Local Government Amalgamation and Financial Sustainability: The Case of England and Wales

Abstract

Proponents of local government amalgamation in the UK argue that it improves the financial sustainability of organizations by reducing overall expenditure levels and improving fiscal health. However, critics suggest that structural change is beset with disruptive and unanticipated costs that can take years to overcome. This paper reviews what is already known about these issues in the English and Welsh contexts, before going on to analyze whether the amalgamations of several English counties undertaken in 2009 have led to improved financial sustainability. This analysis suggests that the costs of restructuring have not been recouped by the amalgamated governments, and that those governments perform poorly against indicators of fiscal slack and balance. The implications of these findings are discussed.