, Structure and Administrative Overheads: An Empirical Analysis of English Local Authorities, published in 2009 by Rhys Andrews and George A. Boyne, has been used to support a number of local government structural reviews, such as the independent review of the governance and organisational capabilities of Birmingham City Council, commissioned by the Secretary of State and undertaken by Lord Kerslake, in December 2014.
13.2.2 Birmingham is currently the largest single tier authority in the country with a population of 1.1 million.
13.2.3 Lord Kerslake concluded that Birmingham’s size caused significant problems with some services simply too big to manage, and that if the authority was unable to respond positively to the recommendations within the review, a fundamental restructure was likely.
13.2.4 Rhys Andrews and George A. Boyne determine, in the 2009 paper, that the size of an authorities’ population consistently has a linear negative effect on organisational effectiveness: the analysis provides support for the argument that economies of scale could be achieved by merging smaller councils into larger, more suitably sized units and by combining counties and districts into unitary authorities.
13.2.5 The article demonstrates a complex relationship between local authority size and performance which is, of course, reliant on local circumstance and need. Broadly however, for unitary authorities, this research suggests that the optimum size for a local authority may be a population between 400,000 and 600,000.
13.2.6 As outlined earlier, DCLG has indicated more recently that this optimum size could be enlarged to cover a range of between 300,000 and 700,000 residents. As a baseline, table 13 summarises the projected population for each option.
Table 13 – Unitary authority population projections
Option Population (based on 2021 projections)
‘000
Within DCLG optimum
population size
A 379.419
B 641.361
C 310.691
D 316.121
E 444.377
Source: ONS 2012 based Subnational Population Projections
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13.2.7 In considering this guidance, it is worth noting recent developments in Oxfordshire, where Prime Minister David Cameron has supported proposals to disaggregate Oxfordshire County Council and replace it with up to four new unitary councils (all with a population of under 300,000).
13.2.8 These suggestions, although not meeting the suggested optimal size, cover rational geographical areas and offer a solution across the entire county, therefore making the proposals, if viewed in the round, more acceptable.
13.2.9 The graph below highlights the upper and lower population ranges of unitary authorities across England.
Figure 9 – Number of single tier authorities (excluding London Boroughs) by population size
Source: CIPFA Finance and General Estimates Statistics 2015-16
13.3.1 The following table (Table 14) provides information, in order of lowest to highest, on the council tax collected by authorities potentially included in a unitary model, based on the 2015/16 Average Band D equivalent.
Table 14 – Average Band D equivalent of potential constituent councils
District council Number of Band D
properties
‘000
2015/16 Average Band
D Equivalent
£p
District element
£p
Basingstoke and Deane 61.64 1379.33 104.44
Test Valley 45.32 1415.10 126.41
Rushmoor 29.75 1440.66 184.07
Winchester 46.45 1452.15 126.27
Hart 37.98 1470.01 151.84
Source: CIPFA Finance and General Statistics 2015/16
13.3.2 The average district plus county council tax rate that is paid, across all potential constituent councils, is £1178.75. Any potential reorganisation of local councils presents an opportunity to harmonise council tax rates.
13.3.3 In the Oxfordshire County Council strategic financial case for a unitary council, two proposals for the harmonisation of council tax were put forward; set council tax based on the lowest current rate of constituent councils; which in this case could be Basingstoke and Deane or, a 5% reduction to the average rate paid across all constituent councils.
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13.4 Potential council size (number of members)
13.4.1 There is no fixed formula for calculating the size of a council, in relation to the number of councillors, across an area. This is acknowledged by the LGBCE which attempts to take into account local considerations when recommending local authority size and configuration.
13.4.2 In developing a case for unitary status, other authorities have tried to strike a balance when proposing council size, between a ratio of electors per councillor and the practicalities of council size in terms of decision making and strategic planning.
13.4.3 These variables are naturally related; a larger number of councillors will reduce the overall number of electors per councillor but will inevitably increase the overall size of the council and vice versa.
13.4.4 The Boundary Commission will take a close interest in proposals of significantly more than 100 councillors, on the basis of the practicalities of decision-making, but will want to see a reasonable ratio of electors per councillor.
13.4.5 Based on this information, it would seem prudent, as other authorities have done, to explore options around these numbers. It is also import to note that the LGBCE have scheduled a boundary review in Basingstoke and Deane which is due to be completed by 2017/18.
Table 15 – Number of members and total electorate of potential constituent councils
Members Electorate 2014 Ratio of electors per councillors
Hampshire 78 1,024,612 13,136
Basingstoke and Deane 60 131,144 2,186
Hart 33 70,689 2,142
Rushmoor 39 65,303 1,674
Test Valley 48 92,922 1,936
Winchester 4528 91,041 2,023
Source: LGBCE Counties pivot table, December 2014
13.4.6 According to the LGBCE, the total electorate in north Hampshire in 2014 is estimated to be 592,997, with each councillor representing an average electorate of 2,081.
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Subject to parliamentary approval and implementation of new arrangements at local elections in May 2016 – proceeding that date, Winchester City Council will continue to be covered by 57 councillors.
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13.4.8 The graph below plots unitary authorities in England, excluding London and metropolitan boroughs, by electorate and number of electors per councillor. Based on this information; the average electorate per councillor across all unitary authorities is 2,815.
Figure 10 – Council size: representation based on electors
13.4.9 Should any future proposal follow the trend line outlined above the electorate per councillor would range from 2,500 to 5,000. Table 16 outlines potential council size and the number of councillors per option, based on increasing ratios of electors per councillor.
13.4.10 Calculations where the number of members equals 100 or more have been highlighted in red, to indicate possible heightened scrutiny by the LGBCE.
Table 16 – Potential council size (number of members) by option
Option Electorate 2014 ‘000
2,500
3,000
3,500
4,000
4,500
5,000
D 222.2 89 74 63
C 224.1 90 75 64 56
A 267.1 107 89 76 67 59
E 315.1 105 90 79 70 63
B 451.1 150 129 113 100 90
13.4.11 Within the LGBCE electoral review technical guidance, it is stated that a view on the right council size for an authority is arrived at by considering three areas:
the governance arrangements of the council, how it takes decisions across the broad range of its responsibilities, and whether there are any planned changes to those arrangements;
the council’s scrutiny functions relating to its own decision making and the council’s responsibilities to outside bodies, and whether any changes to them are being considered; and
the representational role of councillors in the local community and how they engage with people, conduct casework and represent the council on local partner organisations.
13.4.12 Table 17 shows comparable unitary authorities and the averaged hectare and electors per councillor for each council, with options 1 to 5 included to provide an illustrative comparison.
13.4.13 Note that the recently established single tier authorities (highlighted with an asterisk) have an average ratio 3,478 electors per councillor. On this basis, and for the purpose of this comparison, the potential council size used is based on a ratio of 3,500 electors per councillor.
Table 17 - Council size (number of members) across existing single tier authorities
Electorate ‘000
Members Ratio of electors
per councillor
Hectare per
councillor
West Berkshire 114.8 52 2,208 1,354
North Lincolnshire 124.6 43 2,898 1,968
Herefordshire 137.3 58 2,367 4,321
Central Bedfordshire* 204.1 59 3,459 1,213
Option D 222.2 63 3,500 1,971
Option C 224.1 64 3,500 1,971
Shropshire 230.6 74 3,116 4,321
Cheshire West and Chester* 260.7 75 3,476 1,222
East Riding of Yorkshire 264.2 67 3,943 3,593
Option A 267.1 76 3,500 1,163
Cheshire East 272.9 82 3,328 1,422
Option E 315.1 90 3,500 2,136
Wiltshire* 346.8 98 3,539 3,322
Durham 376.9 126 2,991 1,767
Cornwall* 416.3 123 3,385 2,883
Option B 451.1 129 3,500 1,687
Average 249.9 78 3,159 2,490
Source: LGBCE Counties pivot table, December 2014
13.4.14 To provide context to an authority’s proposal on council size, the nearest neighbour’s model prepared and published by the Chartered Institute of Public Finance and Accountancy (CIPFA) is used to compare the size of similar authorities.
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13.5 Financial resilience and council spend
13.5.1 The net assets of potential consistent councils, based on local authority published balance sheet information for the year ended 31 March 2015 are as follows.
Figure 11 – Net assets (£ ‘000) of potential constituent councils
Source: local authority published balance sheet information for the year ended 31 March 2015
13.5.2 The long-term liabilities of these councils, which forms part of a local authority’s balance sheet and lists obligations that are due more than one year in the future, can be seen in the graph below and have again been taken from local authority published balance sheet information, for the year ended 31 March 2015.
13.5.3 Long-term liabilities include items like debentures, loans and pension obligations.
Figure 12 – Long term liabilities (£ ‘000) of potential constituent councils
Source: local authority published balance sheet information for the year ended 31 March 2015
Basingstoke and Deane, 380,349
East Hampshire, 26,549
Hart, 11,193
New Forest, 201,868
Rushmoor, 58,537
Test Valley, 138,064
Winchester, 257,826
Basingstoke and Deane, 81,754
East Hampshire, 45,890
Hart, 26,087
New Forest, 231,898
Rushmoor, 48,987
Test Valley, 50,530
Winchester, 214,705
0 50,000 100,000 150,000 200,000 250,000
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13.5.4 These long term liabilities can be been broken down, using each authority’s balance sheet information as at 31 March 2015, to understand council commitments in areas such as pension scheme liability and long term borrowing. Of the potential constituent councils, it is worth noting that both New Forest and Winchester have long term borrowing in the region of £150 million.
13.5.5 When exploring the possibility of creating one or more unitary authorities in Hampshire, it is sensible to consider the level of reserves that each of the councils hold. The total reserves held by each authority are outlined in the graph below.
13.5.6 Local authorities should, when reviewing their medium term financial plans and preparing their annual budgets, consider the establishment and maintenance of reserves.
13.5.7 These can be held for three main purposes:
a working balance to help cushion the impact of uneven cash flows and avoid unnecessary temporary borrowing – this forms part of general reserves
a contingency to cushion the impact of unexpected events or emergencies – this also forms part of general reserves
a means of building up funds, often referred to as earmarked reserves, to meet known or predicted liabilities.
Figure 13 – Total reserves (£ ‘000) of potential constituent councils
Source: local authority published balance sheet information, for the year ended 31 March 2015
0
50000
100000
150000
200000
250000
300000
350000
400000
Basingstokeand Deane
EastHampshire
Hart New Forest Rushmoor Test Valley Winchester
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13.5.8 A local authority’s capital and revenue reserves can be disaggregated from its useable reserves, with capital reserves highlighting the amount of resources an authority has available to finance its capital expenditure.
Table 18 – Useable reserves
Useable revenue
reserves
Useable capital
reserves
Total useable reserves
£'000 £'000 £'000
Basingstoke and Deane 38,963 84,066 123,029
East Hampshire 16,165 15,514 31,679
Hart 9,132 5,121 14,253
New Forest 17,986 18,744 36,730
Rushmoor 5,249 19,670 24,919
Test Valley 19,584 32,272 51,856
Winchester 22,768 5,008 27,776
Total 129,847 180,395 310,242 Source: local authority published balance sheet information for the year ended 31 March 2015
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13.6 Council functions
13.6.1 Should a single tier of government be pursued across Hampshire, the new authority would assume responsibility for all local government service in the area.
13.6.2 This would include, but is not exclusive to, services such as education, child social care and adult social care and would, in turn, increase the council’s exposure to heightened service requirements.
13.6.3 The table below outlines the total service expenditure across these areas, taken from the CIPFA Finance and General Statistics 2015/16, across the same unitary comparators used in the sections above.
Table 19 – Example service expenditure across established local authorities
Source: CIPFA Finance and General Statistics 2015/16
13.6.4 Although the education budget for comparator authorities has been included in this data, Government are currently consulting on proposals for a new funding formula which, should it come into place, would be settled directly with schools from 2019/20.
13.6.5 Under the proposals, local authorities would still receive some funding to distribute where there is a need for local flexibility and to create a central funding block for local authorities’ ongoing duties.
13.6.6 Any future detailed business case would need to examine the financial implications and general practicalities of disaggregating Hampshire County Council’s existing services to cover any new authority or authorities.
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Council Tax Requirement is the amount of money the councils need to raise from council tax to fund council spending once government funding and other council income is deducted
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13.7 Council performance
13.7.1 In undertaking this work, research has been done to understand what metrics, if any, are used to evaluate the overarching performance of local government across an area, rather than a specific service or thematic area.
13.7.2 Currently there are no national standards to measure the overall performance of a local authority. However; there are common factors and metrics used to validate performance and local leadership. These metrics tend to focus on:
resident satisfaction;
educational attainment;
adult and child social care performance;
economic strength and business activity;
worklessness;
local health and life expectancy; and,
projected budget deficit and financial management.
13.7.3 In addition to these metrics, the Local Government Association peer challenge model considers five factors it deems critical to council performance and improvement. These are:
effective political and managerial leadership, working as a constructive partnership;
a good understanding of the local context which informs a shared long-term vision and a clear set of priorities understood by the workforce and other partners;
effective governance and decision-making arrangements that respond to challenges and manage performance, change, transformation and disinvestment;
capacity and resources focused in the right areas in order to deliver the agreed priorities, supported by relevant organisational and workforce development; and,
a financial plan in place to ensure its long term viability and evidence it is being implemented successfully.
13.7.4 It would be important, should work continue on a new unitary model, to define what success would look like within the context of those areas included.
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14 Summary
14.1.1 Should the councils not currently included in discussions regarding a new Solent Authority wish to evaluate the potential for a new single tier authority in north Hampshire, it would be prudent for a comprehensive assessment to be commissioned.
14.1.2 In developing similar cases, other local authorities have employed consultancies such as Ernst and Young (EY), who undertook work on the Oxfordshire and Leicestershire proposals, or Local Partnerships, a company jointly owned by HM Treasury and the Local Government Association.
14.1.3 As an example, the following table outlines the timeline for the implementation of a new model of local government in Dorset:
Date Action
January 2017 Local authorities inform the Secretary of State of their desire to merge.
Proposals must include a business case, a case for change showing public engagement and support. Principal councils must have agreed a preferred model by this point, and written the business case
Feb-April 2017 Subject to agreeing the case, government looks to make regulations to fast-track the process using regulations under the Cities and Local Government Devolution Act
May 2017 Regulations are laid and debated in Parliament
July 2017 Regulations are made
October 2017 Orders are laid and approved
December 2017 All legislation is in place
January 2018 to April 2019 Implementation/transition phase (15 months)
Jan 2018-May 2019 The Boundary Commission reviews boundaries in advance of 2019 elections
Option 1 – May 2018 Elections to a new shadow council to fulfil statutory functions such as, for example, budget setting
Option 2 – May 2018 An ‘artificial’ council is created of all current councillors from both tiers to fulfil statutory functions
May 2019 Elections to new council/s
14.1.4 By way of comparison, Wiltshire Council’s bid to restructure was agreed by Government in December 2007 and came into being on 1 April 2009.
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14.1.5 In assessing a case for change, comprehensive analysis should be done on the implications of all options available. In particular, the affordability of any potential option should be a specific focus.
14.1.6 Work will need to be done to establish baseline data using current (2015/16) and projected levels of spending and income and the anticipated levels of service required. This should then be used for comparison to a ‘do nothing’ scenario for the period 2015-2025, modelling the impact of change on the Hampshire area as it is currently configured.
14.1.7 For each option, financial analysis should include:
a future spending and income forecast, modelling the financial opportunities and impact for the county as a whole and where possible for each authority;
the impact any change would have on local taxation (council tax and business rates) for each authority and the county as a whole;
the costs of implementation, including the cost of disaggregation and any allowance for a transitional contingency;
the implications of pooling the reserves and physical assets held by each authority; and,
the payback period for each model, with full exposition of the assumptions made and broad scenario modelling to expose the sensitivity of the assumptions.
14.1.8 Given the likelihood of any structural change leading to some degree of impact on service delivery; assessment should be made on the possible impact of this against each option. In addition, the implementation in each case should be assessed in terms of the relative challenges and associated costs of change.
14.1.9 Any potential future model should take account of existing joint-arrangements and collaborations and any impact of the options tested on these arrangements.
14.1.10 At this stage, the impact on partner organisations or on non-local government boundaries should not be considered unless they have a clear, significant financial impact.
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Appendix 1: Local government functions
Function Tier
Arts and recreation County/district
Births, deaths and marriage registration County
Building regulations District
Burials and cremations District
Children’s services County
Coastal protection District
Community Safety District
Concessionary Travel County
Consumer protection County
Council tax and business rates District
Economic development County/district
Education, including special educational needs, adult education and pre school
County
Elections and electoral registration District
Emergency planning County/district
Environmental health District
Highways (not trunk roads), street lighting and traffic management County
Housing District
Libraries County
Licensing District
Local Planning Authority District
Markets and fairs District
Minerals and waste planning County
Museums and galleries County/district
Parking County/district
Passenger transport (buses) and transport planning County
Public conveniences District
Public health County
Social services, including care for the elderly and community care County