On 26 September, four out of the six areas in the Devolution Priority Programme submitted their proposals for Local Government Reorganisation to Government. Government is expected to announce the results and the statutory consultation on the final proposals this Autumn.   

Meanwhile, Government announced its support for the proposal to create two unitary councils in Surrey, East Surrey and West Surrey, and the aim is for the two councils to be operational and replace the existing 12 councils by April 2027.  

In this insight, we will look at the latest position on the reorganisation of Surrey, the position on the final proposals submitted by the councils and what commentators have said in respect of the effects of the proposed boundary changes that will accompany Local Government Reorganisation. 

Update on Local Government Reorganisation in Surrey 

Whilst Government considered a proposal to create three unitary councils they explained in a letter that the proposal for two unitary councils better meets the criteria, in particular, it performs better against the criterion for the new councils to have the right size to achieve efficiencies, improve capacity and withstand financial shocks.    

In the Secretary of State’s letter, Government confirmed its commitment to repayment in-principle of £500 million of Woking Borough Council’s debt in 2026-2027. Government recognises that this is a significant and unprecedented commitment and reflects Government’s acknowledgement that “…even after the rationalisation of Woking’s historic assets, there is significant unsupported debt held by the Council that cannot be managed locally”.    

Commentators have highlighted that notwithstanding Government’s proposal to step in to address Woking’s debt, based on the current debt-levels across the Surrey Councils, West Surrey Council still stands to inherit a debt of circa. £4 billion. 

17 proposals submitted at the end of September   

For other areas going through Local Government Reorganisation, some of the proposals include multiple options and variants. For example, one of the five Unitary Proposals for Hampshire and Solent, three different variations were put forward.   

Government now must decide which, if any, of those proposals (and in some cases which of the variants within the proposals) meet the criteria set out in the Invitation Letters and Statutory Guidance issued earlier this year and to take forward for public consultation.  

The Government has previously indicated that consultations will run between November 2025 and January 2026. We will see how quickly these come forward particularly given that the proposals for the remaining 14 areas are also expected at the end of November 2025.  

In relation to the English Devolution and Communities Empowerment Bill, this completed the Committees Stage in the House of Commons last week and a report has been provided to the House. The dates for the report stage and the third reading are currently awaited.  

Boundary changes 

Whilst 21 two-tier areas are due to undergo Local Government Reorganisation, 13 of the two-tier areas are considering plans to split up districts using parish or ward boundaries. Commentators have raised questions around the complexities of these boundary changes and how this would work in terms of transfers of assets and liabilities.  

Government’s initial guidelines were for the invitations for Local Government Reorganisation to use districts as “building blocks” unless there is a strong justification for more complex boundary changes in the council’s plans. Government has subsequently clarified that boundary changes can be achieved alongside structural changes. 

12 councils in the Hampshire district put forward three alternative proposals, involving splitting the mainland authorities into four. Two of the options use “district building blocks” but the third crosses the district boundary to further expand Southampton and Portsmouth City Councils. 

In light of the Statutory Framework, Government will need to be clear on how decisions are made when considering the proposals for Local Government Reorganisation to be taken forward, as otherwise, there could be a real risk of challenge.  

Commentators have also highlighted the importance of meeting the criteria and compliance with the Local Government & Public Involvement Act 2007 when considering structural reform. The concern is that Government’s decisions may be challenged via judicial review if the right process is not followed in line with the criteria when it considers proposals for new unitary structures.  

Naturally, for areas going through Local Government Reorganisation, there will also be practical issues around how the splitting up of boundaries will work, as this would involve the splitting up of assets, debt and liabilities.  

How Capsticks can help 

We will continue to monitor progress as Government continues to push forward its plans for Local Government Reorganisation and Devolution.  

As trusted advisors to local government organisations, Capsticks’ purpose is to deliver results that matter. By fully appreciating the need to deliver efficiently and cost effectively and with a deep understanding of the legislative and governance framework in which local authorities operate, the team ensures both good governance and best value obligations are observed.  

If you have any queries about what is discussed in this insight and the impact on your organisation, please contact Tiffany Cloynes and Rebecca Gilbert to find out more about how Capsticks can help.