The EFRA Committee continued its ‘reforming the water sector’ inquiry this week, with two evidence sessions on the mornings of 25 and 26 February. 

At 10am on Tuesday 25 February, MPs questioned the leadership of South West Water. A link to the video recording can be found here. 

MP criticises water boss for ‘not facing’ media 

Bradley Gerrard, local democracy reporter www.radioexe.co.uk

South West Water’s boss didn’t do interviews during parasite outbreak

Exmouth MP David Reed has criticised South West Water’s boss Susan Davy for failing to talk to the media during incidents such as Brixham’s cryptosporidium outbreak.

Mr Reed, who has focused heavily on the company’s performance since taking office in July, said it is “unacceptable” that Ms Davy didn’t address the media during incidents and that this responsibility was given to other staff.

“For me, I find it outrageous that Susan Davy doesn’t face the media and take accountability for her company’s mistakes,” Mr Reed wrote on Facebook.

“Instead, Susan lets politicians, community leader and other people do it for her.

“I have said repeatedly that this is unacceptable and Susan must be the accountable face of her company; if she can’t do this basic task then she must let someone more responsible take over.”

This week Ms Davy was asked about her engagement with the media  by Labour MP Helena Dollimore (Hastings & Rye) at the Environment, Food and Rural Affairs committee.

Ms Dollimore said she had heard that Ms Davy had refused to be interviewed by local media about the cryptosporidium outbreak in Brixham and Kingswear last year.

“Is it correct you have turned down media interviews at times of extreme panic among your customers,” Ms Dollimore asked.

Ms Davy said she wanted to support her colleagues and communities and ensure they were getting all the information they needed.

“I wanted to speak to my customers who were on the ground,” Ms Davy said.

“What I wanted to make sure that we did was get all our information out to our customers and make sure they were very clear what was happening.

“In that instance, I had my incident director and my customer services director, who was doing that twice a day to make sure that the information was [available].”

“So your team spoke to the media, but you as chief executive would not front that media in a time of severe crisis for your customers,” Ms Dollimore added.

Ms Davy said she spent her time “on the ground” in Brixham and Kingswear, and with the control room “making sure our teams were supported in doing what they were doing every day”.

Hundreds of people fell ill and several were hospitalised after a parasite called cryptosporidium got into water supplies at Kingswear. Thousands of homes across the village and nearby Brixham were told for months to boil their water before drinking it.

Tourism businesses were badly hit as reports of the outbreak spread.

Asked if she would pledge to speak to the media in future incidents, Ms Davy said: “The best reassurances I thought I could give customers at that point was to make sure they were getting all the information they needed from our incident director and the customer service team.”

Pushed for an answer, she added: “There are things that I regret around the Brixham incident and I should have, in retrospect, perhaps it would have helped if I had spoken to the media, but at the time I thought the right thing to do was to make sure everybody had the information that they needed.”

Mr Reed has previously met Ms Davy to discuss works in Exmouth following sewage spills that closed its beaches during the height of the summer season.

In October, Mr Reed said Ms Davy and Richard Price, the company’s managing director for waste water services, understood the “magnitude of anger felt by the local community” and were “willing to bring money forward” for repairs if they could get regulatory sign-off.

In December, the firm said it had completed a scheme to replace a section of sewer in Exmouth which would “protect customers and the environment from potential pollutions.

“The team have worked hard over the last eight weeks to replace over 300 metres of sewer entering Maer Lane Wastewater Treatment works to improve services for customers, businesses and visitors to the area following issues with the network over the last 12 months,” the statement said.

An update on Monday 24 February said that following completion of the first phase on the Maer Road rising main replacement “the system has been performing as expected”.

“We are currently carrying out enabling works as we plan to start construction of Phase 2 in the spring,” it added.

Is there any evidence?

There are widespread reports that Angela Rayner’s Ministry of Housing, Communities and Local Government [MHCLG] conducted no analysis of the proposal; nor any assessment of how Somerset, Cumbria and North Yorkshire are faring in their 2023 merger. 

The only evidence available comes from a report commissioned by the County Councils Network [CCN] in the second half of 2020, at the height of the pandemic [which is probably why it escaped Owl’s notice at the time].

The County Councils commissioned this report from Price, Waterhouse, Coopers [PWC] in the expectation that the then government was preparing a White Paper on English Devolution and Local Recovery. This White Paper was delayed at least four times and finally ground to a halt. [Too politically contentious? – Owl]

PWC  2020 conclusions with caveats 

This report concluded that single unitary councils could deliver £3bn saving over five years, a saving of £126m for a mid-sized county area. And ‘maximise’ the benefits of economic growth and housing policy. [The analysis, in the report, on benefits to economic growth and housing are pretty thin. – Owl]

“Now you see it: now you don’t”

However, creating two unitary authorities in each of the 25 shire counties would reduce the potential savings by two-thirds. Any further division would result in net costs. Remember: Devon has already been divided into three with the creation of Plymouth and Torbay unitaries. So are we already on the downhill side? 

Creating multiple unitaries for each area would mean splitting up children’s social services and adult social care departments, creating a risk at a time of a funding crisis. Similarly, disaggregating care services could result in different councils competing over scarce care providers, potentially destabilising local adult social care markets. 

Creating two or more unitaries in each county could potentially create and concentrate economic disparities, with one council benefiting from higher economic activity and local tax income.

Note, the report also argued that the creation of a combined authority alongside multiple unitaries to oversee growth and transport functions would be unprecedented and has no guarantee they will perform better in this new arrangement, nor that economic growth for the county is maximised.

2025 District criticism of 2020 County report

Before a more comprehensive summary, including links, of the County Councils Network 2020 report, here is a summary of criticisms from the District Councils Network published on the Local Government Lawyer website in January.

“According to the network, the Ministry for Housing Local Government and Communities (MHCLG) relied on just one report, which the DCN described as being “out of date”, to base its policy on.

The DCN said it asked MHCLG several questions about the evidence it holds to support the 500,000 figure.

In response, the ministry cited a PWC report from 2020, commissioned by the County Councils Network, as its only source of evidence.

However, in a statement on its correspondence with MHCLG, the DCN claimed that the PWC report is “out of date”, adding: “Many councils in two-tier areas have already delivered significant efficiency savings since 2020, for example by creating shared services or shared management teams.

“The report does not reflect the potential for councils to deliver further efficiency savings within existing structures.

“And it predates much of the surge in demand for adult social care, children’s services, SEND and temporary accommodation, which is expensive for councils to meet and reduces the scope for efficiency savings overall.”

The DCN went on to claim that the Government has not commissioned independent research to support its preference for large unitary councils and has done no analysis of its own.

It also claimed that MHCLG had undertaken no post-implementation assessment of the actual upfront costs to central and local government from creating new unitary councils in Somerset, Cumbria and North Yorkshire in 2023.”

County Council summary of 2020 County commissioned report from PWC

Introduction

Today [28 August 2020] the County Councils Network (CCN) publishes new independent evidence on the implications of local government reorganisation in two-tier shire counties ahead of the publication of the government’s ‘devolution and local recovery’ white paper.

With councils in shire counties facing billions in rising costs for care services, alongside financial deficits caused by the Coronavirus pandemic, the study from PricewaterhouseCoopers (PwC) shows merging district and county councils in each area into a single unitary council could save £2.94bn over five years nationally.

Download the report “Evaluating the importance of scale in proposals for local government reorganisation” here. 

The report concludes a single unitary in each area would reduce complexity and give communities a single unified voice to government. It would provide a clear point of contact for residents, businesses and a platform to ‘maximise’ the benefits of strategic economic growth and housing policy; integral to the ‘levelling-up’ agenda and securing devolution.

However, the report shows replacing county and districts with two unitary authorities in each area would reduce the financial benefit by two-thirds to £1bn over five years, with three unitary authorities delivering a net loss of £340m over the same period. A fourth scenario of a two-unitary and children’s trust model in each county would deliver a net five year saving of £269m.

Alongside a minimum £1.9bn in additional costs from splitting county council services, the report outlines the establishment of multiple unitary authorities in each area creates the risk of disruption to the safeguarding of vulnerable children, while ‘instability’ in care markets could impact on the quality and availability of support packages and care home placements.

The report has been covered across BBC News today. Read an online write-up here. 

On the implications of a two-unitary and trust model, PwC conclude this would lead to additional cost, complexity and potential instability in how commissioning arrangements were managed. It also suggests there is limited evidence the implementation of these types of models can lead to immediate improvements.

CCN says that the report outlines a ‘compelling’ financial case for the creation of more  single county unitaries in areas where councils seek reorganisation. This will  help ‘safeguard’ council services in the wake of the pandemic, while ensuring councils are of the necessary size to drive forward the economic recovery and devolution agendas.

But the network warned that an arbitrary population limit in the White Paper would lead to a ‘missed opportunity’ and ‘worse deal for local taxpayers’, creating ‘significant risks’ and instability in vital care services, and holding back the levelling up agenda.

The report, ‘Evaluating the importance of scale in proposals for local government reorganisation’, reveals:

• A single county unitary in each of the 25 remaining two-tier areas could generate savings of £2.94bn over the next five years, a saving of £126m for a mid-sized county area. Creating two unitary authorities in each shire county would reduce the potential savings by two-thirds to £1bn over five years; £51m for a mid-sized county area. Three unitary councils for each area would cost £340m across all 25 areas over five years, a cost of £1.6m for the mid-sized county area.
• Creating multiple unitaries for each area would mean splitting up children’s social services and adult social care departments which are currently overseen by county councils. PwC concludes this creates risks at a time when demand for both types of care will rise post-Coronavirus, and that ‘the likelihood of performance dropping is high.’
• The report finds that disaggregating care services could result in different councils competing over scarce care providers, potentially destabilising local adult social care markets already under additional strain due to Covid-19. It would also make children’s social services costlier and undermine efforts to attract and retain high calibre directors with sufficient experience.
• PwC suggests that, for the scenarios explored in the report, creating two or more unitaries in each county could potentially create and concentrate economic disparities, with one council benefiting from higher economic activity and local tax income. PwC argues that the creation of a combined authority alongside multiple unitaries to oversee growth and transport functions would be unprecedented and has no guarantee they will perform better in this new arrangement, nor that economic growth for the county is maximised.
• In conclusion, PwC summarise that the “implementation of single unitaries in each of England’s two-tier areas would deliver significantly greater benefit” and if “an alternative approach be pursued the process of disaggregating current county services does present a number of material costs, but also non-financial risks and complexities”.

Cllr David Williams, chairman of the County Councils Network, said:

“The consequences of Coronavirus for local government finances, and the need to work quickly to support the economic recovery, means more councils want to look again at how local government is structured in their area.

“This government has already signalled that it wants to see many more unitary councils created and it is important we get it right for our residents – we do not want to look back on this period as a missed opportunity.

“The findings from PwC show there is a compelling financial case for the creation of more unitary counties where councils seek reorganisation. They will provide significant savings to support frontline services and the stability needed to safeguard care services as we continue to mitigate the impact of Coronavirus. Crucially, it will create councils of the necessary size to support local economies to recover from the pandemic and drive forward the devolution and levelling up agendas.

 “In contrast, an arbitrary population threshold that limits the size of any new council will cap our areas’ ambitions and create significant risks in delivering care services. This evidence shows it would mean a worse deal for local taxpayers, create confusion, costs, and complexity, and potentially deliver a postcode lottery for local services and the economic recovery.

 “Unitary counties won’t lead to a democratic deficit. Rather, as evidenced by authorities that have already made this journey, they have the potential to bring services closer to residents, developing new ways for residents to engage and shape service provision more effectively and enhance local democratic participation with empowered town and parish councils”.

Notes to editor

• An executive summary of the report can be downloaded here. 
• 25 county councils in England are responsible for between 80-90% of local expenditure on services, including social care, highways, transport and public health. 188 District councils across these areas provide services such as planning, waste and street cleaning. The report by PwC modelled the financial implications of merging county and districts across four unitary scenarios and explored in detail the policy implications of reform across 20 lines of enquiry.
• PwC’s analysis models four different scenarios for reform in two-tier council areas. All of these options include the abolition of all district councils and the county council in each of the 25 remaining areas. The four scenarios are: one unitary per county; 2 unitary councils per county; three unitary councils per county; two unitary councils plus outsourcing children’s services to be run by a children’s trust. For a detailed financial analysis of each scenario, see page 24 of the report.

• The figures cited in this report draw on input data from all 25 two-tier county areas. Each area has been modelled, differentiating this analysis from previous studies where averages have been used. In addition, calculations have been made for an example mid-sized authority. These calculations should not be misinterpreted as being based on the average. The mid-sized authority calculations take current variations in scale across all 25 two-tier areas in England into account (there are a large number of two-tier areas which serve relatively small populations).
• The financial assumptions used to calculate benefits and costs are based on data from a representative sample of county councils, supplemented by other sources of publicly available information, alongside PwC’s own work with individual councils on reorganisation projects.
• The payback period referenced in the report is the period whereby there is a net financial saving resulting from the reorganisation. For scenario one, it is less than a year for both the total figure and for a mid-sized county; for scenario two it will be two years for the total figure and 1.8 years for a mid-sized county; for scenario three it could be eight years for the total figure and 5 years for a mid-sized county; for scenario four it would be 3.7 years for the total figure and 3 years for a mid-sized county.