CCN: Local government reorganisation - evaluating the financial impact of population thresholds

This analysis by the County Councils Network (CCN) examines how different minimum population thresholds could affect the financial outcomes of local government reorganisation in England’s remaining 21 two‑tier areas.  

Drawing on updated financial modelling by PwC UK, CCN evaluates the impact of establishing new unitary councils at population thresholds of 300,000, 400,000, 500,000 and 600,000.

The report aims to inform national policy and help local areas develop credible, sustainable proposals that meet statutory criteria set out in the English Devolution White Paper and subsequent statutory invites.  

The analysis demonstrates that population size is the single largest determinant of whether reorganisation delivers significant efficiency savings - or creates long‑term financial pressures.

Population thresholds are the key driver of whether reorganisation produces net savings or net costs:

• 300,000 threshold: would create 58 new unitaries; net cost of £845m over five years due to £3.7bn disaggregation costs.  
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• 400,000 threshold: would create 40 new unitaries; £797m net saving, but 72% of recurring savings concentrated in areas where unitaries cover over 550,000 people.
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• 500,000 threshold: would create 29 new unitaries; £1.85bn net saving, with disaggregation costs falling 73% compared to the 300,000. scenario.  
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• 600,000 threshold: would create 27 new unitaries; £2bn net saving and £531m recurring annual savings, the highest of all scenarios.  
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• Lower thresholds significantly increase financial risk, complexity, and fragmentation across social care, children’s services and SEND.

Recommendations in the report call on government to:

• Treat 500,000 population as the minimum, not an optimum, to ensure efficient, resilient new authorities.
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• Avoid creating small unitary councils (c.300,000 population) due to high, unsustainable disaggregation costs.
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• Maintain clear, consistent national guidance to support evidence‑based local proposals.
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• Prioritise financial resilience, scale and service sustainability—particularly in adult social care, children’s services and SEND—when assessing reorganisation options.