The Local Government (Structural and Boundary Changes) (Control of Disposals etc.) (Amendment) Order 2026

The Local Government (Structural and Boundary Changes) (Control of Disposals etc.) (Amendment) Order 2026 is a crucial statutory instrument for legal professionals navigating local government reorganisation in England. This Order amends the Local Government and Public Involvement in Health Act 2007 (c. 28), specifically sections 27(1) and (3), by updating the 'aggregation date' for assessing financial thresholds related to property disposals and contractual dealings by local authorities slated for dissolution. The amendment shifts the aggregation date from 31 December 2006 to 31 March 2025, thereby ensuring that financial decisions made by predecessor councils during transition periods do not undermine the financial stability or future discretion of successor unitary authorities. This change aims to restore the original policy intent of safeguarding public assets and finances during periods of significant structural change.

The landscape of local government in England is periodically reshaped by structural and boundary changes, a process designed to enhance efficiency, accountability, and service delivery. Central to managing these transitions is the careful control of assets and liabilities of dissolving authorities. The Local Government (Structural and Boundary Changes) (Control of Disposals etc.) (Amendment) Order 2026 (the "2026 Order") represents a targeted yet significant intervention in this regulatory framework.

This Order, made under section 29 of the Local Government and Public Involvement in Health Act 2007 (c. 28) (the "2007 Act"), directly addresses the control of property disposals and contractual dealings by local authorities facing dissolution under sections 7 or 10 of the 2007 Act. Its primary purpose is to update a critical 'aggregation date' within the existing legislative framework, thereby ensuring that financial safeguards remain effective and relevant for ongoing and future local government reorganisations. For legal practitioners advising local authorities, developers, or other entities transacting with councils undergoing such changes, understanding this amendment is vital to ensure compliance and mitigate risks associated with asset transfers and contractual commitments during transitional periods.

The statutory framework for local government structural and boundary changes in England is primarily established by Part 1 of the Local Government and Public Involvement in Health Act 2007. Sections 7 and 10 of the 2007 Act empower the Secretary of State to implement proposals or recommendations for structural changes, often leading to the dissolution of existing two-tier councils and the creation of new unitary authorities. During these reorganisation periods, existing councils continue to operate while new councils are established, necessitating safeguards to prevent decisions that could prejudice the financial position or future operations of the successor bodies.

To address this, section 24 of the 2007 Act enables the Secretary of State to issue directions to dissolving local authorities. These directions mandate that before entering into contracts for the disposal of land or for capital or non-capital purposes involving consideration of specified values, the local authority must obtain the written consent of a specified person, typically the Secretary of State or a designated body. Section 27 of the 2007 Act further specifies that in calculating the consideration value of such contracts, the value of any other relevant disposals or contracts made after a particular 'aggregation date' must be taken into account. The original aggregation date, set at 31 December 2006, was intended to work for the reorganisation round initiated in 2006. However, with the passage of time and subsequent rounds of reorganisation, this historic date became increasingly impractical, requiring authorities to assess financial commitments over an unduly long period, potentially undermining the effectiveness of the safeguards.

The Local Government (Structural and Boundary Changes) (Control of Disposals etc.) (Amendment) Order 2026 makes a precise, yet impactful, amendment to section 27(1) and (3) of the 2007 Act. It replaces the outdated aggregation date of "31 December 2006" with "31 March 2025". This change is not merely administrative; it is a critical recalibration of the financial control mechanism during local government reorganisation. The original date, set almost two decades prior, meant that councils undergoing reorganisation in 2026 would have to consider disposals and contracts dating back to 2006 when assessing whether current transactions met the specified financial thresholds for requiring consent. This was burdensome and could lead to difficulties in applying the safeguards effectively.

The amendment to 31 March 2025 significantly shortens the look-back period, making the aggregation calculation more manageable and relevant to the current reorganisation cycle. This ensures that the policy objective of protecting new councils from potentially detrimental financial decisions made by predecessor councils during transition is maintained. The power to make this amendment is explicitly provided under section 29(1)(b) of the 2007 Act, which envisages the need to update such dates for future rounds of reorganisation. The Explanatory Memorandum accompanying the Order highlights that this is the first use of this amending power.

Practitioners should note that while the general principle under section 123 of the Local Government Act 1972 is for local authorities to obtain the best consideration reasonably obtainable for land disposals, specific consents are required for disposals at an undervalue, or in the context of reorganisation, for transactions exceeding certain thresholds. The 2026 Order reinforces the need for rigorous due diligence and adherence to consent requirements, particularly for local authorities in areas like Surrey, which are currently undergoing reorganisation with new unitary councils set to go live from April 2027. The financial thresholds for requiring consent remain at £100,000 for land disposals and certain non-capital contracts, and £1,000,000 for capital contracts, with the aggregation date now applying to these values from 31 March 2025.

The Local Government (Structural and Boundary Changes) (Control of Disposals etc.) (Amendment) Order 2026 is a vital piece of secondary legislation that ensures the continued efficacy of financial safeguards during local government reorganisation in England. By updating the aggregation date for assessing property disposals and contractual dealings, the Order streamlines compliance for dissolving authorities and protects the financial integrity of successor bodies.

For legal practitioners, this amendment underscores the critical importance of understanding the specific regulatory environment governing local authorities undergoing structural change. Advising clients, whether they are local councils, developers, or contractors, requires careful attention to the updated aggregation date when evaluating transactions that fall within the scope of section 24 directions. Failure to adhere to these consent requirements could lead to challenges regarding the validity of disposals or contracts, potentially undermining the orderly transition of functions and assets. Practitioners should remain vigilant for any further guidance or directions issued by the Secretary of State in relation to ongoing and future local government reorganisations.