Unit cost increase
The forecast increase in unit cost if all new unitaries are of average population in each segment
The analysis identifies a clear correlation between authority size and commissioning costs. For every 200,000 reduction in population, unit costs for commissioned care across all services (adult social care, children’s services, SEND) increase by approximately 1%, driven by reduced purchasing power. With existing county councils commissioning care worth many hundreds of millions of pounds per year, reductions in population scale will result in a very significant, material and absolute cost increase where disaggregation takes place. This programme’s modelling suggests that if all new unitary councils had a population of below 300,000, this would result in additional unit costs (solely as a result of reductions in purchasing power) of over £270m per annum. An additional £180m of annual costs would be experienced if all authorities had a population of between 300,000 and 500,000. In contrast, if all new unitary councils had a population above 500,000, a net reduction in unit costs of £65m could be expected.
£300,000k
£200,000k
£100,000k
£0k
£-100,000k
300k or below 300-500k
500k+
Unitary size
Population size impact on unit cost (regression analysis)
9
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