Local Government Reorganisation: a practical update to Section 24 controls

Gemma Duncan provides an update on potential changes to how s24 directions will operate, tackling a long-standing issue around historic financial commitments.

Local government reorganisation continues to evolve, and so do the rules that underpin it. In this short note Gemma Duncan highlights a key update proposed by the recently published draft Local Government (Structural and Boundary Changes) (Control Of Disposals Etc.) (Amendment) Order 2026 which will change how s24 directions will operate, tackling a long-standing issue around historic financial commitments and compliance risk during local government reorganisation transition periods.

The draft Local Government (Structural and Boundary Changes) (Control of Disposals etc.) (Amendment) Order 2026 introduces a targeted but important technical change to the statutory controls that apply to financial decision-making during local government reorganisation transition periods.

Although technical in nature, the amendment addresses a significant practical issue and will be relevant to any authority involved in the current and forthcoming rounds of reorganisation.

What is a ‘section 24 direction’?

Section 24 of the Local Government and Public Involvement in Health Act 2007 enables the Secretary of State to issue a direction to impose controls on councils that are due to be dissolved or restructured.  In practice, a section 24 direction requires a council to obtain prior consent (typically from the successor or shadow authority) before it can:

• dispose of land above defined financial thresholds;
• enter into significant contracts; or
• commit reserves as part of its budget setting.

The purpose of the regime is to ensure that predecessor councils do not take significant financial decisions which could undermine the financial position or operational flexibility of the new authority.

Transactions entered into without the required consent will be void or unenforceable against successor authorities.

Issue with the current statutory framework

A key feature of the section 24 regime is the concept of an “aggregation date”, the point from which past disposals and contracts must be taken into account when determining whether financial thresholds are exceeded.

The current aggregation date has remained fixed at 31 December 2006 and given the passage of time this creates practical difficulties for upcoming reorganisation:

• authorities may be required to review nearly two decades of historic transactions;
• historic financial records may be incomplete or difficult to verify; and
• there is a heightened risk of technical non-compliance, even where councils act reasonably.

What are the changes proposed by the draft 2026 Order?

The draft Order introduces a single, but significant amendment: the aggregation date is updated to 31 March 2025. This aligns the regime with the current reorganisation timetable and restores a proportionate and workable compliance period.

Importantly, the Order does not amend the financial thresholds, which remain at:

• £100,000 for land disposals and certain non-capital contracts; and
• £1,000,000 for capital contracts.

We expect that the draft Order will now move through the remaining legislative stages fairly quickly, and anticipate that the Order will be made in advance of late June/early July 2026 when it is expected that the s24 direction is intended to come into force in relation to the Surrey re-organisation programme, the first area to have legislation in place to implement reorganisation.

Conclusion

Updating the aggregation date significantly reduces the historic data councils must review, making it considerably easier to assess whether section 24 thresholds are met and reduces the risk of technical breaches.  The core policy intent to provide protection for successor authorities remains unchanged, i.e:-

• material financial decisions are still subject to consent requirements;
• shadow or successor authorities continue to have oversight of key commitments; and
• safeguards remain in place to prevent pre-vesting decisions that could constrain future governance.

Use of the s24 regime will have a continued impact on how councils operate during reorganisation transition periods, and is intended to encourage:-

• a focus on ‘business-as-usual’ activity;
• greater scrutiny of strategic or long-term decisions; and
• closer collaboration with transition or shadow authorities.

See the draft Order and Guidance Notes here The Local Government (Structural and Boundary Changes) (Control of Disposals etc.) (Amendment) Order 2026

For local authorities involved in reorganisation the message is clear – the guardrails remain firmly in place but the rules should now be more practical to manage and easier to comply with.  If you have any questions about reorgansiation or the consequences of a s24 direction please contact our team.

Gemma Duncan is a Partner at Sharpe Pritchard LLP.

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