Local government reorganisation: why discovery must include finance

Recent headlines about local government reorganisation (LGR) have highlighted a core need: a clear understanding of the costs involved and the financial benefits a project will generate. While the focus must remain on outcomes, without financial modelling supporting the proposals, councils, residents and stakeholders are left asking the obvious question: how much will this truly cost, and who will pay for it?  

At Perago, we believe this is exactly why discovery matters. And not just discovery in the broad sense of user needs or services, but financial discovery as a core part of any transformation. 

Financial discovery: unlocking the true costs of local government reorganisation

Large-scale transformations, such as LGR, inevitably come with both financial risk and opportunity. But unless central government and councils invest the time to explore and understand the numbers upfront, decisions are made on assumptions rather than evidence. In the context of large-scale projects like this, financial discovery means: 

• Establishing the baseline: mapping where the money is currently spent, across services, technology, people, and contracts. 

• Understanding duplication: identifying where spend is repeated across councils and where consolidation could unlock savings. 

• Modelling scenarios: looking beyond cost to consider investment requirements, long-term efficiencies, and the real timelines for benefits to be realised. 

• Aligning budgets with outcomes: ensuring that financial decisions are tied to service outcomes and resident needs, not just to structures or boundaries. 

How Caerphilly Council used financial discovery to shape its transformation

When we supported Caerphilly County Borough Council’s council-wide transformation project, financial discovery was built into the heart of the programme. Alongside understanding resident needs, technology systems, and ways of working, we looked carefully at the financial landscape. 

That meant: 

• Working with finance teams to map existing budgets and cost pressures. 

• Understanding where digital and service duplication were driving unnecessary spend. 

• Exploring where targeted investment could unlock efficiencies, such as simplifying customer journeys or rationalising systems. 

• Building a shared financial evidence base and a single view of monetary reserves, so leaders could make decisions with confidence. 

The result was not just a transformation roadmap, but a financially credible plan that balanced ambition with affordability. This principle applies directly to LGR. Without that financial foundation, councils risk creating structures that are unsustainable from day one. 

Why financial planning must be central to local government reorganisation

Too often, finance is treated as a separate workstream, something to be considered once the vision is set or the structures are agreed. Our experience shows that this is the wrong way round. Finance needs to be a driver of discovery, not an afterthought. 

By embedding financial discovery at the outset, councils can: 

• Build trust with stakeholders by showing clarity and transparency. 

• Create realistic plans for investment, savings, and benefits. 

• Avoid the trap of underestimating costs or over-promising on efficiencies. 

• Ensure reorganisation leads to sustainable services, not just new structures. 

Moving from headlines to evidence: building a credible LGR cost model

While headlines demonstrate the challenge of fully understanding and costing initiatives such as LGR, councils don’t have to accept that gap. By investing in financial discovery, they can take control of the narrative. They can build their own evidence base, test their own assumptions, and make sure decisions are both affordable and rooted in the needs of residents. 

At Perago, we know that lasting transformation doesn’t start with a boundary map or a spreadsheet alone. It starts with discovery, and at the centre of that, financial discovery. 

If your organisation is facing the uncertainty of LGR or preparing for a major transformation, we can help. From financial mapping and scenario modelling to building a shared evidence base that leaders can trust, our team has experience in guiding councils through discovery with clarity and confidence.