Addressing the challenges and opportunities in local government reform

It seems increasingly clear that the Government will propose a major overhaul of local government. Amardeep Gill looks at the potential changes and sets out some key considerations.

Since the Autumn Budget, significant attention has been given to the consequences of local government reform, with a range of disparate views on the value and consequences of such reform, and more recent reports rumouring the creation of unitaries covering a minimum population of 500,000. Structural reforms, such as the consolidation of two-tier areas and changes to devolved governance, present both opportunities and challenges for councils, communities, and stakeholders. In light of these developments, Trowers & Hamlins have launched a comprehensive guide, "Bridging The Divide", on local government reform that not only sets out the current legal regime but also explores the lessons learnt by those authorities that have been subject to the most recent reorganisations.

Why Local Government Reform Matters

The shift toward unitary reorganisation – a move to replace two-tier systems with single-tier authorities – has been driven by the need for more streamlined governance, cost efficiency, and clearer accountability. However, implementing such reforms is not without its difficulties. Councils must balance on-going financial pressures with the demand for maintaining or enhancing local service delivery, all while navigating the complexities of political realignment.

The push for reform coincides with the government's broader changes, including increased devolved powers to mayoral combined authorities which will be set out in the soon-to-be published Devolution White Paper, which will be followed by the English Devolution Bill in Autumn 2025. Whilst enhanced devolution aims to bring decision-making closer to communities and away from Whitehall, the process also requires robust governance frameworks and collaborative approaches in order to succeed.

At the same time, the financial health of councils remains a critical concern given the recent spate of s114s, which the additional funding in the budget did little to abate. However, the promise of upcoming multi-year financial settlements for local authorities will provide spending certainty and flexibility – if not further new funding. In this context, local government reform must address not just structural change, but also long-term sustainability and resilience.

Bridging The Divide – A Guide to Local Government Reform

Our guide is designed to equip stakeholders who are on or about the start the reform process, with actionable insights and practical guidance on the key dimensions of local government reform:

Policy Context

The guide examines the drivers and implications of unitary reorganisation, focusing on its potential to improve efficiency, simplify decision-making, and reduce duplication. It also addresses potential drawbacks, such as transitional costs and community concerns over centralisation.

Legal and Political Challenges

Any structural change raises legal and political considerations, from boundary disputes to securing stakeholder buy-in. This section of the guide discusses the key challenges councils are likely to face and offers recommendations for navigating.

Transitional Considerations

There will be a need to consider the transfer of functions, assets, staff and contractual liabilities. We explore how these are commonly undertaken and how to ensure that they result in new bodies that are resourced and empowered to deliver change and improved service delivery.

Governance and Collaboration

Effective reform hinges on governance models that foster transparency, collaboration, and adaptability. This section explores how councils can establish frameworks that align with devolved responsibilities, create effective partnerships, and engage local communities.

Case Studies and Lessons Learned

Drawing on examples of successful reforms, this section highlights best practices and cautionary tales. It provides a roadmap for councils seeking to implement change while addressing local nuances.

Key takeaways

The need for reform is evident, but the path forward is nuanced and complex. Councils must carefully assess the trade-offs of reorganisation while prioritising local engagement and long-term sustainability. Our guide provides helpful support to make informed decisions and develop effective strategies.

We encourage local government leaders, policymakers, and other stakeholders to engage with the findings of our guide and consider how its insights can inform their approach to reform.

Amardeep Gill is a partner and National Head of Public Sector at Trowers & Hamlins. 

Access the full report

For a more detailed exploration of the themes and recommendations discussed above, access Trowers & Hamlins' full guide, "Bridging The Divide" – A Guide to Local Government Reform.