Cost of Wales Local Council mergers could be in excess of £200m

As Flintshire County Council (FCC) Leader Aaron Shotton prepares to update a full Council meeting today (Tuesday 25th Nov) on the Council’s position over a possible merger with Wrexham County Borough Council, who have chosen not to support early discussions on a merger, submissions need to be sent to the Welsh Government by Friday 28th November, the full cost local government mergers in Wales has been laid bare by The Chartered Institute of Public Finance and Accountancy (CIPFA) who have offered the first detailed study on the financial implications of local government mergers in Wales.

The report provides the strongest evidence so far on the transitional costs of council mergers throughout Wales.

Commissioned by the Welsh Local Government Association, SOLACE Wales and the Society of Welsh Treasurers, the study breaks down the main elements of costs and savings, and highlights a number of areas of risk that need to be taken into account during the reform process.

While the report acknowledges that not every consequence of such a vast and complex undertaking could effectively be modelled at this stage, it raises a number of fundamental financial questions.

Some questions will have to be answered locally and will only be settled in detailed business cases for merged authorities, while others will need to be addressed at a national level such as employee terms and conditions, council tax harmonisation and the central question of how local services will be funded in the future.

Key findings include people change and redundancy costs of up to £158m, the rationalisation of property, systems and other change management costs of up to £54m, as well as £57m of income that will be forgone due to council tax harmonisation.

The costs may be offset by savings of £65m that potentially take up to 3 years to be realised. The degree to which they can be realised will have to be assessed in the context of continuing austerity into the next UK Parliament.

For Flintshire. any potential merger it is estimated will cost around £10m 

Councillor Shotton who is also the WLGA Deputy Leader and Finance spokesperson said:

“CIPFA have published the most comprehensive analysis so far on local government mergers and I want to thank the Chief Executive, Rob Whiteman, and his team in Wales for producing a balanced assessment of the financial implications at such an important time.

“Over the next three years alone, local government will be absorbing budget shortfalls of around £900m and I hope policy-makers and politicians alike will reflect on this piece of work and begin to address the many questions that arise from it. The WLGA Council will consider the conclusions of this important report in Cardiff on Friday.”

Details of today’s full meeting can be found here: Flintshire County Council Tuesday, 25th November, 2014 2.00 pm

Feature Image: Bevan Foundation