Future Local Lab
Local Government Explained
Rewiring the state: Delivering for local government
This is the hub for LGIU’s regularly updated comprehensive analysis of the government’s Rewiring the State devolution plans. LGIU and our member councils are developing key recommendations to keep local government central to the forthcoming White Paper.
On 31 July 2026, the government announced its intention to fundamentally ‘rewire’ the state and move power, funding and accountability away from Whitehall to Mayors and regional leaders across England. This is LGIU’s analysis of these proposals and the implications for local government.
Rewiring the State outlines a bold vision for how strategic authorities, the alignment of public service boundaries, and enhanced fiscal devolution will encourage growth and improve public services across the country. We welcome this vision.
This hub draws on our ongoing research programme, including our annual State of Local Government reports, our work with the APPG on Local Government on fiscal devolution and decades of engagement with and for councils across England.
Below you’ll find our latest analysis, information about our roundtables with councils across England and the recommendations shaping our response to the Autumn White Paper.
What was in the “Rewiring the State” Cabinet statement for local government?
LGIU Principal Researcher Greg Stride unpacks the government’s Rewiring the State Cabinet statement, mapping out its key proposals for local government and strategic authorities, the questions which still remain, and what this major rebalancing could mean for devolution in England.
LGIU next steps
Any credible vision for a rewired state has to be built around local government. LGIU is bringing together councils, strategic authorities and academics to engage in how a bold vision for local government’s role in a ‘rewired’ state translates into clear, evidence-led policy positions. Beginning with a series of roundtables in September 2026, LGIU and our member councils will develop a shadow white paper, putting forward practical propositions to deliver devolution that works.
The biggest question now is what the role of local government will look like in a Rewired State. We urge greater consideration of the position of local government in the rewired state, ensuring that every level of government can operate as effectively as possible. Following years of systematic underfunding, councils need to be empowered for devolution to succeed.
Councils must be empowered to be an effective partner to strategic authorities and central government, and to deliver on democratic mandates to represent and serve the needs of citizens.
Below are the five key questions LGIU is working with councils, academics, strategic authorities, and government on:
- What does the role of councils in the rewired state look like?
- How do we extend fiscal devolution to councils?
- Why do we need to empower councils to deliver for the public?
- How do we bolster local capacity?
- What does mutual accountability that rebuilds trust look like?
Rewiring the State: a timeline
Future of local government: Time to rebalance
Local government stands at a crossroads. This paper by Dr Helen Paterson, Chief Executive of Northumberland County Council, advocates moving beyond crisis management toward a proactive role for councils as stewards of social infrastructure and preventative services. By leveraging local leadership and partnerships, councils can drive long-term economic prosperity, community resilience, and wellbeing in an increasingly ‘rewired’ state.
FAQs on ‘Rewiring the State’
These can be split into principle, institutional and finance proposals. At a principled level, the statement commits to “devolving by default”. Secretaries of State will need to justify retaining a power centrally rather than devolving it when policies are designed or altered. This is potentially radical, but the detail is missing: to what level will the power be devolved?
At an institutional level, the eye-catching proposal on public service reform is boundary alignment: new local police units matching local authority boundaries, and regional police, fire, and Integrated Care Boards matching strategic authority boundaries by the end of this Parliament (July 2029).
On finance, there is a major change with the retention of income tax for mayoral strategic authorities. There is also a commitment to more business rate retention for local authorities and to the Overnight Visitor Levy being paid to Strategic Authorities. But everything else – reforms to adult and children’s social care, homelessness and SEND – is flagged as important but with no details.
See our analysis, What was in the Rewiring the State Cabinet statement for local government, for a breakdown of changes specific to local or strategic authorities.
- Rewiring the State is not short of vision. This is a radical articulation of what devolving powers and finance out of Whitehall could mean. But what is not clear is the role of local government in this Rewired State.
- The financial commitment for councils is rather thinner. Business rates retention is the only concrete proposal; reform to the highest-cost services is promised but undefined.
- Overnight Visitor Levy and income tax retention are gated to strategic authorities and mayoral strategic authorities.
- Almost 80% of England’s population is under mayoral devolution. But areas without a strategic authority can confirm a preference for Mayoral or non-mayoral status. The government won’t impose a mayor, but mayors will get the enhanced powers.
- There is a deadline for boundary alignment, and it is quite soon (July 2029). This would be a radical redrawing of the public sector map, and poses key challenges for what this means with new neighbourhood policing, health and new local government reorganisation boundaries.
- Workforce mobility is discussed with new career paths between central government and the wider public sector, aimed at rebalancing a civil service that’s grown while local government has shrunk.
- Capacity building is promised, but there are no real specifics yet. We already hear specific capacity strains from councils regarding local government reorganisation, and building new strategic authorities requires unique skill sets.
- 31st July 2026: A Government webinar for councils outlined the intention of MHCLG to understand the relationship with LGR and elections, and the intention to announce FSA decisions and Spatial Development Strategies geographies in Autumn.
- 6th August 2026. A letter to council leaders. Councils are expected to give a clear statement of local position (mayoral or non-mayoral) by the end of August 2026. Announcements for the next wave of strategic authorities will follow in September 2026.
- September 2026: Government will convene mayors, strategic uuthority chief executives, permanent secretaries and the Cabinet Secretary to review progress on “rewiring the state.” MHCLG will hold a Leaders’ Council meeting.
- 28 October 2026. Autumn Budget. The fiscal devolution roadmap and the White Paper are published together, covering legislation, public service boundary alignment, and the full implementation timetable.
- 2027: Mayors begin retaining a share of business rates from April; powers to introduce the Overnight Visitor Levy take effect; a new wave of strategic authorities is established; mayoral elections take place in Cumbria and in Cheshire and Warrington (May 2027); the Spending Review confirms the income tax retention arrangements, with receipts retained locally from April 2028.
- 2028: A further wave of new mayors is elected, and full strategic authority coverage of England is reached — on the same timeline as local government reorganisation, which the LGA flags as a capacity risk given both are landing at once.
This is the elephant in the room. Our breakdown of changes specific to local or strategic authorities shows that little is formally allocated specifically to local authorities. The Overnight Visitor Levy will go to Strategic Authorities even outside of mayoral areas; although that flows to councils remains unclear.
While non-mayoral authorities will be allowed to keep their non-mayoral status if they choose, there are significantly more powers currently attached to the mayoral model. This raises the very real possibility of territorial inequality if areas end up operating under different levels of devolution.
A foundation strategic authority (FSA) is a legal level of local governance established under the English Devolution and Community Empowerment Act 2026. It is for areas that want to reap the benefit of a strategic authority, but are not yet ready for a mayoral model, or decide that it is inappropriate. Currently, we see combined foundation strategic authority (such as Cumbria and Surrey).
Establishing an FSA is a statutory mechanism for key functions such as acting as a Local Transport Authority, devolved adult education and skills, preparing a Spatial Development Strategy, and economic planning.
LGIU is convening councils, sector bodies and academics to deliver a shadow white paper and a series of practical recommendations. We want to ensure that local government’s role is built into the rewired state from the start, not added in after the fact.
The window between now and the Autumn Budget is when this is decided. After the government’s White Paper is published, the scope for shaping it narrows considerably.
Want to know more? Contact Thomas Lynch.
More research and analysis related to this topic
The LGIU has and extensive body of research that is helping to shape our response to the government’s evolving devolution plans.
A scorecard and a manifesto for local government
Andy Burnham became UK Prime Minister in July 2026 and immediately promised the “biggest rebalancing of power our country has seen”. Our scorecard assesses the the state of devolution that he inherited and provides LGIU’s recommendations for the next steps.
No government can deliver long-term growth without ambitious fiscal devolution
This report is a set of pragmatic, achievable steps to deliver an ambitious fiscal devolution programme within a relatively short time frame. It is the result of a major inquiry into local government finance by the APPG on Local Government for which LGIU provides the secretariat.
The State of Local Government Finance in England
LGIU’s annual survey of council leaders, chief executives, and finance officers examines local government finance and the fiscal pressures shaping service delivery. It reveals how councils are managing budgets, the strain on staff, and the reality behind spending decisions.