Governance in the age of local government reorganisation in England

Devolution in England and the accompanying local government reorganisation (LGR) is transforming the way local services are delivered to communities. Districts, boroughs and county councils will be replaced by as yet untitled unitary authorities and regional strategic authorities with a new set of decision-making powers.

These changes in powers and responsibilities require a refocus on the governance structures of the new authorities to ensure they work effectively. Government has already made it clear that they favour a leader, cabinet and scrutiny model over the more traditional committee governance model.

But before we get to that stage, there is a web of governance that needs to be navigated.

Imagine a County Council and three District Councils becoming a new unitary authority. There are already four Cabinets and four scrutiny functions. A Joint Committee (or similar transitional governance structure) will be needed for elected Members, along with multiple officer groups to work on aggregation or disaggregation of services and functions.

Once a Shadow Authority is elected, it will need a scrutiny function and supporting officer structure. Before vesting day and the creation of a brand-new unitary authority, each ‘node’ in such a complex ‘web’ will need effective governance arrangements to ensure that decisions are made in the best interests of the communities. To understand the task ahead, let’s go back to basics on governance and remind ourselves why it is so important.

Governance is the framework by which organisations are directed and controlled. Having the right systems, policies and processes in place means it is always clear who can make decisions, act on behalf of the organisation and is ultimately accountable for how an organisation and its people behave and perform.

The modern view of governance was first laid out in the Cadbury report in 1992 and later codified in the UK Corporate Governance Code. In this definition governance provides a structure within which the board (or equivalent) and management team can run organisations legally, ethically, sustainably and successfully for the benefit of stakeholders and wider society.

The five ‘pillars’ of governance through an LGR lens are outlined below:

These key principles run through:

• Board structure and practices
• Risk management and internal controls
• Transparency and disclosure
• Ethical conduct
• Stakeholders’ rights and responsibilities
• Performance monitoring and management.

They should also be front and centre when establishing the governance for the change journey that is LGR and devolution.

The timescales for LGR and devolution are tight. Decision-making on how unitary authorities will operate needs to involve the constituent authorities making up that new unitary authority – and will happen before a shadow authority is elected. This time-sensitivity means that the process needs to be as efficient and effective as possible. And with the multiple timetables, differing governance arrangements and multiple locations, that is not going to be easy to achieve.

This is not totally new territory though, and there are previous examples to guide the process. For example, Adur District Council and Worthing Borough Council successfully employed ‘Simultaneous Executive Meetings’ while forming a single, shared workforce. The same reports and papers were presented to parallel meetings of the two authorities, which also took place at the same time and in the same room. There was a shared presentation and debate of the issues, then the two authorities undertook separate votes. This ensured that all parties heard and participated in the debate, but that independent voting and sovereignty was maintained.

This is more effective than forming a ‘Joint Executive Committee’ as it factors in the different size and elected make-up of the authorities. It is also in line with existing legislation and powers (the Local Government Acts of 1972 and 2000), so does not require a change of constitution.

Meetings can also be held online to add even more agility and transparency to decision-making. This will allow meetings to accommodate the needs and complexities of five or six local authorities spread over a large geographic area, each with their own timetables and schedules. The existing scrutiny functions of each authority can still do their job, in terms of challenging and asking questions. But everything is much more streamlined and consistent.

Most authorities have established working groups and workstreams – often with a Chief Officer leading and supported by a subject matter specialist. Keeping risk management front and centre in LGR considerations will help show what actions will facilitate a smoother and more effective transition to the new unitary authority. Existing Audit Committees should also undertake scrutiny and ensure that there are checks and balances on progress towards the new authority.

Once the shadow authority is up and running, there will be governance systems operating in parallel. One will be focused on the transition to the new authority while the other will be managing business as usual for the soon-to-be-gone authority. This needs to be effectively managed or else the two could quickly come into conflict. It’s vital to build a consensus about the roadmap, end goals and governance mechanisms.

Exit strategies and winding down legacy governance structures

Adding to the complexity is how the existing and transitional governance structures will be wound down and ultimately replaced. Vesting day will provide a final, non-negotiable deadline but the transfer of power needs to be managed carefully.

One key issue relating to accountability is to balance local pride with parochialism. For example, is approving a ‘legacy’ project for the outgoing administration truly in the best interest of local communities? These residents will remain in the area and their fundamental needs will not change. History shows that LGR is often scarred by ‘white elephant’ projects that prove to be a waste of public resources in hindsight.

The future of governance after LGR

The pillars of good governance are always going to be transparency, fairness and responsibility. This means that all options on the table should be evaluated objectively and in a fair manner. Governance also means being prepared through good risk management and robust decision-making. It means asking the right questions, taking decisive action and standing accountable. Keeping these principles in mind should smooth the transition from two-tier government to a more streamlined solution.

Here are the questions you need to be asking today:

• If new governance structures are needed, what will they look like?
• What state are your parties’ data and information in? Are they standardised, complete, accurate and valid?
• Are there common templates and formats for reports, minutes and decisions?
• What decisions will be made, what will be reported and how will performance be measured?
• How and where has risk been factored into the equation?
• Have you determined how you will manage the change governance risks?
• Where are your single points of failure?

If you want to talk about good governance and effective risk management, we can help. For more information, please contact Matt Humphrey or Jonathan Nulty.

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