The Autumn Budget isn’t just about numbers – it’s a critical test of whether the Government can align fiscal policy with the sweeping structural changes of local government reorganisation (LGR). Jonathan Carr-West, chief executive of LGIU, argues that the success of both depends on genuine service reform, long-term settlements, and trust between central and local government.

It’s generally held that the Autumn Budget is going to be a key political test for the Government. It’s a vital fiscal event of course, but it will also be a test of coherence: how does the Budget align with, or undermine, other key reform agendas already reshaping local government?

Because while all eyes will be on the headline numbers — on growth forecasts, tax thresholds and departmental settlements — another transformation is underway. Local government reorganisation (LGR) is remodelling the local state across large parts of England, redrawing boundaries, merging institutions and reframing democratic representation. It is the most significant structural change in fifty years, we’re all obsessed by it in the sector, but in the wider world it has gone somewhat under the radar.

And that’s a problem. Because the Budget and LGR are not separate exercises; they are deeply interdependent. Each relies on the other’s assumptions — and each could destabilise the other.

In the coming months, we will see the Fair Funding Review finalise new distribution formulas for local government. The budget will set out the overall envelope and then the Local Government Finance Settlement, due just before Christmas, will translate those formulas into real allocations for councils.

These processes are happening at pace and proceeding on the implicit assumption that local government reorganisation is progressing smoothly — that boundaries are stable, governance is clear, and the system is ready for a new funding regime.

But our recent LGIU research, 'The State of LGR 2.0', suggests that these assumptions may be premature. The Devolution Priority Programme (DPP) areas have produced seventeen detailed proposals covering fifty-six councils across five regions. These are all ambitious plans, but they vary widely in scale, structure and outlook. Some are focused on efficiency savings, others on identity and community engagement. Until we start seeing some decisions from Government about which of these plans will go forward we cannot know what the post-reorganisation landscape will look like.

And that uncertainty matters. Because the Budget’s projections — about growth, productivity and fiscal sustainability — will depend in part on stable local governance. If reorganisation falters, those projections become shakier. But the reverse is also true: if the Budget delivers further cuts, shifts in taxation, or new responsibilities without resources, it could destabilise the very assumptions underpinning LGR.

The fiscal logic of LGR has always been seductive: streamline governance, reduce duplication, save money. But the evidence from our research shows that the financial picture is more complex than this. Transition costs range from £50m to £200m per area, while estimated recurrent savings vary from £19m to more than £100m. The relationship between structure and savings continues to be fiercely debated — there’s no settled consensus that fewer, larger unitaries automatically deliver greater efficiency.

More fundamentally, the idea that reorganisation pays for itself only works if structural change goes hand in hand with service transformation. Without genuine reform of services — making them preventative, integrated, citizen-centred — the financial benefits of LGR will be limited and short-lived. We know that local government remains in financial crisis. Without a credible, multi-year settlement and real flexibility in local funding, reorganisation risks becoming an expensive exercise in shuffling the deckchairs on a sinking ship.

At the national level, reorganisation is being presented as part of a broader story about devolution and growth. The logic runs like this: bigger councils are stronger councils; stronger councils can engage better with regional mayors; and empowered regions will drive economic renewal. There’s a beguiling symmetry to that narrative, and it fits neatly with Treasury orthodoxy. But it also contains a dangerous circularity. If devolution is to succeed, it must be built on robust local foundations — and those foundations are simultaneously being unsettled by reorganisation itself.

The Budget may assume that LGR will contribute to growth, but there’s no guarantee of that. Reorganisation could, in reality, delay local investment decisions, disrupt partnerships, and absorb leadership bandwidth at the very moment when places need to be focused on economic recovery.

So where does that leave us? The interaction between the Autumn Budget and LGR is best understood not as a one-way dependency but as a dynamic relationship. LGR could destabilise assumptions in the Budget about growth and local government funding. Or the Budget could destabilise assumptions underpinning LGR if it introduces new financial pressures or policy shifts that upend local planning. Or both could move together, each reshaping the other in ways we can’t yet predict. Either way this relationship merits far more attention than it has so far received.

Ultimately, the success of both the Budget and LGR will depend on something less tangible than tax policy or structural maps: trust. Trust between central and local government; trust between councils and communities; trust that reorganisation and fiscal reform are being done with local government, not to it.

If the Autumn Budget signals real confidence in local leadership — through longer-term settlements, genuine flexibility, and a recognition of councils as strategic partners — it can give reorganisation the breathing space it needs to succeed. If it does not, it may destabilise the very system it relies upon to deliver national priorities.

In other words, this is not just another Budget for local government to endure; it’s a test of whether we are serious about building a coherent, empowered local state. And that, more than any fiscal headline, will determine whether local government can lead the project of national renewal the Government has committed itself to. As always, national success will depend on local foundations.