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Agenda Item No

 

The Vale of Glamorgan Council

 

Cabinet Meeting: 17 November, 2014

 

Report of the Leader

 

Expression of Interest to Welsh Government for Voluntary Merger

 

Purpose of the Report

1.         To obtain Cabinet’s approval to prepare an Expression of Interest in respect of a voluntary merger with Bridgend Council.

Recommendations

1.         That Cabinet approves the preparation of an Expression of Interest in respect of a voluntary merger with Bridgend Council.

2.         That an Expression of Interest for such a merger be brought to a future meeting of Cabinet for approval prior to submission to Welsh Government.

3.         That full Council be recommended to ratify the Expression of Interest submission if approved at the above meeting.

Reasons for the Recommendations

1.         To ensure that arrangements are put in place to safeguard the interests of the residents of the Vale of Glamorgan.

2.         To ensure that the Expression of Interest receives Cabinet approval.

3.         To ensure that the Expression of Interest receives Council approval

 

Background

2.         The Council in its meeting of 29 September 2014 considered its response to the Welsh Government (WG) White Paper Reforming Local Government, which was published in July 2014 and which proposed mergers of Councils, including that of the Vale of Glamorgan and Cardiff Councils.  In the same meeting the Council also considered WG’s associated document Invitation to Principal Local Authorities in Wales to submit proposals for voluntary merger, which invited Councils to submit by 28 November 2014 bids for voluntary mergers which would allow them to merge sooner than WG’s legislative timetable otherwise allows for.

 

In consequence the Council made the following resolutions:

·               That Council notes the issues set out in this report for its consideration and   indicates its views.

·               That this Council confirms its previous resolution to resist a forced merger with Cardiff City and County Council and believes that the Vale of Glamorgan County Borough is a sustainable Council in its own right and urges Welsh Government (WG) to allow the Vale of Glamorgan Council to continue as a stand-alone Council.

·               That should this position not be agreed by WG or that indications from WG confirm that they will not give such an undertaking, delegated authority is given to the Managing Director in consultation with the Leader to enter into pre-emptive negotiations for a voluntary merger with other Councils that share the same values and cultures as we do here in the Vale of Glamorgan.

·               That WG be contacted to confirm what arrangements and financial support are available to this Council for proceeding with an early adopter approach.

·               That the Leader agrees to keep all other Group Leaders informed of the progress or otherwise of the above resolutions.

·               That a further report be presented to Cabinet and any subsequent Council meeting, including an extraordinary Council meeting if deemed necessary.    

·               That delegated powers are granted to the Managing Director, in consultation with the Leader, to respond to the Welsh Government White Paper on the Council's behalf.

3.         In view of developments since 29 September, including discussions with a variety of partners on the options available to the Council, it is now considered that rather than pursuing a stand alone course of action, the Council should aim for a voluntary early merger with Bridgend Council.   

4.         Appendix A is WG’s prospectus for Council mergers, Invitation to Principal Local Authorities in Wales to submit proposals for voluntary mergers.  It requires Expressions of Interest to be submitted by 28 November.  WG will then respond by 5 January 2015.  If Expressions of Interest meet with WG approval, formal Merger Proposals will be required by 30 June 2015.  The legislative timetable for voluntary mergers is as follows:

·               A first Bill introduced to the Assembly in January 2015 would include the power for the Welsh Ministers to merge Authorities who wish to do so voluntarily.

·               Authorities wishing to voluntarily merge must submit detailed expressions of interest by November 2014 and fully developed cases for merger by June 2015 to the Welsh Ministers for consideration.  The Authorities and Welsh Ministers will work together in considering the cases to enable Authorities to submit statements of confirmation of intention to proceed to voluntary mergers by November 2015.  The Welsh Ministers will, by February 2016, develop the necessary subordinate legislation for approval by the Assembly. 

·               There would be no elections in May 2017 to Authorities merging voluntarily.  Instead, the subordinate legislation providing for voluntary merger would extend the terms of existing Councillors to May 2018.

 

·               In October 2017, a shadow Authority and shadow Council for the merging Authorities would be established, consisting of the full body of serving Councillors on the constituent Councils.  Its functions in preparing for the creation of the new Authority would be specified by Order.    

·               Vesting day for the new voluntarily merged Authorities would be 1 April 2018.  First elections to the new Authorities would then be held in May 2018, based on new wards following an electoral review of the whole of the new Authority, with new Councillors assuming responsibility four days after the elections.  They would serve for four years, until a full round of Local Government elections take place in May 2022. 

5.         For Councils proposed to be merged and not pursuing a voluntary merger the timetable differs and is set out below:

·               In January 2015, a first Bill will be introduced into the Assembly which will provide the powers necessary to enable and facilitate important preparatory work for a programme of merges, but it would not contain specific merger proposals. 

·               The proposed new powers would, among other things, enable the Welsh Ministers to require the Local Democracy and Boundary Commission for Wales to start work on considering and making recommendations for electoral arrangements for proposed new Authorities.

·               It is anticipated that, subject to this first Bill being passed by the Assembly, it would receive Royal Assent in November 2015.

·               In Autumn 2015 a second Bill will be published in draft for consultation.  This second Bill would in due course establish the new Authorities to be created through merger.

·               Shortly after the May 2016 elections to the Assembly this second Bill will be introduced into the Assembly, and subject to Assembly consideration it is envisaged this Bill would receive Royal Assent in Summer 2017.

·               In May 2017, Local Government elections (postponed from May 2016) to the existing Local Authorities would take place.  Councillors elected to Authorities which are to be merged will serve a term of three years.  Councillors of continuing Authorities (i.e. those unaffected by the merger) will serve a term of five years.

·               In May 2019, the first elections for the new Authorities, merged under the provisions of the second Bill, would be held, with Councillors elected for three year terms.  The resulting Councils would exist as Shadow Authorities until Vesting Day on 1 April 2020, when they would assume full functions, with the old constituent Authorities abolished.

·               In May 2022, full Local Government elections for all Authorities would be held, for a proposed term of five years.

 

Relevant Issues and Options

6.         There are two separate but related issues that need to be considered in arriving at a conclusion on the best way forward:

·               Why should we apply for an early, voluntary merger rather than await the legislative process?

·               Why should the Council merge with Bridgend rather than, as set out in the White Paper, with Cardiff Council?

7.         These questions are considered in turn.

Why an early voluntary merger?  

8.         It is clear that significant change needs to be made to the way Councils operate and work with partners and citizens in the future.  This is recognised in the Council’s Reshaping Services change programme.  A voluntary merger offers a unique opportunity to radically transform our approach to public service delivery through creating an organisation that is able to understand and influence the needs of our communities and is able to adapt and innovate in order to deliver joined up solutions. This could be designed into the organisational framework from inception and so the new merged Council will provide a once in a generation opportunity to drive the transformation changes needed with accelerated pace and impact.

9.         WG have stated in their prospectus for voluntary mergers (Appendix A) that extensive WG support would be made available for those Councils progressing voluntary mergers.  That support (which may not be provided for those not merging early) would facilitate preparation for the massive changes ahead.  Recent discussions with WG indicate that dedicated WG teams would work jointly with Councils whose bids are accepted.  This would be to test bed approaches to forming the new Councils, and also to inform the forthcoming legislation on setting them up.  Clearly, the Council could benefit from these arrangements as well as making a valuable contribution to the future of local government in Wales.

10.      In determining whether the Council can continue as presently constituted rather than merging, it is becoming increasingly apparent that the dire future predictions for public expenditure have a direct bearing.  Members will be aware that in line with the Council’s Reshaping Services strategy, all services are currently being subjected to assessment to determine what approaches they could take in response to substantial budget cuts.  An early conclusion is that many services are simply not viable as currently constituted if cuts of the scale currently envisaged are imposed.  That being so, in a number of cases collaboration with another Council’s service would provide the necessary resilience and quality of service.  Setting up such collaborations in a post-merger environment may be difficult as prospective partners are focused on their own organisational change. 

11.      Should the other Council mergers proceed but the Vale continue as currently constituted, it would be one of the smallest (if not the smallest) Councils in Wales.  This could reduce its influence on critically important matters such as taking forward the City region agenda.  This means the interests of residents and businesses could lack effective representation.

12.      The situation in relation to merger options is a fluid and ever-changing one as WG and Welsh Councils continue to weigh up the possibilities.  Discussions with WG have raised the possibility that 12 Councils would represent the least of WG’s merger ambitions, with even fewer Councils being a distinct option (particularly since according to the map some Councils still remain as presently constituted).  That being the case, it is unlikely that the Vale Council would survive in its present shape.   

13.      If an Expression of Interest for voluntary merger is submitted to WG, their initial response will be known in January 2015.  If their response is a positive one it will introduce a welcome certainty into planning for the future;  if on the other hand the Council simply awaits future developments there is a danger that a continuing limbo will jeopardise our ability to function effectively.   

Why a merger with Bridgend?

14.      The report that went to Council on 29 September for discussion, while acknowledging Council’s previously stated preference to stand alone, included a section on the implications for the Vale and its residents if a merger became inevitable or desirable.  The options covered included merger with a variety of other Councils, but it was stated that the two most realistic merger partners were Cardiff, as proposed in the White Paper, or Bridgend.  The report discussed the benefits and drawbacks of merger with alternative options.  Since 29 September there have also been discussions with both Bridgend and Cardiff Councils on the issue.  It is now considered that the best option for the way forward would be for a voluntary merger with Bridgend Council and that this would provide the best outcome for both the Vale and Bridgend. 

15.      The Council report referred to above put forward some reasons for a Vale/Bridgend merger, and it is worth rehearsing those reasons.

16.      Bridgend and the Vale Council areas are of a similar size. Bridgend has a population of over 139,000 and the Vale just under 127,000. The resultant new Council would have a population of circa 266,000, which is large enough to benefit from economies of scale and provide resilience, and compares favourably with the populations of the other proposed merged Councils.

17.      The similarity in size between Bridgend and the Vale is more likely to lead to an equitable distribution of resources across the area of the new Council than would be the case should the merging councils be significantly different in size and consequently influence.

18.      In addition, where the size of merging councils is similar, a new Council is more likely to adopt best practice from whichever of its predecessor Councils demonstrates it (or indeed use best practice from elsewhere). Where a single large Council dominates, there is a significant risk that the practice that is adopted is the one carried out by the majority from the dominant Council and this quite frequently will not be the most effective and efficient means of delivery.

19.      A merged Bridgend/Vale Council, whilst sufficiently large to be sustainable, will not be so large it becomes too distant from the citizens it serves. It will not be necessary to institute elaborate sub-structures for service delivery to try and preserve some sense of place and make service delivery sensitive to the needs of the local population. The size will also mean the Council will be able to innovate and yet be agile enough to implement that change quickly.

20.      There is also likely to be, in view of the similarities with Bridgend set out below, significant commonality in the nature of the challenges, opportunities and problems experienced and the nature of service delivery and key policies. This bodes well for driving through efficiencies in service delivery. It is also likely to assist in preserving the identity of the area as well as promoting regeneration activity, formulating and implementing planning policy, and delivering transport services.

21.      The nature of the areas of Bridgend and the Vale is similar in that both have significant rural areas, small distinct towns and villages, coastal towns and administrative centres and share a heritage coast.  In terms of population density the Vale of Glamorgan and Bridgend both have about 500 people per sq.km.

22.      The Vale has 53 km of coastline, of which 19 km is Heritage Coast that connects with the Heritage Coast within Bridgend.  It has a very similar housing need to Bridgend, and the town centres of both the Vale and Bridgend face competition from new forms of retailing and the draw of the capital city of Cardiff.  Both Bridgend and the Vale Councils also generate significant commuter traffic by road and rail into the capital city and day trip traffic to areas such as Barry Island, Porthcawl and the coastal strip. 

23.      For the reasons outlined, and the geographical context, merger with Bridgend is seen as a sustainable option, and a means of ensuring that the rural characteristics of both Bridgend and the Vale are protected and enhanced for the benefit of the wider region.

24.      There are particularly strong links between the population in the western Vale with Bridgend, in terms of access to services including health, retailing and recreation. 

25.      A merged Bridgend/Vale Council would still be within the Cardiff travel to work area and the merger could assist in transport/highway planning for the existing Bridgend and Vale areas. The Vale of Glamorgan railway line links Bridgend through the Vale to Cardiff.  Bus Services similarly also link Bridgend and the Vale to Cardiff.

26.      With the advent of the Cardiff Capital City region, the importance of transport, economic development and infrastructure is already being driven forward at a regional level, and the Vale merging with Bridgend is not, as a consequence seen as disadvantageous. Indeed, the commonality of issues between Bridgend and the Vale could be viewed as a strength and a key opportunity.  The new merged council would also need to work with Cardiff, and this resultant collaboration could be more beneficial than just a merger of Cardiff with the Vale.

27.      With regard to education, the Vale of Glamorgan and Bridgend are in the Central South Consortium, together with Cardiff, RCT and Merthyr. Consequently, there are strong links between the Councils in education.  Performance and prospects for improvement following the last full Estyn inspections of the Vale and Bridgend were judged by Estyn to be of the same level (adequate).

28.      Bridgend and the Vale are in the same Police Basic Command Unit (BCU) and consequently a merger of the Vale and Bridgend councils would facilitate joint working with the police on community safety and related issues.  Discussions are already in place to examine the benefits of merging the Vale and Bridgend Community Safety teams.

29.      With regard to integration programmes for Social Services and Health, merger with Bridgend would mean that the new local authority area would straddle 2 Health Boards, Cardiff and Vale UHB and Abertawe Bro Morgannwg (ABM) UHB. It is acknowledged that this may pose some challenges but it is not foreseen that managing relationships with 2 Health Boards will be especially onerous. It should be noted that major hospital services are already planned on a regional scale through the South Wales Programme;  that significant numbers of Western Vale residents depend on the provision of hospital and some other health services in Bridgend, which is covered by ABM UHB;  and that for community and primary health services (the most important relationship for adult social care), both Cardiff/Vale and ABM UHBs operate a locality structure within which the Vale and Bridgend have locality status.  Consequently, a merger of Bridgend and the Vale should not pose insurmountable difficulties either for the new Council or the Health Boards. Indeed, it will offer opportunities to learn and share best practice on a wider scale than would be achieved from working within a single Health Board.

30.      A significant opportunity would exist in that whilst Bridgend has transferred its housing stock, the Vale still owns its stock and operates a Housing Revenue Account.  The new Council would thus be able to address its housing problems either directly with using its own stock or through a strong range of Housing Associations. 

31.      The management structures of Bridgend and the Vale Councils are close in size and have similar cultures. 

32.      The Vale Council already has established relationships and joint working with Bridgend and this would assist in a merger.  Bridgend and the Vale share a single internal audit service which has proved to be very successful. The Vale’s Civil Parking Enforcement role is provided by officers working for Bridgend, and the Vale’s CCTV service is in the process of being transferred for delivery by Bridgend.  The Vale and Bridgend, in addition to Cardiff, are involved in a joint Regulatory Services merger.   

33.      From the above, then, there are clearly strong reasons supporting a Vale/Bridgend merger.  This is not to say that other reasons could not be adduced to support a Vale/Cardiff merger, and the report discussed by Council listed some of those reasons (as well as the arguments against).  However, it remains that there are fundamental disparities between the Vale and Cardiff which would make it difficult for a merger on equal terms to happen.  These disparities are essentially about size (Cardiff Council is roughly three times the Vale’s size) and about the nature of the communities the Councils serve:  Cardiff is a densely populated urban conurbation and capital city with all that that entails, while the Vale’s character focuses on a significant rural area, small district towns and villages and coastal towns. 

34.      It is important to stress nonetheless that collaboration between the Vale (and any other merged Councils) and Cardiff will and must continue.  For the past few years a good deal of effort has been put into joint working between the two Councils and their partners, and that effort is bearing fruit.  Joint arrangements in respect of Health and Social Care in particular will be further progressed, and wider initiatives such as Regulatory Services, the Education Consortium and Prosiect Gwyrdd, which involve Cardiff in addition to other Councils, will also continue.  A joint Cardiff/Vale Local Service Board has been set up to oversee and facilitate joint working initiatives with a number of partner agencies, and it is the intention that the board will carry on.

35.      It is becoming clear that even after Councils have merged, it will be essential for them to continue to work with each other and with other partners in order to deliver sustainable outcomes for the public.   

36.      A merger with Bridgend would be seen as an "exceptional" case by the WG as the new authority would straddle the boundaries of two health boards. Additional requirements are consequently required from the Expression of Interest as contained in the Prospectus at Appendix A.

37.      If the Vale wishes to merge with Bridgend then an expression of interest in a voluntary merger is probably required in order to clearly indicate that both councils are serious about that proposition.

 

Next Steps     

38.      The timetable for the submission of the Expression of Interest and its format are dictated by the requirements of WG’s prospectus document (Appendix A). 

39.      In terms of timetable, if the preparation of the Expression of Interest (EOI) is agreed by Cabinet then the draft EOI will come to Cabinet for agreement in a special meeting to be held before the submission deadline of 28 November.  This is in accordance with the WG prospectus, which allows an EOI to be approved by Cabinet, with full Council approval in that case following shortly thereafter.  Should Cabinet approve the submission, Council will consider the EOI in its meeting of 17 December.

 

Resource Implications (Financial and Employment)

40.      If the Expression of Interest is successful, WG will provide extensive support for Vale and Bridgend Councils to prepare a further detailed business case for merger.  This will take the form of providing officers and facilities.  It is not known at this point the extent of any financial assistance that will be forthcoming.

41.      There is an argument that since there is no indication that WG know the costs of reorganisation, the Council risks being committed to a process it cannot afford.  However, the WG prospectus describes an Expression of Interest as an opportunity for Councils to work with WG to identify the steps required for a merger and develop a business case.  It is therefore entirely reasonable to set out to explore these issues.  However, if the business case does not stack up or if resources cannot be identified to support a merger then clearly there would be no expectation for us to proceed.  Councils would be in a good position to accurately articulate the cost and benefits of a merger.     

42.      A merger will require the harmonisation of council tax levels between the affected councils (whether merging on a voluntary or mandatory basis). The council tax band D equivalents for the Vale and Bridgend in 2014/15 (excluding police and town & community council precepts) are £1,029.42 and £1,191.87 respectively. The Cardiff Council comparative figure is £973.77.

43.      It should be noted that recent reports have erroneously compared the Vale band D equivalent council tax for 2013/14 including police and town & community council precepts (£1,206.33) with the Cardiff Council figure excluding police and community council precepts (£936.56).

44.      The correct comparative figures for 2013/14 are ££985.14 (Vale) and £936.56 (Cardiff). The figure for Bridgend in 2013/14 is £1,135.36.

45.      There will be significant staffing implications resulting from a voluntary merger with either Bridgend or Cardiff Council. Members will be aware that there are differences in the local terms and conditions between each of the authorities and in particular those relating to the pay and grading structures.

46.      The success of any merger arrangements will rely on the ongoing engagement of both the staff and the trade unions, consideration of the organisational development implications of bringing together two organisations and critically the application of consistent and transparent arrangements for aligning services and staffing structures. 

47.      It is anticipated that the management of the above will be supported through guidance from Welsh Government and specifically through the work of the Staff Commission. The terms of reference of the Staff Commission are the subject of current Welsh Government consultation process.

48.      At a local level the recognised trade unions have been consulted on the progress of current merger discussions and the prospect of a voluntary merger bid with Bridgend Council. Such consultation will continue over the coming months subject to the Cabinet approving the proposals within this report and the response from Welsh Government.

 

Sustainability and Climate Change Implications

49.      There are no direct environmental sustainability and climate change implications arising from this report.

 

Legal Implications (to Include Human Rights Implications)

50.      There are no immediate legal implications arising from this report.  If however an Expression of Interest is submitted a further report will accompany it.  Any future merger will require considerable work to be undertaken in relation to employment, contract, property and other assets and liabilities matters.  While legislation will provide a framework within which these matters will be managed, there will need to be a need for legal protocols between the merging authorities; management, negotiation and procurement of contracts and other legal transaction documentation;  and advice on various legal issues, responsibilities and entitlements.   

 

Crime and Disorder Implications

51.      There no specific crime and disorder implications arising from this report, but the structural arrangements for dealing with crime and disorder have a bearing on a potential Vale/Bridgend merger.  Both Councils are currently in the same Basic Command Unit within South Wales Police, which would make a merger in this regard comparatively straightforward.   

 

Equal Opportunities Implications (to include Welsh Language issues)

52.      Extensive work on an Equality Impact Assessment of a merger will be needed in due course.

 

Corporate/Service Objectives

53.      The Council’s stated values are delivering good services, transparency, engagement and empowerment.  It is important that these continue to be observed in any merger proposed.

 

Policy Framework and Budget

54.      This report is a matter for Cabinet decision.  However, full Council will need to ratify the Expression of Interest submission, and it is intended that this will be at the 17th December meeting.  This is in line with the WG prospectus for voluntary mergers, which allows the approval by Cabinet of an Expression of Interest by the 28 November deadline, with full Council approval needed shortly thereafter.     

 

Consultation (including Ward Member Consultation)

55.      The prospectus for mergers requires some initial engagement to have been done before the Expression of Interest is submitted.  Initial consultation is being carried out with a number of stakeholders.  If the Expression of Interest leads to the preparation of a Merger Proposal, full and extensive consultation and engagement will be required at that stage.      

56.      This is a matter for the whole Council and therefore no ward member consultation has been undertaken.

 

Relevant Scrutiny Committee

57.      Corporate Resources

 

Background Papers

Welsh Government White Paper Reforming Local Government, July 2014

Welsh Government document Invitation to Principal Local Authorities in Wales to submit proposals for voluntary merger, September 2014

 

Contact Officer

Huw Isaac, Head of Performance and Development

01446 709760

 

Officers Consulted

Corporate Management Team

 

Responsible Officer:

 

Sian Davies, Managing Director