LGR: Examples and options for risk mitigation by councils

The Ministry of Housing, Communities and Local Government (MHCLG), the Local Government Association (LGA), and sector advisors from across local government have developed this aide-memoire to support the identification of risks that could affect the successful transition to a reorganised unitary authority. It does not address long-term operational risks that may arise after the new unitary authority becomes fully operational.

This resource is designed for three key audiences:

• Local authorities: To help identify and manage local risks throughout the transition period.
• Local Government Association and other sector bodies: To inform the development of guidance, support and resources, including a toolkit (to be published in January 2026) which will include a roadmap to support planning, insights, and learning from authorities which have been through LGR, and signposting to further tools and help.
• HM Government: To support Government to remain alive to the risks local authorities may encounter when transitioning to a reorganised authority to inform support or action on existing or future policy. 

The aide-memoire is intended to be a living document and will be regularly updated to remain relevant and useful to all three audiences.

Risks will naturally vary by locality. Financial, cultural, and partnership-related risks, for example, will manifest differently depending on local contexts and complexities. While the document includes examples of supportive actions, these are intended as starting points. We acknowledge that further, locally tailored actions may be necessary to fully address underlying risks.

Not all potential actions will fully mitigate all risks. Government will continue to liaise with local authorities to understand these risks and their implications for the delivery of LGR.

By sharing these examples, we aim to:

• encourage proactive risk identification and mitigation
• promote consistency in planning and assurance across councils
• alert government to potential systemic issues that could affect the successful delivery of reorganisation.

Property and assets

Risk: A lack of awareness or expertise in managing property and assets – such as land, buildings, leases, and infrastructure – can lead to poor decision-making, financial inefficiencies, missed strategic opportunities, underutilisation or neglect of valuable assets and accurate asset records, and/or increased exposure to fraud or asset loss.

Examples of action to mitigate risk:

• Develop an asset register, ensure recent condition surveys and compliance with health and safety legislation.
• Develop an action plan to manage the assets effectively.

Communication and engagement plan

Risk: Some stakeholders may not be in agreement with the change and there is no agreed approach in place to handle trickier comms.

Examples of action to mitigate risk:

• Develop clear plans for internal staff, external public sector partners, government depts, regulators, MPs, town and parish councils, and business and service uses (for example, HRA housing tenants).
• Deliver regular and honest engagement.

Data management and cyber security

Risk: If appropriate procedures are not in place the organisations will be vulnerable to non-compliance with data regulations and cyber attacks.

Examples of action to mitigate risks:

• Engage appropriate expertise during the transition programme, at the planning stage, and throughout as required.

Lack of meaningful data in key service areas

Risk: Data required for reporting is in multiple formats and is lost through the transition (for example, paper, personal drive, etc.).

Examples of action to mitigate risks:

• Complete an audit to understand data gaps and create a plan to report essential service data.
• Sort and cleanse data as soon as possible.

Contracts

Risk: Unfavourable contract terms, agreements spanning vesting day, and/or reliance on waivers or extensions could leave the new authority with numerous contracts to renegotiate or tender immediately, creating inefficiency, added costs, and potential non-compliance.

Examples of action to mitigate risk:

• Develop contract register, agree novation processes, put in place systems to let new or extend existing contracts.

Cost of reorganisation

Risk: Insufficient allocation of funding for reorganisation leads to budget overruns, disruption of services, staff morale, and/or impacts long-term sustainability.

Examples of action to mitigate risk:

• Learn from others and develop a costed phased plan to support affordability of the change programme.

Council tax

Risk: Insufficient preparation prevents smooth path towards harmonised council tax banding and relevant support.

Examples of action to mitigate risk:

• Plan approach to harmonisation of council tax levels, aligned with broader financial planning, ensuring a single uniform level of band D council tax is set across the new area no later than the start of year eight of reorganisation.
• Review existing local council tax support schemes to identify areas of difference and develop a plan for harmonisation in a new single local council tax support (LCTS) scheme which must be in place no later than the start of the third year post-restructuring.
• Review existing local approaches to discounts for second and empty homes and homes undergoing repairs; council tax premiums; and discretionary discounts under s13A(1)(c) of the Local Government Finance Act 1992. Develop a policy on these matters for the new council to have in place at the point of restructuring.
• Early preparation of statement of the council’s likely financial position on (indicative) vesting day date, including assessment of demand pressures and identification of the anticipated aggregated funding gap for the new council in future years.

See guidance from the LGA, which provides practical advice on financial issues to consider. 

Debt

Risk: Not having a clear insight into the debt or financial liabilities, leads to poor financial planning.

Examples of action to mitigate risk:

• List existing and planned debt together with lenders/interest rates and debt profile (including Dedicated Schools Grant).

Estimated savings

Risk: Target savings identified for LGR are not delivered.

Examples of action to mitigate risk:

• Learn from others and develop a costed phased plan to support affordability of the change programme.
• Build governance processes that provide for a tight grip on the delivery of the implementation programme to prevent scope and budget creep and retain a focus only on the activities essential for the delivery of LGR.
• Be realistic in what can be achieved in the time available as part of the transition to a new authority and build transformative activities into the new authority’s medium-term financial plan.
• Use services such as internal audit to check and challenge the implementation programme at key stages and ensure it is consistent with the original intentions.

External audit

Risk: External auditors disclaim or qualify the accounts and/or identify significant value-for-money weaknesses if the outgoing authorities and/or new authority fails to give them timely, accurate, and complete information – requiring additional action by the new authorities.

Risk: Audit results reflect transitional challenges following the move to a new authority structure, including inherited certification of predecessor councils’ accounts.

Examples of action to mitigate risk:

• Ensure outgoing authorities are actively engaged with external auditors so that there are ‘no surprises’ in the final-year accounts and the risk of qualification is reduced.
• Appoint auditors early so they understand the transition journey and associated risks and agree on what evidence they require to certify accounts in year one of the new council(s).

Insurance

Risk: Without accurate knowledge of what is covered, what is pending, and what liabilities remain, the authority faces unexpected costs, delays in claim resolution, and non-compliance with statutory or contractual obligations. 

Examples of action to mitigate risk:

• Build an accurate knowledge of all insurance portfolios, including where different methodologies for asset valuations have been used in predecessor councils, and the implications of this (that is, asset valuations may not be like for like, leading to potential gaps in insurance coverage).
• Understand the degree to which the outgoing authorities self insure and review the appropriateness of these levels for the new authorities.
• Document legacy responsibilities and identify successor obligations arising from historic liabilities.

Private Finance Initiatives (PFIs)

Risk: Disaggregation impacts Private Finance Initiative (PFI) contracts, resulting in poor asset condition upon handover, contractual disputes arising from contract expiry and/or service disruptions.   

Examples of action to mitigate risk:

• Undertake mapping of all existing PFIs and ensure transition agreements are in place before the point of go live.
• Understand the financing arrangements of all PFI contracts and model their impact on the future financial plans of the new councils. When taking decisions during the implementation period, limit the financial strain caused by amending contracts.

Redundancy costs

Risk: Significant costs related to redundancies and pension strain, driven by legal obligations, employee entitlements, and operational needs.

Risk: High costs incurred due to employees leaving before vesting day on enhanced exit terms inherited from predecessor councils.   

Examples of action to mitigate risk:

• Estimate total potential redundancy (and pension strain) costs pre-go live and assess affordability and need.
• Consider establishing an LGR staffing protocol to anticipate both redundancies and new appointments (see under ‘recruitment’).
• Subject all redundancy decisions to a best value test of benefit against cost.
• Consider predicted staff turnover and vacancy management as an alternative to redundancies to retain key skills and experience.
• Involve officers of the shadow authority, once appointed, in key decisions about staff redundancies in advance of vesting day, as part of building a medium-term financial plan for the new authority.
• Build estimated redundancy costs into a costed, phased plan for the change programme. 

Reserves

Risk: Not understanding or accurately estimating reserves could expose the authority to financial and operational risks, including inaccurate forecasting and budgeting. This risk is particularly pertinent during disaggregation, where reserve allocation and clarity are more complex.

Examples of action to mitigate risk:

• Agree position on expected reserves at the point of go live. 

Spending during transition

Risk: Expenditure or borrowing not reflected in the medium-term financial plans of predecessor bodies destabilises the financial position of the new council. 

Examples of action to mitigate risk:

• Maintain local communication on key financial decisions to smooth the transition to service delivery in any new unitary. 

See explanatory note from MHCLG which sets out expectations on financial decision making prior to the Structural Change Order.

Accountability

Risk: Decisions are made rapidly during the transition period and lack sufficient transparency, scrutiny, and accountability. This could lead to reduced stakeholder confidence, ineffective outcomes, or reputational damage.

Examples of action to mitigate risk:

• Plan for member scrutiny.
• Ensure that communications/engagement plans enable transparency of decision making.
• Ensure that all relevant decisions are properly recorded by the programme management office and subject to review by internal audit.

The LG Transparency Code has a recommended schema for published contract information which many councils adhere to.

Change in political party/direction

Risk: A change in political party or direction may lead to significant shifts in priorities, governance style, and operational focus. This change could also introduce greater uncertainty and disruption across the organisation.

Examples of action to mitigate risk:

• Liaise with LGA for support to develop/clarify vision of new administration and plans to achieve them.

Decision making and leadership

Risk: Lack of clarity or additional processes relating to the leadership and decision-making arrangements during the transition process causes delay in implementation activities, increased costs and prevents effective oversight.

Examples of action to mitigate risk:

• Agree a scheme of delegations from the shadow authorities to the predecessor councils for financial decisions above thresholds set out in the section 24 Direction to enable timely decision-making and underpin continual service delivery without fettering the future decisions of the new councils.
• Establish a clear vision, 'board' structure with political level oversight and leadership and a programme governance framework with appropriate formal delegations at member and executive level from predecessor and shadow authorities (when formed) to govern the delivery of the implementation programme.
• Identify a senior responsible officer in each council who will ensure that decision-making considers the likely needs of the new councils in key areas such as cyber and digital, workforce, finance.
• Where two or more councils are to be created, establish a formal arrangement for liaison between their political leadership to discuss, negotiate and agree a resolution to the wicked issues (for example, disaggregation) that will impact all of the new councils.
• Develop control documents to monitor progress and identify potential delays.

Programme management arrangements

Risk: A fast-paced implementation may risk continuity of service delivery and result in challenges further down the line. Lack of preparation or ineffective programme management may increase time and costs.

Examples of action to mitigate risk:

• Establish robust programme management arrangements.
• Identify and source key roles backfilling/training where necessary if no external resource available.

Requests for new town councils

Risk: Volume of work required to respond to requests to establish new town or parish councils becomes a distraction from and dilution of resources to implement LGR.

Examples of action to mitigate risk:

• Liaise closely with local community groups likely to petition for a new town or parish council to seek commitment to delay the initiation of a community governance review until such time as the new unitary council is in place and provide assurance in the form of a formal resolution by the Shadow Authority/ies to this effect.
• Seek the support of any neighbouring principal authorities not going through LGR to assist in the response to any petition seeking the establishment of a new town or parish council in the area.
• Create a dedicated unit to respond to all requests for new town and parish councils using suitably skilled and qualified people from across the principal authorities in the LGR area, where a negotiated delay is not achievable.

Strained relationships

Risk: Tensions between members and officers from different predecessor authorities result in strained relationships, leading to poor decision-making, reduced cooperation, and limited join up.

Examples of action to mitigate risk:

• Develop a shared vision that articulates its purpose, benefits, and intended outcomes.
• Ensure wide engagement — including backbenchers — in shaping this collective goal to reduce division and encourage collaborative working.
• Establish protocols for liaison between the leadership of the new and outgoing authorities for dealing with ‘wicked issues’.

Subject/technical knowledge and expertise

Risk: A lack of expertise or awareness in key areas could lead to delayed or misinformed decision making.

Examples of action to mitigate risk:

• Ensure training for key elected members and officers on statutory functions.
• Ensure provision of clear professional advice from statutory postholders and technical experts.

Changes to employment law and policies

Risk: Failure to anticipate the timing and impacts of changes to employment legislation and other government policy changes and having insufficient capacity to make required changes risks non-compliance and operational disruption.

Examples of action to mitigate risk:

• Ensure a monitoring process is in place to track upcoming changes in employment law and policy (for example, Employment Rights Bill, school support staff negotiations body), which will inform updates to internal practices, factoring in costs and employee communications.

Employee burn out

Risk: Employees experience burn out running a large change programme whilst maintaining 'business as usual' service delivery. This may lead to declined productivity, increased absence and high staff turnover.

Examples of action to mitigate risk:

• Offer access to Employee Assistance Programmes (EAPs) or mental health support throughout the transition.
• Train leaders to recognise signs of burnout and respond appropriately.
• Use feedback and engagement surveys to identify pressure points. Ensure senior officers and members are connected to appropriate networks for mutual support.

Employee data

Risk: Incomplete HR data means the organisation is not able to understand the employee cohort and meet legal requirements (for example, gender pay gap reporting).

Examples of action to mitigate risk:

• Before go live ensure all predecessor councils have up to date data in a sharable format.
• Ensure all staff in predecessor councils have up-to-date job descriptions and person specifications.

See LGA guidance as supportive resource.

Employee retention

Risk: Unable to retain key staff with critical skills, experience and institutional knowledge to maintain steady service provision during the implementation period. Thus, leading to vulnerable people at risk, a loss of confidence from the public, and reputational damage.

Examples of action to mitigate risk:

• Seek advice to consider retention payments for key staff.
• Ensure that staff communications include a compelling vision for the future.

See LGA guidance on ‘golden handcuffs’ as a supportive resource.

Equal pay

Risk: Employees in predecessor authorities may be on differing pay and grades for work of equal value. While Transfer of Undertakings – Protection of Employment (TUPE) protections may provide a defence to equal pay claims in the short term, there is a risk that if a consistent approach to pay structure/evaluations are not in place, the council is not compliant with equal pay legislation and employees may become frustrated and legal challenges made.

Risk: Changes to the scope of equal pay claims increase risk further.

Examples of action to mitigate risk:

• Keeping in mind what is permissible under the TUPE regulations in terms of changing terms and conditions, develop a single approach to terms and conditions for post-go live. Consider voluntary assimilation. Ensure equal pay audits are up to date.
• Involve trade unions in selection of job evaluation process to mitigate industrial action and litigation risk. This is particularly important because the ban on 'fire and rehire' in the Employment Rights Bill will mean that individual and/or collective union agreement will be needed to implement changes to pay where the duties of the role will not be changing. 

See Ten essential workforce considerations for local government reorganisation (LGR) | Local Government Association as a supportive resource.

Establishment numbers in predecessor councils

Risk: Without clarity on establishment numbers, staffing structures, roles, and budgets, the local authority may struggle to plan effectively, allocate resources appropriately, or maintain service continuity.

Examples of action to mitigate risk:

• Identify and confirm establishment numbers across predecessor councils and associated employers to ensure clarity on baseline staffing levels.
• Implement vacancy controls to manage recruitment strategically during the transition period, while allowing essential recruitment activity to continue where needed.

Individual staff roles

Risk: A failure to understand the roles, responsibilities, and authority levels of individuals within a local authority leads to inaccurate mapping of roles. Inaccurate mapping may then hinder decision-making, delay service delivery and cause employee frustration.

Examples of action to mitigate risk:

• Consider loose ‘brigading’ of staff into key service directorates pre go live with a forward plan of service reviews post-go live.

Industrial relations

Risk: Some trade unions have taken views on a preferred LGR model, which risks the change process starting in an adversarial way if not handled appropriately. Increased risk of strained relationships with trade unions, possibly leading to an increase in industrial action following change to ballot thresholds.

Examples of action to mitigate risk:

• Open and proactive ongoing trade union engagement.
• Participation in national collective bargaining.

Influential stakeholders

Risk: Key individuals with formal authority, influential networks, or subject matter expertise may actively or passively resist the change programme. Such resistance could undermine programme credibility, delay implementation, and reduce overall adoption across the organisation.

Examples of action to mitigate risk:

• Seek advice to consider early exits schemes or severance packages to limit disruption and protect organisational culture.

Interim costs

Risk: Significant demand across the sector for temporary staff drives agency and day rates upwards, at further expense to the sector.

Examples of action to mitigate risk:

• Consider timetables for when temporary and transitional staff are needed, especially statutory officers.
• Consider sharing roles across authorities.
• Consider the appropriate use of call-off contracts to mitigate the risks of one-off purchasing.

Learning and development

Risk: Learning and development/investment in the workforce is deprioritised in lead-up to LGR, resulting in decreased employee morale, skills gaps and reduced performance.

Examples of action to mitigate risk:

• Ensure that essential learning and development is maintained to reduce any impact on key services.

National pay negotiations

Risk: Where there is a mixture of collective bargaining arrangements among merging authorities (some National Joint Council, others local) this will need to be addressed for the new authority. There is a risk that if not done properly, it will raise equal pay risks and potential industrial relations issues.

Examples of action to mitigate risk:

• Ensure that staff establishment lists are cleansed and up to date and any differences in approaches to terms and conditions across authorities are mapped at an early stage to inform planning for the authority’s new pay and grading structure.
• Shadow authority adoption of pay policy and change management policy.
• Shadow authority decision that the new authority will be part of national collective bargaining.
• Regularly assess pay structures to identify disparities between employees doing equal work.
• Provide transparency throughout the process.

Payroll/expenses post-go live

Risk: Not having a single system leads to payroll errors, inconsistent data handling, lack of central oversight and higher administrative costs.

Examples of action to mitigate risk:

• Creation of single payroll, planning early how this will be achieved.

Public sector reform

Risk: Changes to public sector services or partnerships could be disrupted if partner organisations (like health boards, police, or community safety teams) have to move from one shared arrangement to multiple new ones, creating pressure and coordination challenges.

Examples of action to mitigate risk:

• Initiate discussions and develop shared transition plans with key partners (for example, ICB, police, community safety) early to clarify roles and expectations.

Recruitment

Risk: Unable to quickly and successfully recruit quality candidates into key new posts such as the CEO and the Corporate Management Team. This may lead to delayed decision making, and delays in providing the benefits and expected outcomes of a new council.

Examples of action to mitigate risk:

• Implement a phased approach to senior recruitment across tiers 1, 2, and 3 ahead of go live.
• To support continuity and informed decision-making, consider formally engaging staff transfers and interim appointees as advisory participants in the first Annual General Meeting (AGM) of the shadow authority.
• Explore establishing mutual aid arrangements with partner councils to ensure access to critical capacity and expertise.
• Establish an LGR staffing protocol as soon as possible so individual authorities and shadow authorities understand respective roles.
• Consult shadow authority (once established) regarding new appointments, under terms of Section 24 Direction.

Single points of failure

Risk: Single subject experts exit the organisation or depart through the redistribution of staff across the new structure, impacting on key processes or services.

Examples of action to mitigate risk:

• Identify key roles ahead of go live and consider how they should best fit into the new structure.
• Prioritise smoothing the transition for these roles.
• Identify individuals at risk and develop succession plans or internal development programmes to fill gaps.

Trade unions/staff capacity

Risk: Capacity pressures arising from staff using an increased amount of facility time that requires backfilling, compounded by convergence of other legislative changes that increase demands on trade union time. Local branches of trade unions require sufficient capacity to fulfil their role relating to LGR and to avoid bottlenecks.

Examples of action to mitigate risk:

• Work with trade unions and representatives to understand the implications on resourcing pressures.

TUPE (Transfer of Undertakings – Protection of Employment)

Risk: TUPE regulations can cause complexities in staff transfers, including disputes over terms and conditions, assignment, unfair dismissal risks, increased costs, and delays in implementation. This could result in operational disruption, legal challenges, and reputational damage.

Examples of action to mitigate risk:

• Audit existing contracts to identify potential conflicts and cost implications.
• Consult employment law specialists and HR early to interpret TUPE obligations.
• Provide timely updates to employees and trade unions of the processes, rights, and timelines to reduce uncertainty and disputes.

Workforce morale

Risk: If change is not managed effectively and the workforce not sufficiently engaged, this may damage staff morale, disrupt services, and limit retention of the relevant skills and roles for the new organisation.

Examples of action to mitigate risk:

• The workforce across all existing organisations should be involved in informing and co-designing future arrangements from the beginning. While recognising differences, it is critical that all employees contribute to shaping the purpose, identity and culture of the new organisation.

Data management/cyber security

Risk: If appropriate procedures are not in place the organisations will be vulnerable to data breaches/non-compliance with data regulations and cyber-attacks.

Examples of action to mitigate risks:

• Engage appropriate expertise during the transition programme, at the planning stage, and throughout as required.

IT documentation

Risk: Lack of proper documentation for existing IT systems and infrastructure hinders understanding, integration and troubleshooting efforts.

Examples of action to mitigate risks:

• Undertake an audit of existing systems using a common approach to documenting systems, configurations, and processes.
• Engage system owners/technical leads to develop a plan to reconstruct missing documentation.

Multiple systems/functionality

Risk: Failure to understand the functionality and interdependencies of multiple and complex IT systems leads to operational disruption, security vulnerabilities, increased costs and compliance failures.

Examples of action to mitigate risk:

• Audit all systems and develop forward plan to bring together/replace IT systems post-go live.

Inspection and regulation

Risk: LGR distracts from efforts to ensure the council is compliant with statutory requirements.

Examples of action to mitigate risk:

• Ensure alignment with relevant standards by mapping inspection frameworks and regulatory functions, including associated timelines and implications.
• Confirm that appropriate preparations are underway to support inspection readiness and compliance with regulatory requirements.
• Take robust and effective action against areas for improvement once received post-inspection.

Delivery of key policy outcomes

Risk: Failure to deliver key policy outcomes effectively could undermine statutory obligations, public trust, and long-term strategic goals.

Examples of action to mitigate risk:

• Consider early amalgamation of teams to unify plans and processes. 

Failure of system/process/policy

Risk: Not all systems, processes and policies are successfully transitioned through reorganisation, causing uncertainty and disruption across the organisation. For example, several systems for one service.

Example of action to mitigate the risk:

• Establish a hierarchy of change projects for pre and post-go live.
• During discovery phase, map existing policies, systems, infrastructure, functionality and documentation to understand implications for delivery from day one.
• Identify best practices for adoption and agree a phased plan for harmonisation and transfer of systems and processes (including physical records).

Provider capacity

Risk: Current service providers (for example, IT systems) do not have the capacity or capability to successfully support a transition programme.

Example of action to mitigate the risk:

• Identify where providers do not have the ability to create separate contracts pre-go live and agree a schedule to ensure continuity.
• Develop contingency plans (that is, plan for if providers don't deliver as promised).

Safe/effective disaggregation

Risk: It is not possible to disaggregate one or more services in an effective manner that maintains continuity or service delivery and/or ensures that vulnerable people remain cared for at all times, prior to Vesting Day.

Example of action to mitigate the risk:

• Develop a plan to disaggregate in a reasonable time period after Vesting Day, including consideration of all impacts, risks and implications.
• Assess whether disaggregation of services has occured or may occur and whether a suitable alternative governance structure is in place to oversee existing arrangements.
• Develop an information sharing agreement for crucial systems/data, contracts, and assets.

Universal and specialist services

Risk: Failure in either universal or specialist services leads to delays or failures in safeguarding vulnerable individuals.

Example of action to mitigate the risk:

• Ensure early identification of key service managers and directors ahead of go live, with a clear focus on maintaining 'business as usual' operations and driving performance improvement to safeguard service standards and ensure long-term transformation objectives are not missed.