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Vertical consolidation and financial sustainability: evidence from English local government

Andrews, Rhys William ORCID: 2015. Vertical consolidation and financial sustainability: evidence from English local government. Environment and Planning C: Government and Policy 33 (6) , pp. 1518-1545. 10.1177/0263774X15614179

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Proponents of the vertical consolidation of lower-tier units into a smaller number of single-tier local governments suggest that it improves the financial sustainability of governments by generating economies of scale and scope. However, critics suggest that such structural change is beset with disruptive and unanticipated costs that outweigh any potential efficiency savings. I investigate the validity of these contrasting arguments by analysing the expenditure and fiscal health of English county councils before and after the consolidation of the lower-tier units within several counties that took place in 2009. Levels of financial sustainability are modelled using a difference-in-difference estimator for the years 2003–2012. The results suggest that in the short run the consolidated governments have been able to realize administrative economies, but their fiscal health has weakened. These findings appear to be robust to the possibility of selection effects. Theoretical and practical implications are discussed.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HC Economic History and Conditions
J Political Science > JN Political institutions (Europe) > JN101 Great Britain
J Political Science > JS Local government Municipal government
Publisher: SAGE Publications
ISSN: 0263-774X
Date of First Compliant Deposit: 30 March 2016
Date of Acceptance: 4 August 2014
Last Modified: 07 Nov 2023 01:30

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