Written statement: Local Government Reorganisation - Mar 25
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Secretary of State for Housing, Communities and Local Government
(Steve Reed): This Government is undertaking the biggest reform of
local government in a generation, ending the two-tier system and
replacing it with new single-tier unitary councils. This agenda is
key to this government's vision of local councils that deliver good
services for residents and are equipped to drive economic growth,
but can empower their communities. As a government, our number one
ambition is...Request free trial
Secretary of State for Housing, Communities and Local Government (Steve Reed): This Government is undertaking the biggest reform of local government in a generation, ending the two-tier system and replacing it with new single-tier unitary councils. This agenda is key to this government's vision of local councils that deliver good services for residents and are equipped to drive economic growth, but can empower their communities. As a government, our number one ambition is growing the economy and putting more money in the pockets of working people. Driving economic growth means acknowledging that cities, towns, and villages don't all perform the same roles in the national economy – they specialise in what they're best at. Public service demand also isn't the same across the country. Some areas have high levels of homelessness and temporary accommodation, others have high need for adult social care due to an older population. Local leaders, both in councils and mayoralties, need to be able to focus on the specific needs of their area. Reorganisation presents a once-in-a-generation chance to make sure our councils match the modern realities of our places, making sure outdated boundaries are not constraining growth, particularly in our towns and cities. In too many places, council boundaries are misaligned with the needs of their local communities and how those communities live their lives. In Ipswich, for example, the boundaries have remained largely unchanged since the middle of the 19th century, even as population has grown. These outdated and misaligned structures slow down decisions, stifle housing growth, and fragment public service delivery. This is particularly important for key government priorities on housebuilding, like our target of building 1.5 million homes in England this Parliament. The housing needs of local communities are best met by councils who are closely connected to their communities and understand a place's local identity. This connection is crucial in ensuring that local government can boost economic growth and design public services that respond to local residents. Reorganisation must also respect local identity, and the distinctive nature of the rural, urban and coastal communities across our country. We want to see councils that are connected to their local residents and communities; councils that mean something to the people they serve. DECISIONS I am pleased to announce today the next step in our vital reforms to reorganise local government. On 5 February 2025, councils in the 21 areas of England that still have two-tier local government and neighbouring small unitary authorities were invited to submit proposals for unitarisation. We invited six areas to put forward proposals by 26 September 2025 – East Sussex and Brighton and Hove; Essex, Southend-on-Sea and Thurrock; Hampshire, Isle of Wight, Portsmouth and Southampton; Norfolk; Suffolk; and West Sussex. My department received 17 proposals in total across the areas. I would like to thank councillors and officers in these areas for their hard work. As the House was informed on 19 November, all the proposals received were taken to consultation, which closed on 11 January 2026. We have now considered each proposal carefully against the criteria set out in the invitation letter of 5 February 2025, alongside the responses to the consultation, all representations and all other relevant information to assess the proposals. In summary, these criteria are:
Decisions on each area have been made on a case-by-case basis, on its own merits, respecting the differences of local circumstances and local people's views. In two areas, I have not yet made a decision, and will make a decision as soon as practicable, so reorganisation can be completed on the planned timeline. Today, I have written to the Leaders of councils setting out decisions and/or next steps for all six areas. I have decided to implement the following proposals, subject to Parliamentary approval, in these areas: Essex, Southend-on-Sea and Thurrock: 5 unitary proposal, creating the councils referred to in the proposals as:
Hampshire, Isle of Wight, Portsmouth and Southampton: 5 unitary proposal (option 1A) submitted by Eastleigh, Fareham, Hart, Havant, Portsmouth, Rushmoor and Southampton councils, creating the councils referred to in the proposals as:
Norfolk: 3 unitary proposal, creating the councils referred to in the proposals as:
Suffolk: 3 unitary proposal, creating the councils referred to in the proposals as:
In implementing the above proposals for reorganisation in Hampshire, Portsmouth, Southampton and the Isle of Wight; Norfolk; and Suffolk, I will exercise my power to modify the base proposals received from councils, in order to make the boundary changes that the councils requested. Further information on the decisions taken in these areas can be found in the letters to council leaders in the areas, which will be published on gov.uk later today. A summary of the responses to the consultations for proposals in these areas will also be published today. In East Sussex and Brighton and Hove and West Sussex, after carefully considering the four proposals received across the areas, I have not yet made a decision, due to concerns regarding all four of the proposals I received. But I would like to reassure the House that I am still fully committed to delivering reorganisation in these areas with elections in May 2027 and changes coming into effect from April 2028. I am considering modifications that could address my concerns, including an option for potential modification of the proposals for further consultation. I have set out further details in a letter to council leaders this morning I would also like to confirm our commitment to repay in-principle £200m of Thurrock Council's debt in 2026-27. This is a significant and unprecedented commitment which reflects an assessment of value for money for national and local taxpayers, given the significant unsupported debt at the Council linked to historic capital practices. This follows the recent announcement in October 2025 as part of reorganisation in Surrey to repay in-principle £500m of Woking Borough Council's debt in 2026-27. We have not taken these decisions lightly and they have not been made simply because debt is high at these councils. The decision for Thurrock Council reflects an assessment of value for money and acknowledgement that, even after significant local action to reduce debt, the Council still holds significant unsupported debt that cannot be managed locally in its entirety. I would like to thank the Council's current leadership for its grip of the financial situation and to recognise the progress that has been made to reduce debt. Further detail on this can be found in the letter to Essex council leaders, which will be published on gov.uk. To prevent failures like those seen in Thurrock and Woking from happening again, we will now bring into operation the statutory powers enacted in 2023 - but never used by the previous government - which allow direct intervention where authorities take excessive risks in their borrowing and investment practices. These powers will ensure that essential capital investment in services, housing and growth can continue, but within a much stronger framework of safeguards to protect taxpayers from costly and avoidable failure. We will soon launch a consultation to engage with the sector and stakeholders in developing and implementing these powers. I am pleased to be able to confirm how the £63m in transition funding announced in February will be allocated – making this the first government to provide funding for the reorganisation process. We will provide at least £900,000 for each new unitary authority to help establish effective services and governance arrangements, ensuring funding is provided fairly, consistently, and as quickly as possible. This will mean the Essex invitation area receives £4.5m for five new unitary councils; the Hampshire, Portsmouth and Southampton invitation area receives £3.6m for four new unitary councils; the Norfolk invitation area receives £2.7m for three new unitary councils; and the Suffolk invitation area receives £2.7m for three new unitary councils. We will also provide the Surrey invitation area with £1.8m for two new unitary councils. This approach reflects the differing levels of complexity involved across areas and allows for a small central reserve to be used later for targeted support if needed. Funding will be issued through established, flexible grant mechanisms and my officials will be in touch with councils to confirm next steps. NEXT STEPS Delivering reorganisation for the benefit of all residents is a shared endeavour, and ongoing collaboration will be vital to ensure that these reforms are implemented with the interests of residents at their heart. We remain committed to the timetable we have set out previously, with elections to the new unitary councils taking place in May 2027, ahead of them going live and delivering services in April 2028. For the other 14 areas going through local government reorganisation, I would like to emphasise that the decisions taken here, and previously in Surrey, do not set any precedent. Decisions will be taken individually, based on the published criteria referred to above, the merits of each proposal we receive, and the local context. I will deposit in the House library copies of the letter and documents I have referred to, which are also being published on gov.uk today. |