Local authorities in two tier authorities are currently progressing their Proposals for Local Government reorganisation following the invitation from the Secretary of State under the Local Government and Public Involvement Health Act 2007 and the submission of their interim plans to the Government last month. The Secretary of State may also take advice from the Local Government Boundary Commission.

Following the submission of proposals later this year and subsequent consultation, it will then be for the Secretary of State to either implement by Order the Proposal or an alternative proposal from the Boundary Commission, with or without modification, or decide to take no action pursuant to section 7 of the 2007 Act. 

When implementing any Order, authorities will need to consider the various transitional and supporting Regulations made under Section 14 of the 2007 Act, including the Local Government (Structural Changes) (Transitional Arrangements) Regulations 2008. 

Following the order and prior to the vesting day, the new shadow unitary authorities will be established and election held to enable a transitional period to take place. 

On the vesting day when the former councils cease to exist and the new unitary becomes the successor authority, all of the property, contracts, assets, liabilities and functions of the existing councils will automatically vest in the new successor body in the form and degree specified in the order and the supporting Regulations. 

So, what will the delivery of reorganisation mean for local authorities? 

This means that a single tier of Local Government will replace the current two-tier system of district and county councils. The unitary authority will then be responsible for all local services within that area. 

The Government is proposing that for most areas, this will mean creating unitary authorities serving populations of 500,000 or more, but there may be exceptions. 

The idea is that by simplifying Local Government structures, it will create better outcomes for residents. The aim for reorganisation is to deliver greater efficiencies, savings, service transformation and to increase accountability and collaborative working. 

How do local authorities prepare for reorganisation? 

Due diligence will be key to understanding some of the challenges which will need to be addressed prior to vesting, as success will be in part dependent on the ability of the new shadow authority to fully understand the status, liability and holdings of the previous. 

In preparation, authorities should start to prepare up to date records of: 

1.1 Finances 

1.2 Assets

1.3 Service contracts 

1.4 Staff arrangements and contracts 

1.5 IT 

1.6 Land and property 

1.7 Other contracts

 

Monitoring Officers should seek to obtain and look at how this information can be collated as efficiently as possible. It is worth bearing in mind, that if this were a boundary order under section 10 of the 2007 Act, the Local Government (Boundary Changes) Regulations 2018 provide that the predecessor shall supply the shadow authority with:

 

1.8 Details of any relevant contracts 

1.9 Details of every action or proceeding 

1.10 Such other information as shall be reasonably requested by the shadow authority relating to the predecessor council's property, rights or liabilities. 

The Regulations set out various timeframes for the provision of information. This is helpful as an indicator of what should be collated in terms of due diligence and provided to the new shadow authority well in advance of the vesting date. 

As part of the due diligence exercise, it should become clear whether any of the existing contracts for service will run on beyond the vesting date. These contracts should be identified and consideration given as to whether they should transfer to the new body and if so, whether they need to be extended or re-procured, together with what interim services can be provided until all can be brought into alignment. 

It would be worth considering the establishment of joint working groups and pulling together collaborative arrangements to set out who will deal with what and when to help enable resource and project planning.

Communication of what is being done and why, both internally and externally is, as we know, incredibly important to ensure everyone understands the process, to enable continued resilience and the balancing of workloads, particularly whilst moving from an existing organisation to a new organisation. A clear communications plan should be prepared so the messaging and time of communication are known by all those involved to ensure consistency. 

Regarding staffing, TUPE considerations will be relevant. The Local Government (Structural and Boundary Changes) (Staffing) Regulations 2008 makes it clear that the transfer of functions from a predecessor authority to a single tier authority in connection with a structural change shall be treated for all purposes as a relevant transfer within the meaning of the TUPE Regulations. 

Thought will need to be given to ICT systems, for example, HR, payroll and risk management systems. How is it intended that they operate during the transition period? Particularly where there has been outsourcing and there is an overlap between those arrangements, when considering there will be several authorities coming into one new organisation.

In relation to any wholly owned companies, consideration will need to be given as to: 

How have these been set up?

1.11 What is their function, and what services do they provide and to whom? 

1.12 How are those services to be provided following the vesting day?

1.13 Do arrangements need to be put in place to ensure minimal disruptions?

1.14 What changes might need to be made to the ownership and governance arrangements? 

 

Considerations for an Incoming Shadow Unitary Authority in preparation for implementation 

 

To ensure continuity on reorganisation, paragraph 3 of the 2018 Regulations provides that anything which is in the process of being done by or in relation to a predecessor council immediately before the beginning of the transitional period in the exercise of, or in connection with, any function which is to be exercised by the preparing or shadow council by virtue of these Regulations may be continued by or in relation to the successor council.

During the transition period in preparation for vesting day, the incoming shadow authority should look to start:

 

1.15 Identifying priorities and develop project plans 

1.16 Communicating its long-term vision. 

1.17 Recruiting staff and agree staff transfers

1.18 Preparing short term plans for services, property, IT, human resources and finance

1.19 Putting in place Management structures and systems (e.g. scrutiny, oversight, schemes of delegation, scheme of consent).

1.20 Preparing other plans for operations and transformation strategy.

It is clear that a lot needs to be done, but the key to a successful transition will be due diligence and effective project management, and the sooner this can start, the better the process is likely to be, although appreciating this will need to take place alongside the day job, de business as usual.

 

Tiffany Cloynes is head of local government, Rebecca Gilbert is principal associate and Megan Tam is senior associate at Capsticks