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While the Government set out the case for unitary authorities in the original White Paper, pointing to the confusion and weakness that is inherent in two-tier working when services and responsibilities are split, the choice of the way forward has been entirely a matter for the local authorities themselves. That is precisely what has made this restructuring process different from previous processes. What we have done is to simply invite those principal councils in England that wished to do so to put their own proposals for new unitary structures or enhanced two-tier working to overcome those challenges. Indeed, the option to put forward an enhanced two-tier solution for Cheshire was one of the options open to the councils. In the event, that did not prove achievable. The search for a unitary solution, as noble Lords will know better than I, goes back many years, with many councils believing for some time that a unitary solution was the only way forward. All seven principal councils had an opportunity to come forward with a joint bid for a unitary structure that they could all endorse. Likewise, in the event, this did not prove possible.
In the end, this is a unique situation reflecting the complexity of local government relations in Cheshire, and the geography and political make-up determined that we received three different proposals from the councils in Cheshire. In our judgment, only two of those met the criteria that we set out in our invitation—the proposal for a single unitary put forward by the county council and the proposal made originally made by Chester City Council and then subsequently endorsed and joined by the borough councils of Ellesmere Port and Neston, Macclesfield and Vale Royal for a two-unitary Cheshire.
It is important that I explain the criteria that these two proposals needed to meet and how we made our choice between them. The criteria set out in the invitation were devised to reflect the aim of restructuring, which was to put in place local governance which would best enable an area to achieve economic, social and environmental success. Therefore we set out three criteria which specified what restructuring should deliver. These criteria therefore focused on strategic leadership,
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However, when assessing a proposal for unitary local government, it is important to consider not only what the proposal would achieve once implemented, but what the change to the new structure would involve. Briefly, would it be worth the candle? Would it have sufficient support locally for the new unitary structure to be a success in delivering quality local services and in enhancing opportunity and prosperity? Therefore, our invitation also set out two criteria that if the change were to be made, it must be a change that would not set up new councils that were designed to fail; and that has meant, first, that those advocating change should show that it was affordable, and secondly that it would have the support of people who would ensure pragmatically that their partnership and commitment would ensure better services, better strategies for the entire community. That is precisely why we chose the form of words that there should be a,
As with the other criteria, the judgments were prospective. In the case of Cheshire, we received two diametrically opposing proposals—one for two unitary authorities, which this draft order seeks to implement, and another for a single unitary authority. We made clear in our consultation paper published on 6 June 2007 that we chose the two-unitary option because we genuinely believe that it would deliver to a greater extent the long-term outcomes that we are seeking. It is important to stress from the outset that this is not a choice on which one delivers greater savings or which one has greater public support. It is about which one can better deliver long-term outcomes in a very challenging environment.
I understand that some noble Lords disagree with our judgment and we have tried wherever possible to listen to, respect and respond to those concerns, but the fact is that opinion remains divided, just as it does on the ground in Cheshire, on the relative merits of the two proposals. I understand the sincere feeling among some noble Lords and the case for delay that we will hear this evening can be argued either because some noble Lords feel that delay would be a better outcome or that they still hold to a preference for a single-unitary option. Both positions are honourable but neither will serve the interests of local authorities now being formed in Cheshire—and neither is open to us today.
I shall go through the criteria. Noble Lords here may say that this proposal is neither affordable nor sensible, and the amendment to be moved by my noble friend Lord Grantchester reflects those concerns. We do not share those perspectives because, for a proposal to meet the affordability criterion, the transitional costs must be expected to be more than offset by the savings that the proposal is estimated to generate and this is expected to be achieved within five years. I shall explain how we arrived at the judgment, which we did not come to alone.
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The financial cases for each proposal were subjected to rigorous scrutiny by independent financial experts—ex-local authority chief finance officers—employed by the department through CIPFA and IPF. In the case of Cheshire, as part of our careful examination of the affordability criterion, we identified certain risks to the financial case put forward for the two-unitary bid and requested in August that the proposers of that bid submit further financial information on the viability of their business case. Our financial advisers independently analysed the business case in light of this further information. They undertook their own modelling, making their own assessments, and they concluded that it was right to categorise the proposal as high-risk, but within the safe context that the proposal met the affordability criterion.
The advisers concluded that the levels of savings envisaged in the proposals were not unreasonable and that the business case, even after significant additional risk provisions, still produced ongoing savings of some £16 million a year, which are at the high end of the sort of savings that we have seen in the unitary proposals that have been successful so far. We considered this risk-adjusted figure and a risk-adjusted estimation of the transition costs very carefully, and they are the figures on which we based our decision. They differ from the original bids because they are lower, but they support the conclusion that the proposal is affordable; transition costs are repaid within 3.7 years—well within the five years that we set out as part of the criterion.
Let me conclude on this point by answering a particular criticism that has been levelled at the Government in this House and the other place that we have not released publicly the assessment of our independent financial experts. We decided not to release this report—not just in relation to Cheshire but in relation to all the areas where similar requests have been made—because we consider that it falls under the exemptions in Section 35(1)(a) of the Freedom of Information Act 2000, which relates to the formulation or development of government policy, and Section 35(1)(b) relating to ministerial communications. We consider that the public interest weighs against its disclosure, in particular because of the need to preserve the thinking space around Ministers when reaching decisions, to maintain the convention of the collective responsibility of Ministers.
I turn to the issue of support, which is very important and is the subject of the amendments to be moved by noble Lord, Lord Wade, and by my noble friend Lord Harrison. Let me be clear about what the definition of,
actually means, as set out in the original invitation. It is, essentially, about whether the new unitary authority genuinely meets its objectives and will work for local people. Again—and this is different from any reorganisation that has taken place in the past—we were conscious of the strain and stress in any change. We knew that the proposals would have to be tested against whether they would work, because they had the support of those, including partners outside local government itself, like the health or police services who would have to make them work.
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That is not the same as popular support and that is deliberately the case. We did not make this a test of public opinion; that is, whether we had a majority of public support. We did not base support on whether there was a majority of stakeholders, a majority of local citizens or a majority of some other group of interested persons who supported or approved the unitary proposal. In our original invitation we explicitly recognised that any proposal might not carry consensus from or within all sectors, and that is why we said that no single council or body, or group of councils or bodies, could have a veto. We left it to the local authorities to solicit opinion locally in the way they thought effective in order to demonstrate how the proposal would stand up against the support criteria. The responses we have received to the stakeholder consultation as a result reflect divided opinion, divided politics and divided loyalties.
The two-unitary proposal was originally made by Chester City Council, and subsequently endorsed and joined by the borough councils of Ellesmere Port and Neston, Macclesfield and Vale Royal. Predictably, there was strong opposition from the county council on the basis of its unitary proposal, and from the remaining two districts, the borough councils of Crewe and Nantwich and Congleton. I can tell the House that Congleton’s claim for judicial review was dismissed by the High Court on all grounds in September. Today, we have learned that the appeal has been dismissed unanimously by the Court of Appeal, which has also refused leave to appeal. We welcome this judgment. We urge Congleton, before it seeks to take its claim further, to think very carefully about what course of action is now truly in the interests of their council taxpayers and local communities.
As I said, local polls conducted by the affected councils had varying but predictable results. A poll commissioned by the proposing districts showed a preference for the two-unitary proposal over the single-unitary proposal—23 per cent compared with 16 per cent—whereas a telephone survey conducted by the county council demonstrated 46 per cent of support for a single unitary compared with 22 per cent for the two-unitary proposal. Hostile district councils—for example, Crewe and Nantwich Borough Council—conducted specific polls where the results were also predictably hostile. However, polls were only one of the factors that we took into account in assessing the range and depth of support for a proposal.
Stakeholder support was also predictably variable, with opinion being divided. Although there was a consensus from the majority of respondents in support of unitary local government in principle, it is fair to say that a majority of representations received from public sector stakeholders expressed a preference for the county’s single unitary proposal.
However, as I said, this has not been about a search for a majority. The two-unitary proposal has support from four out of the six district councils and some public sector stakeholders, such as East Cheshire NHS Trust and West Cheshire PCT, and some business and third-sector support, as well as some support from town and parish councils. On that basis we felt, and
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We believe that support will be bolstered by that fact that the new unitary authorities propose to put in place new local area arrangements which build on established and successful practice in the Chester area. Those will ensure, with the new duty to involve under last year’s local government Act, that local people are represented locally, that they have local influence and that they will be connected in new ways to the new local authority. That is a very important part of what makes these new unitaries “new”.
Our judgment also turned on how closely the new authorities would match the existing economic footprint within Cheshire and therefore whether they or the alternative single unitary would be better able to take advantage of new opportunities and build on the economic realities. Again, we accept that there are differing views about this. The county council commissioned an independent report by the Centre for Sustainable Urban and Regional Futures, which sought to challenge the notion that east and west Cheshire are component parts of the neighbouring Manchester and Liverpool city regions. The proposing district councils, on the other hand, claimed that the findings in the report lacked hard evidence and that in any event the data in the report could be interpreted as supporting the east-west split. They used travel-to-work journey data to argue that the east and west were self-contained economic units.
We carefully considered all the information submitted to us, and the views represented a range of different positions. We have read the report very carefully and are persuaded that the data in the SURF report was equivocal and that the travel-to-work journey data support the argument that the east and west are self-contained economic units. Furthermore, we believe that the reality now, and in the future, is that the economic drivers of Liverpool and Manchester—and, to a lesser extent, Deeside—will continue to dominate the region and offer greater advantages in the future. As it better matches this economic reality, the two-unitary option offers the possibility of a more focused approach to economic development to take advantage of that. We believe that the single unitary system would not offer those sorts of advantages.
We are also convinced that these new authorities, through effective place-shaping, will be able to channel economic prosperity and influence outcomes throughout their communities, including those to the south that would perhaps consider themselves marginalised from this economic reality. We are convinced that the new neighbourhood and area committee arrangements will genuinely connect people with their local neighbourhood and new councils.
I turn to the issue of deliverability and shall reflect on the Merits Committee report. The committee said that it understood the Government’s wish to achieve an early resolution of uncertainties but suggested that,
- “this be weighed carefully against allowing more time to prepare for the establishment of the new authorities”.
We have weighed and considered that carefully. We accept that implementation will be challenging. This
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Strong evidence was presented to the Merits Committee that local government in Cheshire will provide, and is providing with increasing energy and commitment, the necessary leadership. The debate in another place provided further evidence of that. As I said, compelling evidence was presented to the Merits Committee that new councils in Cheshire are co-operating positively and practically to begin the delivery and transition process. Much of the preparatory work is already well advanced.
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The Government are supporting and monitoring delivery through our regional office. My officials meet regularly with the joint implementation teams that are already up and running on the ground. The relevant government office works closely with the implementation teams pulling in service-specific expertise across the services, providing support where necessary, and helping to build the capacity of the officers where appropriate.
There is also a requirement in the order for implementation plans to be drawn up, against which we will monitor progress. A recent implementation update report provided to my officials has also highlighted the desire of major partners to be fully engaged. This was picked up by the Member for Macclesfield in the debate in the other place last week, who said:
“In all the arrangements, all seven local authorities and their partners are actively and positively involved with major partners, signalling their desire to be more fully engaged. Good progress is being made”.—[Official Report, Commons, 26/2/08; col. 1055.]
I do not for a moment deny that this is a challenging situation. However, there are precedents with successful restructurings having taken place on a similar timescale in Humberside and Avon in 1995-96. We are confident that new flagship councils delivering strategic leadership, effective neighbourhood empowerment, value for money and equity in public services can be delivered in Cheshire on 1 April 2009.
Perhaps I may spell out to the House the genuine risks of delay. If we delay, we risk creating a further period of uncertainty—for a year or perhaps more—for the people of Cheshire. What would that achieve? On top of that, the thousands of employees of the current councils will be in a state of limbo and uncertainty for another year. If we delay, we will derail the process which is now seriously under way of local government officers working together for the good of the people of Cheshire. We will jeopardise the progress that has been made. Again, I refer the House to the words of Members of Parliament for Cheshire in the debate in the other place. They know their constituencies and know what is happening on the ground. The Member for Weaver Vale said:
“Now is not the time to emphasise our divisions; we should be saying, ‘This is what we’ll do, and what is in the best interests of everybody whom we represent.’ We should take that agenda forward in a positive way”.—[Official Report, Commons, 26/2/08; col. 1057.]
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I have received a letter from the leaders of Macclesfield and Vale Royal borough councils—the two councils that will be leading implementation in east and west Cheshire until the elections. In the letter, they say that they are,
- “keen to get on with the task of implementation of the two new unitary authorities in Cheshire and to keep up the momentum which we are already achieving through engagement with officers and elected members of all existing councils in Cheshire. We would ask that you stress that to the House of Lords in the debate which you will be leading for the Government tomorrow”.
If we delay, we break faith with the fact that, despite the genuine difficulties and unhappiness, there is now a growing willingness to make the decision work. Officials and elected members alike have come together in a determination to work through what is now best for Cheshire as swiftly and as clearly as possible. It is to the enormous credit of those professional officers and councillors alike who did not want this choice to be made that they are now determined to make it work. They need, and seek, the approval of Parliament.
That approval has been forthcoming. The order has been considered in detail in another place, and the debate was constructive, despite some sharply argued disagreements. That reflects the progress that has been made and the shared desire in Cheshire to make unitary restructuring work. I sincerely hope that your Lordships will assist this process now and support the order without delay or division. I beg to move.
Moved, That the draft order laid before the House on 31 January be approved. 9th Report from the Joint Committee on Statutory Instruments, 10th Report from the Merits Committee.—(Baroness Andrews.)
Lord Wade of Chorlton rose to move, as an amendment to the Motion, at end to insert “but this House calls on Her Majesty’s Government not to proceed with the draft order until the residents of Cheshire have been fully and properly consulted and have been able to express a view on the division of their county.”
The noble Lord said: My Lords, I am most grateful to the noble Baroness for the rather lengthy explanation that she gave us of how the Government came to this decision. I listened to it with great care. I thought that, if she had come to a different conclusion, she would have said something very similar.
I have lived in Cheshire all my life. My family has lived and farmed in Cheshire for a couple of hundred years at least and I was a county councillor in Cheshire in 1973 when we went through a reorganisation. My family business is in Chester and I have many interests in businesses and organisations—charitable and social—throughout the county. I know it extremely well. I decided to bring forward this amendment and to question the Government’s decision because of the weight of influence that has been brought to bear on me from various parties who are very dissatisfied with the decision made by the Government.
I do not agree that the evidence received indicated a strong view in Cheshire for the two unitary authority solution. Throughout Cheshire, the view is entirely the opposite. There is no strong feeling against the idea of
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The Minister made no comment of any criticism—I do not think that anyone can—of the existing structure within Cheshire County Council, which has run the county extremely efficiently and already delivers some 80 per cent of the services now received by the citizens of Cheshire, covering the whole range of activities for which the council is now responsible.
I am sure that the Minister will agree with me that, over the period of this Government and previous Governments, the responsibilities of councils have increased enormously. I have no problem with that. Local delivery of services is no bad thing. At the same time, however, one must imagine that the greater emphasis on local delivery of services will increase rather than decrease; indeed, history indicates that that will happen. Therefore, for the future we need an organisation that is best fit to deliver those extra services; we need an organisation that attracts the most able leaders in the county, an organisation that attracts the most efficient and capable officers in the county and one that unifies all the activities of the county rather than destroys them.
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