Why property decisions are under scrutiny
Local authority finances have been under sustained strain. Polling of chief executives reported through the Institute for Government Performance Tracker found that 27 per cent and 33 per cent thought a section 114 notice was very or fairly likely in 2026/27 and 2027/28 respectively without exceptional financial support. That support has since been extended to further authorities for 2026-27, alongside a £78 billion multi-year settlement.
In that context capital receipts have taken on a role they were never designed for, supporting transformation and, in some cases, repayment. Property has become a financial instrument as much as a service asset.
What does reorganisation change?
It introduces a fixed date and a second audience. Assets transfer to the new unitary authority, and every decision taken by a predecessor council in the run-up will be examined twice: once by auditors, and once by the authority that inherits the consequence.
LGA guidance is explicit that decisions on capital investment and on the acquisition and disposal of assets must not compromise the sustainability of the new councils, while also recognising that surplus assets may generate receipts to support corporate priorities. Both statements are true at once, which is precisely what makes the judgement difficult.
What has to be evidenced?
Three things, and all of them need to survive the departure of the officers who assembled them.
That the asset was genuinely surplus to service need, tested against the service plans of the successor authority rather than only the predecessor. That the disposal achieved value, with the basis of valuation recorded. And that the decision was taken with the successor authority’s position considered, not merely noted.
The difficulty is not willingness. It is that the underlying information sits across property databases, condition reports, valuation files, and capital programme records that were never built to be read together, and the timetable does not pause while they are reconciled.
How should disposals be sequenced?
Not simply by value. A sequence that front-loads the easiest sales can strand the harder assets with the successor authority, which is the outcome the guidance is written to prevent.
A more defensible sequence weighs receipt value against service dependency, holding cost, condition risk, and the time each disposal realistically takes. Some assets are worth holding precisely because the successor authority will need them.
Working inside the timetable
Reorganisation programmes do not allow for long data projects, which is the practical constraint on doing this well. The workable approach establishes a good enough baseline quickly, then deepens it where the decisions are largest.
Where OPAL supports this work, it deploys in 12 weeks on data the authority already holds. That timescale is what makes it usable inside a reorganisation programme rather than after one.
Frequently asked questions
- What is vesting day in local government reorganisation?
- The date on which new unitary authorities formally assume their functions and the assets, liabilities, and staff of predecessor councils transfer to them.
- Can a predecessor council sell assets before reorganisation?
- Yes, but constrained. LGA guidance states that decisions on acquisition and disposal must not compromise the financial sustainability of the new unitary authorities, and such decisions attract scrutiny from both auditors and the successor authority.
- What is a section 114 notice?
- A statutory notice issued by a council’s chief finance officer when the authority cannot set or maintain a balanced budget, which restricts new expenditure while a recovery plan is agreed.
- What is exceptional financial support?
- Government agreement allowing a council to fund revenue pressures through capital resources, typically including capital receipts from asset disposals, subject to conditions.
