Local government reorganisation brings significant change, uncertainty and opportunity. At the heart of navigating this successfully is strong governance. As a minimum, good governance is essential to keep authorities safe, compliant and operating within the legal framework.
Member understanding will be critical. Reorganisation will bring together elected members with differing levels of treasury knowledge, varying approaches to investment, and different attitudes to borrowing and risk. Developing a shared understanding of treasury responsibilities will therefore be essential to support effective oversight and consistent decision-making in the new authorities.
Training should begin during the transition and continue beyond vesting day. This should cover the core principles of treasury management including liquidity, security and yield, alongside statutory requirements such as the Prudential Code, Treasury Management Code and MRP guidance. Just as importantly, members will need a clear understanding of the new authority’s capital strategy, borrowing position and risk appetite.
Alongside member training and support, authorities will also need clear structures and processes that support effective oversight and decision-making throughout the reorganisation period.
Establishing a strong financial governance framework outlines the roles, responsibilities, and processes related to financial management. It is crucial for predecessor councils to set up a framework before the shadow council is established, as it will help to clearly show where responsibility lies. This can include identifying a member-level body and an oversight body to look over and accountability for key decisions. A Memorandum of Understanding can be used between councils to provide an agreed basis for managing significant financial decisions. Whilst this is not legally binding, it can show a commitment to collaborative working for the benefit of residents.
Demonstrating good governance is not only about who can make decisions, but about how those decisions are justified, evidenced, and communicated. Authorities should be able to clearly demonstrate that decisions taken prior to vesting day:
- Support long-term financial sustainability
- Avoid creating unnecessary financial pressure for the new authority
- Are based on clear professional advice and robust risk assessment
- Have been subject to appropriate scrutiny and oversight
Finally, maintaining a clear audit trail throughout the process reinforces accountability. Clear documentation of decisions, rationale and advice provides confidence to stakeholders that financial stewardship has been maintained during a period of structural change.
If you would like to discuss the member training and support services Arlingclose can provide, please contact us on treasury@arlingclose.com.
24/03/2026
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