Local Government Reorganisation (LGR) and devolution present organisations with various challenges. Here, our experts Matt Humphrey and Jonathan Nulty discuss the benefits of taking a risk-based approach to identify opportunities and successfully manage change.

Over the past 30 years, a range of legislation aimed at continuous improvement has impacted local government. With an underlying premise of instigating wider wholescale shifts in the way that services are delivered, momentum has gathered in many areas, including Compulsory Competitive Tendering, Best Value / Best Value Inspection, Comprehensive Performance Assessment, Gershon Efficiency Saving, Comprehensive Area Assessment, shared services, and the creation of Combined Authorities and the Police and Crime Commissioner. Now, the English Devolution White Paper and new Devolution and Community Empowerment Bill are bringing widespread devolution and LGR closer than ever, representing the biggest change to the local government landscape in over 50 years. This change isn’t just structural but requires transformation  in services, governance and digital integration.

There’s an imperative for each of the 21 affected county areas to undertake LGR. However, with no prescribed shape, size, structure, or method, designing and implementing an effective roadmap is each authority’s responsibility. Each area can choose their own path.

Key milestones and deadlines local authorities must know

Clearly, this transformational era will be rife with both risks and opportunities. So at RSM, we have already been engaging with authorities to assess how prepared organisations are for the transition.

Firstly, authorities will need to consult their citizens and establish a business case for the composition of new Principal Authorities in their areas. This involves submitting their preferred option to the Ministry of Housing, Communities and Local Government (MHCLG) by November 2025 (or September 2025 if they are a “fast track” authority), with vesting of new authorities in either April 2027 or April 2028.

Timescales are very tight. Consequently, what could have been an ideal ‘burning platform’ for system redesign, efficiency and streamlining, now runs the risk of becoming an ad-hoc collision of organisations, with clearing up and fine-tuning only possible once new authorities have been established.

Our three-stage risk approach to LGR and devolution

Based on our experience, and referencing RSM’s Risk and Preparedness Toolkit, we have developed a three-stage risk mitigation process for organisations facing LGR or devolution:

• Scene-setting: Identify and understand the risks of ineffective planning, poor project management or weak governance ahead of the changes.
• Navel-gazing: Look internally at the information and knowledge needed by an organisation to be amalgamated (or disaggregated) into a new Strategic or Principal Authority. –Consider the risks of not knowing  your costs, poor data quality and unfilled knowledge gaps.
• Match-making: In the final phase, assess the risks of failing to ensure a good ‘fit’ with the other authorities making up the new entity: from culture to systems, contracts to assets.

You can use this process to inform the creation of a comprehensive LGR/devolution risk register. In turn, this will help you develop a prioritised action plan for undertaking and monitoring the steps within LGR.

Putting our approach into action:

• Key leaders at a Council (including the Executive Leadership Team and Heads of Service) should participate in a simple survey to identify specific challenges, opportunities and curveballs they anticipate in relation to LGR.
• The responses can be collated, analysed and synthesised to prepare for a (RSM) facilitated workshop focused on achieving the best outcomes based on the challenges identified.
• A workshop like this encourages peer-to-peer collaboration, open discussion and engagement, as well as providing the opportunity to develop and define a consistent, organisation-wide approach to LGR and devolution.
• Through tailored one-to-one calls, we unpack the identified risks using established controls and risk scores, recommending key actions to address potential problems and focus on opportunities. By asking “what could go right?” and “how can we maximise this?”, as well as “what could go wrong?” and “what are we doing to stop that?”, we can minimise risk and convert challenges to opportunities.

“It’s been very instructive and has helped us get our ducks in a row” said one source at a local council.

Risks and challenges in LGR and devolution

There are many financial hurdles on the road to LGR and devolution. These include the risk of councils that will soon cease to exist depleting healthy reserves to fund vanity projects or ‘legacies’, and the underestimation of costs associated with LGR, harmonisation of Council Tax levels and locally-determined benefit schemes. Additionally, there’s the very real threat of continued pressures of funding Adult Social Care, Homelessness and Special Educational Need & Disabilities (SEND).

Other significant concerns include:

• Integrating ICT platforms and selecting which systems the new authorities will continue to use.
• Ensuring that all LGR partner councils (i.e. those who will be merging / disaggregating) know when contracts terminate, which procurements are imminent, and whether the contracts can be novated to a new authority.
• Managing capacity issues across services and teams and maintaining service delivery levels during the LGR transition process – fears of LGR ‘distracting’ from business-as-usual.
• Guarding against external factors that could cause delays or derailing the LGR process. These factors could include maverick elected officials, the media and protest groups.
• Supporting and engaging all staff during the transition, inspiring buy-in by providing a good understanding of the process and its outcomes.
• Identifying which multi-agency partnerships will change and how effective these working arrangements will be in the future.

For organisations facing change relating to the devolution agenda and the establishment of Strategic Authorities with mayoral powers, the key issues are similar to those related to LGR. Indeed, these are the fundamentals for any major change that involves working together (shared services, partnerships and more).

Roles and responsibilities in the LGR process

Fundamentally, these changes involve working effectively with your neighbouring authorities. Think of the LGR process as a car journey, during which organisations can decide where to position themselves in the vehicle.

• Do you want to be the driver - pushing things forward and taking the lead?
• Should you be in the passenger seat - advising on where to go, reading the map and advising on navigation?
• Would you be content in the backseat - being taken on the journey, but aware of what might lie ahead and able to speak up when necessary?
• Could you ignore the process and be bundled in the boot - relinquishing all control and content to be taken wherever the car is heading?

Not everyone can drive, and there’s only one passenger seat upfront, so you may need to be realistic or pragmatic in your choice. Nevertheless, there will be stops on the journey when you can all change position if needs be.

Some questions you should ask now

1. Have you mapped out the risks and opportunities relating to LGR (or devolution) for your current organisation?
2. How well do you know yourselves (in terms of pay levels, true service costs, contracts and assets etc.)?
3. How can you use risk analysis to drive the agenda forward?
4. What action do you need to take?

Silver linings and opportunities in LGR and devolution

While the LGR and devolution process may seem daunting, it can provide clear opportunities. By not only avoiding the mistakes of previous LGR rounds, but also taking the appropriate time to prepare, your organisation can embrace radical changes to the way services are structured and delivered , identify and realise cost-efficiencies, and invest judiciously in new technology. Finally, and perhaps most importantly, this transition offers the chance to tangibly improve the outcomes and lives of the people and communities authorities serve.

How RSM can help

To discuss any of these issues, learn more about RSM’s Risk and Preparedness Toolkit and see how we can help you navigate LGR and devolution, contact Matthew Humphrey or Jonathan Nulty today.

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