Statement on ‘Local Government Reform in Oxfordshire’ report from Oxfordshire County Council

Published: Wednesday, 26th August 2020

Oxfordshire County Council have today published a report from PwC entitled ‘Local Government Reform in Oxfordshire’.

Below is a statement from Oxford City Council in response to the Local Government Reform in Oxfordshire report:

“We are in the midst of a pandemic which has caused a national economic crisis. Now is not the time for major restructuring of local government. 

“This report looks rushed and flawed, before the Government has set out its policy on this. It gives attention-grabbing financial forecasts without looking at the delivery of essential services. It makes basic errors on essential data like the size of population. The savings assessments are flawed, un-evidenced and contradict other reports – including by PwC. 

“The report does not consider all options, nor, crucially does it even acknowledge the current context of COVID-19 in terms of health arrangements, community support and economic recovery. 

“Why rush this out now? We are happy to be involved in discussion about the future local government arrangements in Oxfordshire, but based on evidence and considering the needs of our communities and businesses, and with their engagement.

“For the moment, our top priority has to be mitigating the impact of COVID-19 on the local economy, on protecting jobs and supporting residents and local businesses through recovery. On the day that BMW have sadly announced job losses in Oxford because of the impact that COVID-19 has had on the world economy, the livelihoods and wellbeing of the people of Oxford are my top priority.”

Councillor Susan Brown, Leader of Oxford City Council

 

Detailed response from Oxford City Council and West Oxfordshire District Council on PwC report:  Local Government Reform in Oxfordshire Options Appraisal

Oxfordshire County Council and Cherwell District Council commissioned this report from PwC. The other four councils in Oxfordshire were not invited to be involved in the commissioning and have not agreed it as a basis for discussion of future arrangements for councils in Oxfordshire. This briefing note therefore provides an initial response to the report.

There are significant concerns around the PwC report.  At a time when District Councils are focusing their efforts on supporting their residents through the COVID crisis and implementing recovery plans, they are being forced to respond to arguments for disruptive reorganisation that are unsubstantiated and unlikely to yield the outcomes they claim.

The report has been commissioned by two parties whose interests are aligned but unrepresentative of the rest of the councils.  The figures contained within it are misleading and inaccurate.  Its approach ignores both the needs of Oxfordshire’s residents and the locality specific benefits delivered by the current councils.  Going blindly down its suggested path without a proper assessment of what would give the best outcome for our residents, risks a reduction in crucial services and increased costs to people who have already suffered through an unprecedented time with more economic disruption to come.

In summary the report:

  • takes no account of the context of the COVID pandemic;
  • makes some basic errors and is based on un-evidenced assumptions;
  • ignores other options and models for local government structures;
  • is premature and cannot therefore consider the full range of options;
  • ignores the Oxfordshire context;
  • includes an assessment of savings that is flawed, lacks evidence and contradicts other reports (including those by PwC);
  • raises fundamental questions and concerns about the impact on residents.

The report takes no account of the context of the COVID pandemic:

  • We are in an economic crisis caused by the COVID pandemic. Unemployment is rising significantly in each District to a level that we have not seen in a generation and is expected to rise to around 70,000 people, 10% of the total population of the 5 Districts by Christmas.
  • District councils are on the front-line of tackling the health and economic crisis – with food and medicine provision, support for the homeless, and support for businesses. Now is not the time to pursue local government reorganisation during a global pandemic when the local response is central to the government’s stated strategy.
  • Our top priority has to be mitigating the impact of COVID-19 on the local economy, on protecting jobs and supporting residents and local businesses through recovery
  • That needs collaboration and stability right now and we need to avoid anything that disrupts or distracts from our focus on that. There is a real risk that spending time discussing the future of local government distracts us from our support for business and residents.

The report makes some basic errors:

  • Because four district councils were not invited to take part in the PwC report, it does not present an accurate picture of the financial situation that each council is facing.  The report reveals a lack of proper understanding or research from PwC. For example it quotes a figure of £46.9m as the total budget deficit for Oxfordshire’s six councils to 2024/25. This appears to be a misreading / lack of understanding that councils’ plans set out how the gap in each District will be met. The impression given is that PwC has not read the councils’ financial papers.
  • PwC use ONS data to predict that the population growth in Oxfordshire will reach 707,000 people in 2028. This does not factor in already planned growth. Oxfordshire County Council’s own population projections show the county reaching a population of 822,200 by 2027. PwC’s own report, in 2016, found that “Oxfordshire’s population could reach 883,637 by 2031 if housing need [in local plans] was met”
  • PwC’s report states: “Previous guidance suggested a ceiling of around 700,000 residents [for unitary councils] but more recent intelligence suggests that proposals that involve larger resident populations would be considered.” It then quotes a written statement from Simon Clarke, Minister for Regional Growth and Local Government, from 29 June (PwC inaccurately states this was issued in July). But Mr Clarke followed this up in July by saying the Government viewed the optimum size for new unitaries as covering an area no larger than 500,000-600,000 residents

The report ignores other options and models for local government structures:

  • The report does not take account of the Government consideration of removing social care from County Councils to merge it with the NHS in a more integrated service.  
  • The report’s alternative proposition of two unitaries for the County is an arbitrary 50/50 split based on population which makes no attempt to consider what groupings might be beneficial for each locality.
  • The report ignores the potential role for Service Boards and Children’s Trusts to commission services, or that the Local Resilience Forum could commission the fire service.
  • A proper consideration of options would examine how devolution could help tackle some of the issues faced by each District such as affordable housing, infrastructure gaps, and tackling  the climate emergency.

The report is premature:

  • The report has been released before the Government’s white paper on devolution has been published. This means the whole basis of the report, to meet the Government’s wishes on local government reorganisation, is based on guesswork. No one knows yet, for example, the new powers and responsibilities that the Government may propose in the white paper or the criteria that will be used for testing proposals.

The report ignores the Oxfordshire context:

  • The report takes no account of what residents and businesses would want through devolution. The starting place should be using devolution to achieve better outcomes for our communities and business.
  • The report ignores the service innovation, place leadership and local characteristics of each district – including the Garden Villages in South, Vale and West; the housing innovations delivered in Cherwell and Oxford and the climate change responses in each District.
  • Its claimed savings are based on a theoretical model which ignores existing service arrangements, where joint back office agreements and partnerships already exist. West Oxfordshire District Council has already made significant savings by moving to a shared service model in conjunction with other Councils.  It’s unlikely that further savings would be made without an impact on service delivery and it is even possible that unpicking the current model could end up costing more. Oxford City Council is the only local authority to in-source its direct services function and retain its housing stock, both generating income. Dismantling those arrangements will hit 600 jobs in Oxford, and raises questions about Oxford’s council housing.
  • PwC itself admits that “there is also an additional challenge in terms of managing the potentially disruptive consequences, and costs, of disaggregating key county functions (Fire and Rescue, Adult Social Care and Children's Social Care and Education) and rebuilding the associated delivery models and governance arrangements in a two unitary model”. It does not mention the challenge of amalgamating key city and district functions.

The assessment of savings is flawed, lacks evidence and contradicts other reports (including those by PwC):

  • There is no substantiation offered for the savings claimed in the report, and given that what can be easily checked seems inaccurate, it’s difficult to have any confidence in them. Indeed compared to work PwC did four years ago on a similar basis, the latest figures appear to underestimate the transition costs and overestimate the savings, presenting an overly optimistic view of the outline business case.
  • PwC alleges that £69m-£92m could be saved a year by creating a single unitary for Oxfordshire. However, the report includes no numbers next to any of the workings. The same is true of the company’s “one off cost” – presumably over many years – of £28m to amalgamate six councils.
  • PwC is largely coming to the £69m-£92m figure by arbitrarily suggesting that around 17%-25% of staff are cut. There is no evidence of why this range has been chosen, no suggestion of what services this would cut, and no numbers to show precisely how much this would save.
  • In 2017, Oxfordshire County Council stated that one unitary council for Oxfordshire would save £100m over the first five years. The County Council’s latest report now says this it could save up to £92m every year.
  • The report starts by saying: “Like most local government areas, the current model and structures that councils in Oxfordshire are working within are reaching the limits of what can be achieved.” This is simply not true and takes no account of innovative plans for investment by the City and District Councils in areas such as delivering affordable housing and tackling climate change.
  • The limited calculations that are shown appear to be completely arbitrary – “a 15% blanket decrease has been applied to annual property costs provided by the County for 1UA, 12.5% for 2UA – and have no figures attached
  • Two and a half years ago, PwC prepared a report for Oxfordshire County Council which suggested savings of up to £58m could be found through a transformation programme. The County Council embraced the report fully, but subsequent financial planning documents predict that only £26.4m can be saved through the same transformation programme. It was reported this week that the County is pausing transformation activity to divert that financial resource to core service provision – this does not give confidence about the ability to deliver transformation.
  • The bulk of the budgetary shortfalls that the report seeks to address belong to the County.  The careful financial management of other Councils would cease to benefit their residents but would be absorbed at a higher level and used to fund County problems.
  • Large projected savings should always be treated with scepticism – especially when they are based on a report that was produced in a rush and is riddled with errors.

The basis for the savings raise some fundamental questions about the impact on residents:

  • The PwC report suggests a 25% cut in staff across all Oxfordshire’s councils. After a decade of austerity, each District has already made significant cuts to back office services, so cutting 25% of staff will hit frontline services.
  • PwC does not explain which services would be cut, but the focus would be on non-statutory services. In Oxford this likely means youth clubs, the 100% council tax discount for deprived families, and financial support for charities and community groups; other Districts would witness the same sort of cuts across towns and villages. In West this would certainly be free parking, their extensive top class leisure provision and widespread community grant programme.
  • The report offers no assessment of the likely impact on Council tax which would see significant increases for some residents.
  • All of these cuts would hit the poorest the hardest. This is not ‘levelling up’, it is levelling it down.

Conclusion

At a time of economic crisis caused by the COVID virus, starting a debate about local government reform is reckless and misdirects valuable resources.

  • The PwC document is disappointing. It ignores the economy, place and identity of the City, towns and villages and would lead to a homogenous outcome, a remote, unaccountable Council and lost innovation, forward thinking and creativity. It’s claimed savings are theoretical and not backed up by facts but most of all, the PwC report proposes change that risks damaging our economy and undermining growth at the very moment we need to focus on the COVID recovery and kick-starting economic growth.
  • The starting point for any discussion about the future of local government needs to be what is in the best interests of residents, communities and businesses. That needs full consideration of the facts and engagement with the people who will be impacted.