Transforming all remaining two-tier areas into county-based unitaries could save £2.9bn over five years, according to research commissioned by the County Councils Network (CCN).

According to the figures, produced by consultants EY, the move could save 68% more than the option of creating two unitaries in each county area – and creating three unitaries per county could be even more costly than the current structures.

Merging district councils and reforming the current two tier system was considered more cost effective than the three unitary per county model.

Modelling three unitaries with a combined authority – as proposed in Oxfordshire and Buckinghamshire – would cost between £1-14m over five years.

However, the CCN acknowledged reorganisation has ‘a deep and long lasting legacy in the new unitary council’ which can have a knock on effect on the efficiency of a new organisation.

As the local government reorganisation debate reignites, the CCN commissioned EY to consider the costs and transformation benefits of six reorganisation options. In addition, fellow consultants Shared Intelligence reviewed previous rounds of reorganisation.

It found county-wide reorganisation delivered the best chance of efficiency savings, and financial sustainability, alongside the best platform for economic growth and public service transformation.

While the CCN insisted the research was to inform debate, and it was not advocating reorganisation, chairman Cllr Paul Carter said: ‘A clear conclusion from the report is that there are real risks in splitting up the historic counties of England, in terms of both savings and maintaining good public services.

‘Instead, the evidence strongly suggests the most effective means of structural reform – whether through unitary or two tier models – are those that build on the scale and geography of county councils.’

Responding to the report, the District Councils’ Network hit-out at the ‘one-size-fits all’ approach to reorganisation. It claimed there should be ‘greater focus on place-based public sector reform’, reflecting the economic geography of communities.

DCN chairman Neil Clarke said: ‘The national agendas for housing and industrial strategy must be mapped around Functional Economic Areas, housing market areas and travel to work areas that resonate with the daily lives of the 22 million residents we serve, and not ancient ceremonial boundaries.

‘As a network, the DCN is clear that when it comes to devolution it should be for local areas to determine what works best for their locality and many of our members have demonstrated an appetite for the transformation of local services where there is local need and consensus. One size does not fit all.’

Head of government and public sector at EY, Darra Singh, said: ‘This discussion will be increasingly important given the growing demand for services, funding reductions, devolution and structural reform debates, as well as uncertainty of future funding arrangements for local authorities.

‘Most importantly, this report looks beyond a narrow focus of savings from structural reorganisation. It places emphasis on the transformational and service re-design opportunities which can come from considering different governance scenarios and the imperative for wider public service reform.’

For more analysis on local government reorganisation visit The MJ (£).