The Labour government’s ambitious plan to reorganize local government across England—touted as the biggest council shake-up in half a century—has come under fierce scrutiny after revelations that ministers failed to commission their own cost review, instead relying on outdated and now-discredited figures from a lobby group. The BBC broke the story this week, exposing how Deputy Prime Minister Angela Rayner and her department based their multi-billion-pound savings claims on a 2020 report by PriceWaterhouseCoopers (PwC) and the County Councils Network (CCN), a cross-party group representing county councils. But as it turns out, those numbers have not just aged poorly—they’ve been fundamentally overturned.
According to the BBC, the CCN’s updated analysis for 2025 now warns that the reorganisation could in fact cost £850 million over five years, with some scenarios delivering no savings at all. That’s a far cry from the £2.9 billion in savings originally trumpeted by ministers. The new figures have sent shockwaves through local government circles, with critics accusing Labour of either gross incompetence or outright dishonesty.
Angela Rayner, who has led the government’s push for the reforms, told MPs in June: “Local government reorganisation will lead to better outcomes for residents and save a significant amount of money that can be reinvested in public services and improve accountability.” Yet, as the BBC revealed, her department admitted in response to a Freedom of Information request that it hadn’t bothered with a fresh, in-house analysis. Instead, ministers leaned entirely on the external work of PwC and the CCN—figures that have since been rendered obsolete by the CCN’s own revised projections.
Tim Oliver, chairman of the CCN, summed up the group’s shifting stance: “Local government reorganisation could unlock billions in efficiency savings to be reinvested in frontline services, if it was delivered at the right scale.” But he also issued a stark warning, saying, “We are concerned over the potential costs of reorganisation where proposals seek to replace the two-tier system with multiple small unitary councils.” The CCN’s latest analysis shows that splitting county areas into unitary councils with populations as small as 300,000 could create “hundreds of millions of new unsustainable costs for local taxpayers.”
The government’s case for reorganisation rests on the idea that merging councils—replacing the current two-tier system (where responsibilities are split between county and district councils) with single authorities—will streamline services and cut costs. But the CCN now says that, under certain scenarios, “no long-term efficiency savings would be delivered, meaning it would be more efficient to retain the current two-tier system in England.”
Essex has become a live test case for the government’s plans. The county council there has proposed creating three new unitary authorities, while several districts are pushing for five. The government is set to decide which proposals to take forward in 2026, but the CCN’s analysis suggests that the more councils created, the greater the risk of ballooning costs and diminished savings.
The District Councils’ Network (DCN), which represents district-level councils, has been scathing in its criticism. Sam Chapman-Allen, chair of the DCN, told the BBC: “It’s astonishing that the government has undertaken no independent analysis before embarking on the biggest reorganisation of councils for 50 years. Mega councils, with populations of half a million people or more, could be imposed on areas when there’s no independent, up-to-date evidence to justify councils of this size, and many large councils created previously are struggling financially.” Chapman-Allen added that it was not too late for the government to commission a proper analysis on the optimal size of councils to maximize potential savings.
The government, for its part, maintains that the reorganisation will “improve services and save taxpayers’ money.” A spokesperson for the Ministry of Housing, Communities and Local Government said, “Councils across the country have also told us that bringing services together under one roof means residents get joined-up support when they need it most, while clearer structures mean people know exactly who’s responsible for delivering their services. Councils will also develop their own proposals for how reorganisation works best in their areas, as we fix the foundations of local government through our Plan for Change.”
Despite these assurances, the lack of independent, up-to-date analysis has fueled suspicions that the true motive behind the reorganisation may be more political than practical. According to reporting by the BBC and others, the government has postponed local elections in nine areas from May 2025 to May 2026, ostensibly to smooth the path for the changes. In total, 16 county councils and two unitary authorities requested delays, with nine granted. Critics argue that this move conveniently pushes back contests Labour expects to lose, raising concerns about the democratic legitimacy of the reforms.
Liberal Democrat deputy leader Daisy Cooper expressed disbelief at the government’s approach, stating, “It beggars belief that the government has embarked on a huge reorganisation of vital services, in a way which piles even more costs onto councils, whose finances are already on the brink.” Meanwhile, Stephen Atkinson, Reform UK leader of Lancashire County Council, warned, “It is extraordinary that Angela Rayner is pushing ahead with these huge changes to local government without either proper consultation or any independent analysis of how much it might actually cost. To make fundamental changes to 20 councils in one year is unprecedented and will lead to vulnerable children and adults falling between the gaps.”
The CCN’s Tim Oliver further cautioned that, unless new councils are sized appropriately to achieve efficiencies and withstand financial shocks, the reforms could “pile further strain on already under pressure care services and at a time when many county and district authorities could see their funding reduced.”
All of this has left many wondering whether the government’s “Plan for Change” is really about improving services, or simply about buying time and avoiding electoral backlash. The BBC’s reporting has made clear that, until Whitehall produces a transparent, independent cost–benefit analysis for each configuration in each area—and submits it to public and parliamentary scrutiny before orders are made—suspicions will linger that the reorganisation is as much about political convenience as it is about public good.
As the government prepares to make final decisions on which proposals to move forward with in 2026, the pressure is mounting for greater transparency and accountability. With billions of pounds of public money and the future of local democracy at stake, the stakes could hardly be higher. The coming months will reveal whether ministers are willing to subject their plans to the scrutiny—and the reality checks—that such a sweeping overhaul demands.
