Pixel: Reorganisation - complexity of disaggregating funding in multi-unitary business cases
This report, produced by Pixel Financial Management for the County Councils Network (CCN), examines the complexities of disaggregating government funding in proposed multi-unitary local government reorganisation (LGR) areas. It highlights that these planned reforms in Essex, Norfolk, Suffolk and Hampshire represent a significant departure from previous reorganisations, which largely involved one or two unitary authorities based on existing administrative boundaries.
The report emphasises that funding disaggregation under these proposals is highly complex because both county and district funding must be split across multiple new authorities, often using parish or ward boundaries where data is limited. Unlike previous reforms, authorities will need to divide funding without receiving updated allocations from central government until a later funding review, placing greater pressure on local modelling and agreement.
A key risk identified is that inaccuracies in disaggregation could lead to mismatches between funding and service demand, potentially leaving some new authorities underfunded. The challenge is compounded by new funding formulas that rely on datasets not publicly available, particularly in high-cost service areas like children’s services and adult social care.
The report concludes that multi-unitary arrangements introduce substantial uncertainty, capacity constraints, and technical difficulty, requiring stronger central support, better data access, and more realistic timescales to avoid financial instability and service disruption.
Key findings
- Multi-unitary splits are unprecedented and significantly more complex than previous LGR models.
- Funding must be divided across multiple authorities and non-standard boundaries (parish/ward).
- High risk of inaccurate allocations leading to under- or over-funding.
- New funding formulas are difficult to replicate and rely on inaccessible data.
- Greatest risks lie in children’s services and adult social care funding.
- Limited central government support leaves authorities reliant on local modelling.
- Disaggregating local taxbases (council tax, business rates) is a new and complex requirement.
Recommendations for local authorities include:
- Secure central government support for data provision and funding allocations.
- Prioritise access to detailed, disaggregated datasets for key funding formulas.
- Undertake robust modelling and validation to reduce risk of funding errors.
- Assess feasibility of using parish vs ward boundaries based on data availability.
- Strengthen coordination between authorities and government departments.
- Plan for transitional financial risks, including potential short-term funding imbalances.