PwC: Evaluating the impact of scale in proposals for local government reorganisation

This report, featuring analysis from PwC, examines how scale affects the costs, risks and outcomes of local government reorganisation in England.

The analysis compares four scenarios across all 25 two‑tier county areas: a single county‑wide unitary authority, two unitaries, three unitaries, and two unitaries plus a children’s trust.

The report finds that scale is a critical determinant of financial sustainability, service resilience and place leadership. Larger unitary authorities benefit from economies of scale, simpler governance, stronger commissioning power and greater resilience to shocks.

In contrast, disaggregating county services into multiple smaller authorities introduces duplication, higher transition costs, increased leadership and workforce pressures, and risks to safeguarding and partnership working—particularly in complex services such as adult and children’s social care.

The report concludes that a single unitary authority offers the strongest balance of financial benefit, operational resilience and strategic capacity.

More fragmented models significantly reduce benefits and, in some cases, result in net financial losses, while also increasing non‑financial risks and complexity.

As a result, the CCN argues that decisions on reorganisation should prioritise long‑term sustainability, service stability and the ability to lead recovery and growth at scale.

Key data findings:

• A single county unitary in each of the 25 remaining two-tier areas could generate savings of £2.94bn over the next five years, a saving of £126m for a mid-sized county area.  
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• Creating two unitary authorities in each shire county would reduce the potential savings by two-thirds to £1bn over five years; £51m for a mid-sized county area.
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• Three unitary councils for each area would cost £340m across all 25 areas over five years, a cost of £1.6m for the mid-sized county area.
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• Creating multiple unitaries for each area would mean splitting up children’s social services and adult social care departments which are currently overseen by county councils.
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• PwC concludes this creates risks at a time when demand for both types of care will rise post-Coronavirus, and that ‘the likelihood of performance dropping is high.’  
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• The report finds that disaggregating care services could result in different councils competing over scarce care providers, potentially destabilising local adult social care markets already under additional strain due to Covid-19.
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• It would also make children’s social services costlier and undermine efforts to attract and retain high calibre directors with sufficient experience.
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• PwC suggests that, for the scenarios explored in the report, creating two or more unitaries in each county could potentially create and concentrate economic disparities, with one council benefiting from higher economic activity and local tax income.

‍Recommendations to government include:

• Prioritise single county‑wide unitary authorities where reorganisation is pursued.
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• Avoid unnecessary disaggregation of strategic services, particularly social care.
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• Use scale to strengthen financial resilience and commissioning power.
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• Ensure reorganisation decisions reflect credible geographies and long‑term sustainability.
  
• Treat reorganisation – if done at scale - as a catalyst for wider service transformation and place‑based growth