Section 24 spending controls: navigating the shadow year

For councils undergoing Local Government Reorganisation (LGR), the shadow period, the months between the establishment of the shadow authority and vesting day, is one of the most operationally and politically demanding phases of the transition. 

Central to this period is the section 24 direction regime, the mechanism by which government can impose spending controls on predecessor authorities, requiring them to obtain shadow authority consent before taking certain financial decisions.

This article explains how section 24 directions operate, why they create operational friction, and what councils can do to manage the shadow year effectively.

What Is a Section 24 Direction?

Section 24 of the Local Government and Public Involvement in Health Act 2007 gives the Secretary of State the power to prevent outgoing predecessor councils from making certain significant financial commitments without the consent of the incoming shadow authority. 

The purpose of this mechanism is to protect the financial integrity and operational stability of the incoming authority, ensuring that outgoing councils do not take decisions that could bind or burden their successor.

Government guidance on financial decisions before local government reorganisation anticipates that this direction will follow the precedents previously set, namely that written consent from the successor council will be required for

• land disposals worth more than £100,000;
• entering contracts of more than £1,000,000 for capital; and 
• entering contracts of more than £100,000 for non-capital (whole life costs).

These thresholds capture more routine activity than might be expected, particularly for larger councils with active estates or procurement pipelines.

Why Section 24 Creates Operational Friction

Section 24 adds an additional layer to already complex approval processes. Each decision above the thresholds requires outgoing council approval and shadow authority consent. The challenges that this presents are:

• Delays: The shadow authority may be newly formed, under-resourced, or still establishing decision-making processes. Even routine approvals can stall. 
• Political tension: Where the outgoing council and shadow authority have different political control, the consent process can become a site of political contestation rather than a governance mechanism. 

Managing these risks requires clear governance frameworks, transparent decision criteria, and early escalation procedures.

Implications for Procurement and Contracts

Section 24 has several practical consequences for legal and procurement teams:

• Pipeline procurements straddling vesting day: 
  • Decisions about whether to continue, re-scope, or pause procurements inherited by the successor authority are critical. 
  • Part-completed procurements that were designed without the incoming council’s input are particularly risky and should be avoided if possible. 
• Framework agreements and call-off contracts: 
  • Councils must determine whether frameworks transfer to the successor authority and under what terms. 
  • Shared frameworks or those involving central purchasing bodies may require early engagement and legal review. 
• Contract extensions and renewals: 
  • Extensions requiring section 24 consent must be planned well in advance. 
  • Failing to initiate consent early can create gaps in service provision. 

As a result, councils should map all active contracts, identify which require section 24 consent, and establish timelines for approvals well in advance of vesting day.

Section 24 and Existing Legal Duties

It is important to note that the section 24 requirement does not replace councils’ existing legal obligations. Therefore, councils remain subject to:

• Best value duty;
• Fiduciary obligations to council taxpayers; and
• All other statutory responsibilities 

This means that consent from the shadow authority does not shield a decision that is poor value or breaches fiduciary duty. 

The practical implication of this is that outgoing councils should treat consent as a procedural safeguard, not a substitute for rigorous decision-making. Shadow authorities must assess requests on their merits, rather than as a mechanism for political influence.

Building an Effective Governance Framework

To manage the shadow year effectively, councils and shadow authorities should agree a clear consent process early. The key elements of this will include:

• Scope: Define thresholds and decision categories that require consent. 
• Timetable: Set clear response times and consequences for delays. 
• Escalation: Establish a procedure for disputes and time-sensitive decisions. 
• Decision criteria: Agree transparent, consistent rules for evaluating requests. 
• Record-keeping: Maintain a log of all consent requests and decisions for accountability and handover purposes. 

Transparency and mutual respect are critical: they protect governance integrity and ensure the successor authority inherits a well-managed, accountable decision-making record.

Looking Ahead

The section 24 regime is a short-term mechanism protecting a long-term interest, which is the viability and coherence of the successor authority. Councils that view it as an obstacle will experience frustration, while those that treat it as a shared governance responsibility can use the period to build working relationships and smooth the handover.