The region has been told that it should simplify its multi-layered local authority system in return for extra powers and cash.
Depending on any future agreement, that could result in all of the region’s councils - county, district and unitary - being radically redesigned or disappearing altogether in their current form.
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The region would also have to create a new combined authority and establish an elected mayor - similar to the roles formed in Greater Manchester and the Liverpool City Region - who would ultimately be responsible for the devolved arrangements.
That prospect has previously derailed devolution hopes after causing disquiet amongst some Lancashire districts. Wyre and Ribble Valley councils have temporarily walked away from talks at various points, while Fylde officially withdrew from discussions two years ago - and has never returned.
But the additional request for a restructure of the region’s existing councils - while seemingly intended to streamline membership of any combined authority - also has the potential to add another layer of complexity to the devolution negotiations, which have now dragged on for almost four years.
The Local Democracy Reporting Service (LDRS) understands that questions were raised at this week's meeting about the effectiveness of a combined authority if it were to include 15 separate voices. Previous discussions have faltered over whether individual councils would have a veto on the new body, which could have powers over issues such as transport and skills - and attract an extra £30m a year in government funding for the next three decades.
MHCLG officials reportedly stipulated that any new single-tier councils created in Lancashire - similar to those currently in place in Blackpool and Blackburn - should cover populations of between 300,000 and 700,000 people.
That could lead to the formation of anything between two and five standalone councils across the county - provided the government offers some flexibility over the population size of each authority. The LDRS understands that concerns expressed about the prospect of reorganisation at last week’s meeting cut across party lines.
But County Cllr Driver described the latest discussions as “constructive”.
“We understand that the Secretary of State would expect simplified governance arrangements for the combined authority, which means a revised local government structure in Lancashire. Discussions about the way forward are set to continue," he said.
There was consternation amongst district councils last month after it emerged that the then Northern Powerhouse minister Jake Berry MP had held a meeting with the leaders of the three top-tier authorities - Blackpool, Blackburn and Lancashire County councils - at which the trio proposed a combined authority consisting of just the three of them, with County Hall representing the districts as a “convenor”. That idea was rejected by the government, which insisted all councils must sign up to the plans.
However, there is no such requirement for unanimity over local government reorganisation. Ministers said last year that local opinion would merely have to be "coalescing" around a particular option.
Blackburn, Burnley. Rossendale and Pendle councils last year proposed an East Lancashire standalone authority. But Burnley and Pendle have since backed away from the idea after the councils changed political control at the local elections.
The MHCLG was contacted for comment.
Reaction so far from the district and city councils to the latest proposals has been limited. But West Lancashire Council leader Ian Moran said the government’s demand for reorganisation was far from definitive.
“They told us we should have a good look at it, but didn’t say we absolutely had to reorganise.
“Devolution is supposed to be about power coming back down to the people, not being sucked to the centre in Preston. It shouldn’t be about taking services further away from the people.
"If we have to merge any of the districts, then that is something for the districts themselves to decide.
“Senior civil servants have said that any combined authority should be based on local economic drivers - and ours are over towards Liverpool and Manchester. So whatever we do has got to be right for West Lancashire,” Cllr Moran said.
However, in South Ribble, fellow Labour council leader Paul Foster threw his weight behind the ideas discussed with government officials.
“We completely support the idea of a combined Lancashire authority and an elected mayor of Lancashire.
“We feel that there are clearly massive economic benefits to these proposals, which we hope can now progress with the pace and intensity needed to make an ambitious goal into a working reality.
“The people of Lancashire deserve the very best services, the very best representation and the very best facilities – whether that’s social care, leisure, libraries, refuse collections, roads, transport, the lot.
“Now more than ever, we need to pull together to realise our collective strengths to really deliver for the people of Lancashire and both myself and my cabinet are adamant we can, and will, do that,” Cllr Foster.
Leader of Preston City Council, Councillor Matthew Brown said: “Any decisions made about the reorganisation of local government need to be made with the interests of our residents at the very core as well as our priorities to deliver an inclusive economy and stronger communities.
We are always ready and willing to speak to our neighbouring authorities about how to best work together to achieve our common goals and have long since been operating on the city region’s economic footprint for key projects such as the Local Plan and City Deal. We welcome the opportunity for a thorough and robust dialogue about the future of local government in Lancashire.”
Lancaster City Council leader Erica Lewis said that the discussion over devolution was continuing.
"In summary, the message [from MHCLG officials] was that there would be no significant devolution deal without a mayoral combined authority (CA) - and that in proposing a CA, we would need to review the underpinning governance i.e. the district councils. The strong message was that 15 members was probably too big.
“Our discussions also continue with South Lakeland and Barrow [over the possibility of a merger of the three councils]. Lancaster, South Lakeland and Barrow are a functional economic area, and we want a solution that supports our ongoing collaboration rather than making it harder for us to work together.”
The LDRS contacted all of Lancashire’s 12 district councils and Blackpool Council for comment.
HOW IT WORKS NOW
The standalone councils in Blackpool and Blackburn with Darwen are responsible for all local authority services delivered in their areas.
Across the rest of the region, Lancashire County Council delivers major services such as social care, schools and highways. The county is then divided into twelve district councils which look after areas such as leisure, parks and waste collection - and also make most planning decisions.
The two-tier system would be likely to be replaced by a so-called 'unitary' model as part of any reorganisation. That would see the creation of new single-tier councils covering wider areas than current district and standalone authorities.
Lancashire County Council currently has an annual budget of £844m, overseen by 84 county councillors. The net yearly budget of the 12 districts adds up to around £160m - but there is a combined membership of more than 560 councillors across the second-tier authorities.
The Communities and Local Government Secretary, Robert Jenrick, told the Conservative Party conference last September that he did not believe district councils had a long-term future. A devolution white paper is due to be published shortly, with one source recently telling the Local Government Chronicle magazine that it was likely to contain "a strong preference" for reorganisation as a precursor to deals being struck with two-tier areas like Lancashire.
A study by consultants Ernst and Young back in 2016 suggested the most financially efficient form of restructuring in any two-tier area would be to create a county-wide unitary, rather than two or three new councils. But the government's requirement for new single-tier councils to cover a maximum population of 700,000 people rules out that option in Lancashire - which has a population of almost 1.5m according to 2018 estimates.
Last year, County Hall chief executive Angie Ridgwell - a veteran of warned that there was a risk of reorganisation being "a distraction" for local authorities.
“You need to be very clear that a restructure is going to bring service benefits and financial benefits to the taxpayer – [especially when we provide] services for vulnerable people which are critical to their daily lives and have to be maintained in all circumstances,” Ms. Ridgwell told the LDRS in August 2019.
“We also need to have a significant role working with the Lancashire Enterprise Partnership and local businesses to do everything we can to stimulate the Lancashire economy, so that we are creating local wealth and jobs for our residents.
“Unitaries are not a panacea in their own right – they are not going to bring more money into Lancashire in and of themselves.”
DEAL OR NO DEAL?
The government has been offering local areas devolution deals for just over five years and, by 2019, ten agreements were in place with different parts of the country - six of which have resulted in the formation of mayor-led combined authorities.
The additional powers and cash on offer vary from one place to the next, but typically include control over integrated transport, adult education and strategic planning. The minimum cash offer from government for such a deal is usually an additional £30m every year for 30 years.
Some of the more ambitious agreements - such as that covering health in Greater Manchester - attract much greater sums.
But the deals have proved politically and practically difficult to negotiate in some localities - not least here in Lancashire, where there are more councils involved than any other area which has so far agreed a devolved set-up.
The initial requirement for an elected mayor was a sticking point for districts such as Wyre and Fylde. But even after that demand was briefly dropped during Theresa May's term as prime minister, deadlock remained over whether each member of any combined authority would have a veto. Some districts, including Ribble Valley, demanded it - while Lancashire County Council leader Geoff Driver expressed concern that such an arrangement could prevent the authority from exercising its statutory duties.
The county has been operating a combined authority in shadow form since 2016, but neither that body, nor regular meetings of Lancashire's 15 council leaders, have so far been able to break the deadlock over devolution.