Treasury Considerations Before, During and After Transition
Local Government Reorganisation (LGR) is reshaping the structure of councils across England. In previous iterations we have seen counties adopting unitary models, while in other regions boroughs and districts have merged or split to form new organisations. The aim of LGR is to create financially resilient, efficient authorities capable of delivering services more effectively during a time where central government funding is becoming more constrained.
This insight sets out what we at Arlingclose believe to be best practice before, during and after reorganisation. It is based on our extensive experience in this area which we have obtained through assisting many local authorities through LGR.
Reorganisation presents significant challenges for finance and treasury teams. Complex issues such as consolidating or disaggregating balance sheets, allocating debt and investments, and aligning accounting policies must be resolved before vesting day. Without early planning, authorities risk delays, inaccurate financial reporting and costly disputes.
Reorganisation is not simply a technical exercise. Early planning is essential to avoid financial misstatements and disputes.
Strong Governance and Planning are Essential
Once a plan on what each area will look like is agreed our experience suggests that a Treasury Transition Working Group, comprising finance leads from all affected councils, should be established early.
Clear governance structures and decision-making hierarchies must be agreed, supported by a robust communication plan that includes internal stakeholders, banks, counterparties and advisers. Aligning the project timeline to statutory orders and consultation periods is critical to ensure readiness for vesting day.
Early Financial Due Diligence
Reconciling multiple balance sheets or splitting one into several is a resource-intensive task. Authorities must review audited statements, determine the treatment of reserves and capital receipts, and agree consolidation or disaggregation principles. Aligning accounting policies from the outset is vital to ensure consistency in depreciation, capitalisation and provisions.
Treasury Priorities During Local Government Reorganisation - Managing Debt and Investments Under Change
As reorganisation progresses, authorities must review every debt instrument held to determine fair allocation methods, whether by asset, service area or demographic basis. Liaison with lenders such as PWLB is essential to secure necessary consents or novation’s to transfer loans.
Investment balances must also be treated equitably. Cashflow forecasts need to be reprofiled to reflect the new structure, while the handling of pooled funds, reserves and long-term investments must align with the future risk appetite of the authority.
Authorities must adopt transparent, legally defensible approaches to debt and investment allocation.
What is important to mention is that the spectre of LGR should not prevent good treasury management taking place in existing organisations, so if an opportunity arises that makes sense now it shouldn’t be avoided just because LGR is on the horizon.
Aligning Strategies and Policies
Differences in Minimum Revenue Provision policies, Treasury Management Strategies and capital programme commitments must be reconciled. Modelling these changes ensures that harmonised policies are affordable and CIPFA-compliant and the new organisation knows what its future financing costs are from the outset.
Ensuring Operational Continuity
Banking arrangements, mandates and electronic banking systems must be fully operational before vesting day. Failure to prepare adequately risks disruption to cashflow and settlement arrangements, particularly with counterparties and creditors.
Post-Reorganisation Actions and Lessons Learned - Embedding New Treasury Arrangements
Once the new authority is operational, finance teams must review all cash, debt and reserve positions to identify and correct any transitional imbalances. Treasury strategies, prudential indicators and risk frameworks should be refreshed to reflect the revised structure and long-term objectives.
How Arlingclose Supports Finance Teams
Arlingclose has successfully supported councils through reorganisations working on balance sheet due diligence, debt allocation and treasury strategy development. Our expertise ensures that authorities enter reorganisation with a clear, equitable and defensible financial framework.
We have worked alongside numerous councils reviewing debt portfolios, securing lender consents and re-profiling investments. Our expertise ensures authorities adopt fair and robust approaches while maintaining operational capability.
Why Our Involvement Matters
Reorganisation requires more than technical execution. Arlingclose provides strategic insight, lender engagement and operational solutions to keep projects on track.
We have extensive experience in supporting local authorities through reorganisation and can be seen as the voice of reason when difficult treasury management and capital financing decisions need to be taken during the process.
Why Engage Early
Early involvement of a specialist adviser saves time, reduces risk and prevents disputes later in the process. To discuss how Arlingclose can support your authority at the planning stage of LGR, contact our team today.
The Role of a Specialist Adviser Beyond Vesting Day
Arlingclose’s support does not stop on vesting day. We have helped councils embed new strategies, finalise transitional treatments and implement treasury frameworks that align with political and operational ambitions. Our advice ensures compliance, reduces financial risks and supports long-term sustainability.
Working with Arlingclose
We have an unrivalled track record of supporting councils through reorganisations, from balance sheet due diligence to post-implementation reviews. Our understanding of treasury management, capital finance and local authority accounting ensures that council’s transition smoothly and are well-positioned for the future.
To discuss how we can support your authority through LGR, contact the Arlingclose team today.
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