Making local government reorganisation a catalyst for innovation

England is about to rebuild a third of its local government, and the decisions that will matter most are being taken before the new authorities formally exist.

By April 2028, 134 councils in England will no longer exist. The government confirmed last month that they will be replaced by 38 new unitary authorities, adding to earlier decisions covering Surrey, Essex, Hampshire, Norfolk and Suffolk.

It is the largest reorganisation of local government since the 1990s, affecting around 41% of England’s population.

The decisions that grab the headlines tend to be about boundaries, elections, and which town halls survive. But what rarely gets discussed is how reorganisation will force councils to take hundreds of decisions they would normally put off, about systems, services and ways of working. What each new authority does with those decisions will shape its services for decades.

Together, these decisions are an opportunity to renew how local services work. Most authorities will struggle to seize this opportunity.

Why local government needs to innovate

The financial position of local government has been deteriorating for more than a decade. Demand for services keeps rising, funding has not kept pace, and the Local Government Association puts the gap at £6.2 billion over two years just to maintain services at current levels.

Most councils have already shared services, outsourced, raised what charges they can, spent reserves and salami-sliced every budget in between. Thirty councils needed exceptional financial support from government to balance their books last year, and the number seeking it this year is expected to more than double.

Doing the same things slightly cheaper no longer closes the gap.

The response that remains is to do things differently, and that is what innovation really means in local government: redesigning services around prevention rather than crisis, using data and AI to take the cost out of routine work, and finding better ways of working with communities.

Done well, it is the difference between managing decline and improving outcomes with the money available.

The same pressures are a large part of what is driving reorganisation. The government’s case for fewer, larger councils rests on simpler structures, lower costs and services that are easier to join up, and the new authorities will be expected to deliver savings their predecessors could not.

But structural change alone rarely achieves this. Previous reorganisations found that promised savings often failed to materialise, because merging organisations is not the same as improving them. The outcomes reorganisation promises are only achievable through new and substantially improved ways of working.

For the new unitary authorities, the upheaval that normally makes change so hard to start is already under way: systems, contracts and ways of working have to be re-decided as part of the merger. The question is whether all that change simply reconfigures what currently exists, or delivers something better.

What usually happens, and why

I have spent most of my career working with local, regional and devolved government. Restructuring, reorganisation and change can feel like a constant cycle in the public sector, and watching enough of them teaches you to spot the common patterns.

The most reliable pattern is that, left unchallenged, councils will often opt for the status quo on most decisions.

It is understandable why the path of least risk and resistance is preferred. Councils run services people depend on every day, often the most vulnerable people in a place. Getting it wrong in a homelessness service or a child protection system is nothing like getting it wrong with a product launch. For much of what councils do, caution is the right instinct.

And even where it would be safe to try new things, councils are not particularly set up to do this. There are no R&D budgets in local government, little slack in stretched teams, intense scrutiny when anything goes wrong, and every pound spent experimenting is a pound visibly not spent on a service under pressure. So “carrying on as we are” usually wins out.

Reorganisation challenges the status quo, but lock-in often prevails

The unique opportunity from reorganisation is that a brand-new unitary authority has no status quo of its own to defend. It inherits one from each predecessor.

Running them in parallel is possible for a while, but duplication becomes a cost somebody owns. Eventually every inherited system, contract and way of working has to be chosen again or given up.

When faced with so many of these choices at once, most new authorities reach for the least disruptive answer available: carry over the largest predecessor’s way of doing things.

It is rarely the best of what is on offer, let alone the most efficient or the most future-proof, but it keeps services running while everything else is in motion.

While such decisions may only be intended as a short-term fix, the catch is that whatever gets carried over becomes the new authority’s status quo. The same caution and constraints that protected the old ways of working now defend the new one, and the lock-in can hold for a decade or more.

Adopting best practice

No local authority is brilliant at everything; merging councils theoretically have an opportunity to combine the best of what they already do. However, this isn’t usually what plays out.

Comparing services honestly is politically charged work: every council takes pride in its own ways of doing things, officers have careers invested in them, and declaring one predecessor’s approach the best can feel like declaring the others second rate at exactly the moment everyone is being asked to come together. So comparisons get softened into diplomacy.

Even for councils that want to make the comparison, the practical task is formidable. Benchmarking hundreds of services and systems on their commercial terms, their technical condition and what residents actually experience of them is specialist work that councils are not set up to do. This is especially the case mid-merger, when the people who understand each service best are the same people keeping it running through the transition.

There is also a hard deadline. If the comparison is ever going to be made, it has to be made during the transition, while the different approaches still exist side by side. Once systems and services are harmonised, the evidence of what each council did well is gone.

Designing something better

Reorganisation is also an opportunity to design something better than any of the merging councils currently has. The appetite for this exists, and many councils recognise reorganisation as their best chance to achieve transformational efficiencies and improvements.

But designing something new is the hardest route. It faces every challenge that choosing best practice faces, and adds more: consensus has to be built around what success looks like, somebody has to take responsibility for delivering it, and trialling and scaling something unproven takes extra work, investment and time.

Once again, such ambition under transition conditions has to be deliberate, because the default path is always faster.

Choosing where and when to innovate

Reorganisation shouldn’t demand a fresh start on every front. No transition programme has the capacity to redesign everything at once, and much of what councils do is fine as it is.

But every forced decision is an opportunity to achieve better outcomes, and the authorities that gain most will be the ones that target their ambition: choosing the areas where innovation can deliver achievable, meaningful and lasting improvements, and letting the default do its job everywhere else.

Targeting starts with evidence, establishing what each predecessor council actually does well and what better would look like for residents. It needs consultation, because the case for change has to be built with the people who run and rely on services, not announced to them. It needs strategic framing, so that hundreds of individual decisions add up to the authority the councils set out to build rather than a collection of fixes. And it needs managed trials, giving new approaches the chance to prove themselves at small scale before anyone bets a live service on them.

Reorganisation is going to happen to these councils whatever they do. Renewal will only happen if they choose it, in thousands of unglamorous decisions over the next couple of years, taken mostly before the new authorities formally exist.

This is a big part of what Urban Foresight has done since 2011: helping public bodies decide where innovation is worth the effort, building the evidence and consensus behind it, and creating a delivering without putting services at risk. We’re primed to help the existing and new authorities to achieve the best possible outcomes throughout this process.

 

[Image credit: Marketing Nottingham and Nottinghamshire]