Appendix 2: Draft Somerset West and Taunton (Local Government Changes) Order 2018; Draft Somerset West and Taunton (Modification of Boundary Change Enactments) Regulations 2018
Additional information from the Ministry of Housing, Communities and Local Government
Q1: In the EM, you say: “After the Secretary of State announced his initial decision that he was minded to implement the proposal, there was a period for representations lasting from 30 November 2017 until 19 January 2018. 251 representations were received. Of these 114 were supportive of the proposal, 14 were neutral and 123 were opposed...The majority of negative representations received were from members of the public (99 representations) with a further 15 negative representations coming from local councillors. A recurring theme of the negative representations was an unwillingness among Taunton Deane residents to take on West Somerset as a financially unsustainable council. However the proposal put forward by both councils outlines that the merger would result in increased financial sustainability across the area, for both extant councils.” The final sentence quoted, and its vague reference to “increased financial sustainability”, does not deal with the concern reported from Taunton Deane residents that West Somerset is a “financially unsustainable council”. What are the relative financial positions of both councils?
A1: The councils’ business case submitted as part of their proposal in March 2017 stated that “The medium term financial challenge continues to shift as forecasts are updated to reflect the latest information. Since the statement of the financial position in July 2016, information on pension fund deficits, business rates revaluations, and appeals risks has shifted the budget challenge and the latest forecast shows by 2021 TDBC needs to reduce its annual budget by £2.3m and WSC by £0.8m (previously £2.5m for TDBC and £1.2m for WSC).”
We received further information on the councils’ financial positions during the Secretary of State’s consideration of the proposal.
The independent auditor considers West Somerset District Council to be unsustainable in the medium to long term unless action is taken to address its finances and enable it to set a balanced budget. In an email to the Department in November 2017 the independent auditor summarised the findings on the financial situation of West Somerset District Council (WSDC) as follows:
“In 2015/16 we qualified WSDC’s Value For Money (VFM) conclusion on the grounds that it did not have a balanced medium term financial plan and as at the date of our opinion did not have robust plans in place to address the shortfall. This matter was evidence of weaknesses in proper arrangements for planning finances effectively to support the sustainable delivery of strategic priorities and maintain statutory functions.
In August 2017 WSDC updated their Medium Term Financial Plan to reflect a revised rateable value for Hinckley B. This resulted in an unqualified VFM conclusion for 2016/17. Our reports did, however, highlight that WSDC was still reporting a cumulative £0.8 million budget shortfall in the years 2018-2021 and although this represented a much improved position into the medium term, full financial balance was predicated on the ‘One Council’ proposal being realised.”
Taunton Deane Borough Council is currently considered by the auditor to be sustainable; however it too will need to make savings from 2020 to enable it to continue to set a balanced budget.
Q2: What hard evidence has been offered that the merger will address any financial difficulties in West Somerset, without burdening Taunton Deane residents?
A2: The business case, submitted jointly by both councils, details that becoming a single council will secure on-going savings of £3.1 million per annum; this will include an additional £0.5 million of on-going savings per annum from the current shared working partnership. The proposal submitted by the councils highlights the joint benefits that the proposed merger would bring in terms of improved service delivery across the whole area, agglomerations of scale and the ability to commission as a single entity.
The independent auditor considers that West Somerset District Council is financially unsustainable, and that the proposed merger would significantly improve this, stating to the Department that West Somerset District Council has “cumulative £0.8 million budget shortfall in the years 2018-2021 and although this represented a much improved position into the medium term, full financial balance was predicated on the ‘One Council’ proposal being realised”.
We consider that the Taunton Deane residents are also likely to benefit. The two councils already benefit from shared services, a senior management team and staff team; and considerable savings of over £1.8 million per annum have already been generated through the current partnership. However, we understand that should the merger not be implemented, the financial unsustainability of West Somerset District Council is considered to jeopardise the financial benefits of the current partnership, thus making it likely that Taunton Deane Borough Council would remove itself from the partnership agreement, which for both councils would risk the savings already generated. The independent auditor notes that “if the ‘One Council’ was not to go ahead and TDBC sought to unwind the collaboration the financial gap would be exacerbated”.
The councils’ business case also details the benefits expected for Taunton Deane Borough Council: “Both councils continue to face challenging financial futures but for very different reasons. Taunton Deane has committed to continue to invest its new homes bonus funding towards a programme of local growth. This means that the Council will need to reduce its net budget position (by reducing costs and/or increasing income). The latest Medium Term Financial Plan predicts a budget gap of around £2.5m by 2021/22 should no action be taken.”
Q3: How does the S of S see the proposal as consistent with the criteria for such mergers - specifically, “a good deal of local support” - when the largest number of representations to the S of S opposed the merger?
A3: The Secretary of State has reached his conclusion that there is a good deal of local support for the proposed merger of West Somerset and Taunton Deane from the evidence presented in the councils’ proposal and the information he received directly.
He concluded that there is support from the councils and their members who are the democratically elected representatives of the local people. West Somerset reiterated this position at their full council meeting on 13 December 2017 (voting 20 in favour, 3 against, 1 abstention). Taunton Deane voted in support of progressing the merger at its full council meeting on 26 July 2016 (voting 32 in favour, 16 against, 2 abstaining). The Leader of West Somerset, Councillor Anthony Trollope-Bellew, recently reaffirmed his support for the merger, confirming his belief that his council’s financial position in the absence of a merger is unsustainable beyond the next couple of years.
Somerset County Council equally supports the merger, and all public bodies are either supportive (15 representations) or raised no objections (4 representations). A strong majority of businesses and voluntary sector organisations were supportive (18 representations) or raised no objections (4 representations). The majority of parishes were supportive (10 representations) or neutral (1 representation).
As to representations from members of the public, 53 were supportive of the proposed merger. 99 did not support the proposed merger and the most common reasons cited were the perceived reduction in democratic representation for West Somerset following the merger, and the misconception that Taunton Deane would be detrimentally affected by the merger. The first of these concerns is addressed by the expectation that the Local Government Boundary Commission will carry out a full electoral review of the whole area of the proposed new district, which will ensure all wards are equally represented on the proposed new council. The second is addressed (as above) by the fact that Taunton Deane also stands to benefit from savings generated by the merger. These concerns were therefore considered to be addressed.
Having considered all the information available to him, the Secretary of State has concluded that the proposed merger has a good deal of local support; from the County Council, the District and Borough councils, and a majority of public authorities, town and parish councils, and voluntary and business organisations. Whilst a majority of the very small proportion of the population who made representations were opposed to the merger, their principal concerns are being addressed. More significantly, a substantial majority of the democratically elected representatives of the population are in favour of the proposal.
17 April 2018