Devolution and Local Government Reorganisation

Frequently Asked Questions

• We are currently considering a sale of assets owned by the council, could our proposals for LGR impact on this sale?

  In anticipation of a structural changes order being made the local authorities in the area which are to be subject to reorganisation into new unitary authorities are expected to work together and cooperate and there is likely to be an expectation that the council will be mindful of the fiduciary interests of the successor authority and the interests of the other authorities in the run up to a structural changes order coming into force. Provided that the sale has been considered in this regard and occurs prior to the structural changes order coming into force the council may proceed in the usual way with the sale.

  The council should be mindful that central government has wide powers in relation to the assets of a predecessor authority and may make provision in relation to them in the structural changes order. It is also likely that central government will make a direction under section 24 of Part 1 of the Local Government and Public Involvement in Health Act 2007, taking effect at the same time or in close proximity to the structural changes order coming into effect, which places restrictions on the disposal of land, entering into capital and non-capital contracts, and the use of council reserves. With a lack of case law in this area the risk is difficult to quantify but is likely to be low in the absence of any exacerbating factors.

• What action do we need to take to transfer shares in companies we hold to a successor authority as part of LGR?

   Ahead of any structural changes order being made the constitution of the company should be checked (including any shareholders agreement) and the directors of the company kept informed of progress. Transfers are primarily governed by the Local Government (Structural Changes) (Transfer of Functions, Property, Rights and Liabilities) Regulations 2008 (as amended).

  Where there is a sole successor council, the predecessor council (and/ or successor council) will simply need to liaise with the directors of the company to ensure that the statutory registers of the company in which it holds shares are updated to reflect the name change and to cancel and re-issue the share certificates in that relevant name. Where there is a shareholder’s agreement the other shareholders will need to be updated (to ensure they understand the legal effect of the structural changes order).

  Where there is more than one successor council they will need to agree between themselves (along with the predecessor council) to which successor authority the shares in the company are to transfer, or how the shares in the company are to be split. They will need to liaise with the directors of the company, and update the registers and share certificates accordingly. Any existing shareholders agreement will need to be amended (as may also the articles) and where there was previously no shareholders agreement one is likely to be required.

• Will there be a statutory transfer of functions, property, rights and liabilities of a predecessor council to the successor council?

  On Vesting Day, we would expect the functions, contracts, assets, rights, and liabilities to transfer under the statutory framework, subject to any specific provisions in a Structural Changes Order, a section 16 agreement or any caretaker arrangements outlined in the Local Government (Structural Changes) (Transfer of Functions, Property, Rights and Liabilities) Regulations 2008.

  Under these regulations, if there is only one successor council, all functions, property, rights, and liabilities of the predecessor council will automatically vest in that successor council on the reorganisation date. However, if multiple successor councils succeed a predecessor council, the statutory framework differentiates between categories of property and liabilities with greater specificity, and broadly speaking requires the authorities to reach agreement, failing which the Secretary of State has powers to nominate caretaker authorities. 

• How will the ‘county functions’ continue when the responsibility for their delivery will instead rest with the successor councils?

  Each successor authority will be a unitary authority and have all of the functions of predecessor county and district or borough councils. At one end of the spectrum, each successor council may choose to deliver services separately. This approach will require a process of disaggregation of what were county functions, which can be complex and will need careful consideration leading up to Vesting Day, and may require a form of interim arrangements to manage smooth transitional service delivery. This is the time to consider the scope of inter authority and joint working arrangements between successor councils. 

  At the other end of the spectrum, the successor councils may decide to deliver 'county functions' in partnership. This could involve one successor authority acting as the host for that function, or it might take the form of a joint committee arrangement. While aggregating functions and services is complex, especially in the short term, different council cultures must come together to form a unified culture. 

• What will happen to a council’s ownership or membership of companies when the council is succeeded?

  Councils should review any companies in which they are a member, either on a sole or a joint basis. Whilst there may be other forms of company that the councils are involved in, the two most common entities will be a company limited by shares or a membership interest in a company limited by guarantee. We note that some of these entities may be registered as community interest companies and there may also be some LLP arrangements.

  There will be two possibilities for the onward transfer of ownership: the first is that there is only one successor council which covers the entirety of the area of the predecessor council and the ownership or membership will transfer to the successor authority by statute. The second is that there is more than one successor council that covers the area of the predecessor council. A due diligence exercise will help identify issues, including whether joint venture partner engagement is required, the scope of any restructuring (if applicable), the extent of any governance review required, and administrative matters to ensure compliance. Authorities will be required to reach agreement as to which of the successor councils ownership or membership will transfer, or if the ownership or membership is to be split, what that split looks like.

• What happens to shared services at Vesting Day?

  Authorities should undertake early reviews of shared services and inter-authority arrangements to ensure that services run smoothly from day one. Some arrangements may transfer under the statutory framework and vest in a successor authority which incorporates the whole area of the predecessor authorities and the entirety of the shared service, whereas some arrangements may vest in separate successor authorities and will require further consideration as to how or if a shared service is to continue.

  A worthwhile exercise is to review the commercial terms of any agreements to ensure they accurately reflect reality. A few examples of commercial issues to analyse and/or renegotiate include: which successor council will own (singularly or in a share capacity), host or receive each service; and will any variation to the contract fall foul of the relevant procurement regime?

  Any updated arrangements as a result of any review should be clearly documented between the parties.

• We are due to start a review of our Local Plan. We are in an area where Local Government Reorganisation is likely to take effect. Should we wait until after the new unitary authority is in place to progress our Local Plan review to avoid wasted work?

  The government has stated that local authorities should not delay reviews of their Local Plans pending the establishment of new unitary authorities in areas where Local Government Reorganisation is expected to take place. Once established, new unitary authorities are generally required to adopt a single, new comprehensive local plan covering their entire area within 5 years of the reorganisation. Until this time, all existing Local Plans adopted by the constituent authorities will remain in force.

  There are significant downsides for development management purposes in not having an up-to-date Local Plan in place. The Government has therefore advised that existing authorities continue with scheduled Local Plan reviews to avoid the potential for areas to be subject to significant periods of time without an up-to-date Local Plan (noting also the requirements of the new '30 Month Local Plan Process' introduced by the Levelling Up and Regeneration Act 2023). However, existing authorities looking to commence preparation of their Local Plan in the interim period may wish to begin creating a shared evidence base with neighbouring authorities as soon as the new single-tier footprint is known. 

• We are not due to review our adopted Local Plan for some time but are within a Strategic Development Area where a new Spatial Development Strategy is being prepared. How should planning applications be determined where there is a conflict between the policies in an adopted Spatial Development Strategy (SDS) and the existing adopted Local Plan?

  There will inevitably be a period of transition where conflicts between the two adopted plans will need to be resolved as part of the planning application decision making process. Once adopted, SDSs will form part of the development plan. As a result, local planning authorities will be required to determine planning applications in accordance with the policies in the adopted SDS unless material considerations indicate otherwise.

  The next review of the Local Plan will need to be prepared in line with the SDS, at which point the potential for conflicts should be limited. During the interim period, the draft NPPF (published December 2025) confirms that the weight to be given to a draft SDS in determining planning applications will depend on the stage of preparation of the emerging plan (the more advanced its preparation, the greater the weight that may be given); the extent of unresolved objections to the relevant policies in the draft SDS; and the degree of compliance of the relevant policies in the emerging plan with the policies for plan-making in the NPPF (the closer the policies in the emerging plan to the policies in the NPPF, the greater the weight that may be given to them).

• How do staff transfer to the new unitary authorities on in LGR and what do we need to do in connection with that?

  The Local Government (Structural and Boundary Changes) (Staffing) Regulations 2008 make it clear that the Transfer of Undertakings (Protection of Employment) Regulations 2006 (known as TUPE) would be deemed to apply on unitarisation, so (with limited exceptions) employees covered by the reorganisation automatically become employees of the new authority on Vesting Day on their existing terms and conditions, with no break in employment, unless their employment has ended before then.

  There's a legal obligation to inform and consult affected staff via recognised trade unions or elected employee representatives. This includes sharing information on reasons for transfer, when it will happen, legal implications, and measures envisaged. Both the predecessor and new unitary councils must inform and, normally, consult with affected employees. Failure to consult can lead to significant financial penalties. Ideally you should engage with staff/unions in the early stages of planning for LGR and acknowledge the impact of the change and uncertainty this brings – this is critical to maintaining performance, morale, and retention. Identify roles that are business-critical and those staff with essential skills across all affected councils, consider retention strategies and manage recruitment risks for current work capacity and the unitary’s future needs. 

• What about when where multiple new unitary councils are being created – how do we allocate staff between them?

  Here informed planning needs to be undertaken to determine to which of the new unitaries the staff of the various predecessor councils should transfer. While there may be many employees for whom it will be clear to which new unitary the work function to which they are assigned will transfer (particularly where they are linked to specific locations such as schools), there will others who cannot be so readily assigned to functions transferring to a particular new unitary, (such as staff engaged in corporate functions and senior managers). 

  There are practical ways to try to achieve the disaggregation of staff needed, but it will need careful consideration to ensure that the new unitaries have the staff they need to deliver services and employees have as much certainty as possible so that they remain on board during the process. Communication and engagement with staff and unions is key, as is preparation of accurate employee data around roles and functions. Ideally, for those staff where it is not clear, a set of criteria to assist with disaggregation should be developed, which can be applied to individuals or groups of staff, and the proposed process of allocating staff should be consulted on with trade unions to help reduce risk of challenge and should include consideration of equalities factors. The position can be more complicated where there are shared services arrangements in place.