10 April 2026
5 min
Towards the end of March 2026, the Government (via MHCLG) wrote to a small number of English councils about the decisions it had taken regarding their future number of unitary councils. A mixture of ‘decision’, ‘implementation’ and ‘update’ letters were sent to the areas concerned.
The affected LGPS funds are:
As well as providing information about the decisions made to date, we’ve also got the potential for insights into the logic behind the decisions made, allowing us to look at how the wider changes across England may apply.
A big takeaway is boundary changes, particularly to cities. In Norfolk, MHCLG agreed changes to Norwich were “sensible boundary changes” and approved them. In Sussex, whilst MHCLG has delayed a decision to obtain further information, it recognised there are advantages to increasing the footprint of Brighton & Hove.
City boundaries aren’t just an area of interest in Sussex and Norfolk. In places such as Leicestershire there have been proposals for an increase in the size of a city (Leicester in that case) and it appears increasingly likely such changes would be agreeable to the Government.
We’ve also seen that some parish councils will move under the remit of a council area that they wouldn’t traditionally be linked to.
But, before I lose myself into a deep dive of the decision letters, what do they mean for LGPS funds?
Firstly on impacts, a caveat. MHCLG were expected to produce some guidance for LGPS funds but, at time of writing, this hasn’t been released. This will doubtlessly be a valuable addition to the available material for officers, committees and boards. But for now, we must work with the hand that’s been dealt. So, what are these impacts?
Existing boundaries within a County will change.
The movement of some parishes from one traditional council area to another means a shift in who will be responsible for providing key services, such as refuse collection. Where these services are outsourced, contracts will change to reflect the new landscape, and this is likely to lead to more complex staff transfers than simply a change in the outsourcing council. Notional allocations of assets and liabilities will also alter, but that is something for the Fund Actuary to take care of – albeit at a cost to each Fund.
The same is true where a city expands and provides services to a larger area.
MHCLG has made clear, both in the letters to local Leaders and in the, separate, Local Outcomes Framework, that a key priority for the Government is housebuilding. The economic developments in the new council areas will be part of the remit of each Mayor, and it’s not unreasonable to expect housebuilding to be a key theme.
We expect to see LGPS pools engaging with Mayors about the creation of investable opportunities linked to housebuilding as part of the drive towards increased local investments. Committee members will need to be able to appropriately challenge advice it is given on this subject by their pool as part of setting the overall investment strategy and determine what local investment opportunities are right for them.
With New Fair Deal (NFD) expected to be in place by the time Local Government Reorganisation is complete, the Government’s position regarding existing councils with significant debt is of interest. For example, in its letter to leaders in Essex, MHCLG confirmed the Government would repay £200m of debt owed by Thurrock Council. As tax raising bodies, councils would normally be considered as having strong covenants. However, confirmation of action taken by the Government to limit the debts and improve contribution rate affordability of the most badly affected areas, will come as a relief to funds (as NFD proposes the abolition of admission agreements leading to changing relationships with employers).
Changes to boundaries, including local wards, can affect local election results. In turn this may mean a new Administering Authority could have a different political make-up to the Council it replaced. Where this happens, just as with any election, officers will need to be prepared for a committee which may seek a different approach to the ultimate aim of securing member benefits and paying them appropriately. A comprehensive induction training programme will also be required to cater for elected members who are newly appointed to the pension committee.
Local Government Reorganisation still has a long way to go – a situation made more complex by the emerging declarations of legal challenges to the Government decisions, whether these actually happen or not. And we are yet to see guidance about the impact on the LGPS and Administering Authorities, which will doubtlessly be helpful for all those planning for what the future holds, especially if it covers how the Government expects funds to implement reforms.
We know funds are starting to plan. Some by looking at how they are structured, showing interest in Single Purpose Pension Authorities. But others are more concerned with the requirements of the here and now, which is understandable given the scale of change to the LGPS in the forthcoming year. However, this introduces risk if they can’t adapt to the emerging landscape promptly. Overall, the direction of travel is starting to become clearer. LGPS officers, committees and local pension boards can start to plan with a better understanding of the type of decisions the Government is making.
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