‘Big is not always best for good public services’
Welsh Labour AM Mike Hedges has produced a pamphlet setting out his latest thoughts on public service delivery in Wales. Chief reporter Martin Shipton examines his ideas
ALL public services in Wales should be organised on the basis of three or four regions, according to a leading supporter of Welsh Labour leadership front-runner Mark Drakeford.
Mike Hedges, the AM for Swansea East, is not advocating wholesale council mergers – in fact, he believes that would be counter-productive.
But he has drawn on his long experience of local government, during which he served for a time as leader of Swansea Council, to set out the changes he believes are needed – and why some things should stay as they are.
In a pamphlet entitled Public Services in Wales, Mr Hedges lists changes introduced in recent decades to the make-up of devolved services including the NHS and local government, as well as the merging of three former quangos into Natural Resources Wales.
He states: “[The] direction of travel is to larger and fewer organisations. Those who look at it simply, calculate the savings from reducing the number of senior staff and thus provide more money for front-line services.”
However, he argues, “mergers are expensive with redundancy costs and the cost of re-badging the organisation”.
“More expensive is creating a single ICT system from the systems of the predecessor organisations,” he adds.
“Some will still be under contract and others will need to be updated or closed down and merged into the new system.
“All these are up-front costs, and while the cost of local government reorganisation in 1996 was approximately 5% of annual expenditure for each council, that was without the variations in terms and conditions between authorities that exist today.
“The simplistic conclusion of some is that following a merger, all the senior post duplication is removed and thus substantial ongoing savings are made. This ignores issues such as the senior managers carry out tasks and if the number is reduced the tasks have to be reassigned and the same number of decisions need to be made.
“Economic theory predicts that an organisation may become less efficient if it becomes too large.
“Larger organisations often suffer poor communication because they find it difficult to maintain an effective flow of information between departments, divisions or between head office and outlying parts.
“Coordination problems also affect large organisations with many departments and divisions as they find it much harder to coordinate operations. ‘X’ inefficiency is the loss of management efficiency that occurs when organisations become large and operate in uncompetitive markets.
“Such losses of efficiency include over paying for resources, such as paying managers’ salaries higher than needed to secure their services, and excessive waste of resources.”
This, writes Mr Hedges, leads to three questions on public services as they are currently configured.
■ Do the larger organisations such as Betsi Cadwalladr perform better than smaller ones?
■ Has the creation of all-Wales organisations such as the Welsh Ambulance Service produced an improved service?
■ Has the reduction in the number of organisations carrying out a function such as the Trunk Road Agency, Natural Resources Wales and the National Procurement Service, improved the services being provided?
Mr Hedges goes on to argue that if larger local authorities were more efficient and effective, that would be reflected in lower council tax and better performance. Yet there is no evidence that such is the case, he says.
Setting out his view that public services should have a “regional footprint” based on Cardiff, Swansea and Mid and/or North Wales, he writes: “While services could, and in many cases will, be on a smaller footprint than the regions, no service should cut across the regional boundaries unless it is an all-Wales service which would be very rare.
“This will allow regional working across services to be undertaken far more easily.
“There is nothing intrinsically good about the current structure of local government in Wales. Why were the councils of Rhondda, Cynon Valley and Taff Ely merged into one but Blaenau Gwent and Merthyr district councils turned into unitary authorities?
“Change should only be considered where there is a very strong chance of improving service and/or reducing cost over the medium term because of the initial cost of change.
“Having spent several years discussing local government reorganisation as if it were some silver bullet to solve the lack of funding for councils, the threat of reorganisation receded and has now been brought back. It was as if the economic theory that predicts that an organisation may become less efficient if it becomes too large or diseconomies of scale was unknown.
“Different services need a different method of joint working and some are best carried out, but most work best at the current local authority level. Examples of services that would benefit from a joint working model based upon the regional footprint are transport, economic development and regional planning.
“Specialised social service provision and educational improvement could be dealt with by two or more councils working together within the regional footprint. Within Wales, it is the councils that will know best what works for them and consequently they should be allowed to decide locally what works best for an area.”