The cost of council mergers is rising – do you have the right tech to cope?

Back in March, council leaders raised serious concerns about whether local government reorganisation would actually deliver the financial benefits promised. Now, those concerns appear to be justified – at least according to recent findings from the County Councils Network (CCN).

A revised financial analysis commissioned by CCN and conducted by PwC suggests that while large-scale mergers could yield savings, smaller-scale reorganisations may deliver no savings at all – and in some cases, could increase costs. For example, replacing two-tier systems with multiple smaller unitary councils could cost £850 million over five years and deliver no net savings due to duplicated services and higher transition costs.

Meanwhile, councils across England are facing mounting financial pressure. Demand for core services – including adult social care, support for children with SEND requirements, and temporary accommodation – continues to rise. In many cases, these pressures are stretching local budgets to their limits.

So the question remains: how can councils build resilience in the face of financial uncertainty?

SaaS: Simplifying financial management and governance

Councils navigating organisational change need systems that are stable, scalable, and built to support ongoing financial sustainability. Software as a Service (SaaS) platforms offer a streamlined way to manage finance, spend, and governance – without the overhead of traditional software or the delays of complex upgrades. Offered on a subscription basis, SaaS offers fixed costs, without the need to pay for licenses or upgrades.

With automatic updates and built-in controls, SaaS solutions help councils stay compliant, reduce risk, and maintain visibility over public funds. Whether it’s tracking expenditure, managing approvals, or producing audit-ready reports, SaaS delivers the tools to keep financial operations running smoothly, even during long periods of restructuring.

Why SaaS makes sense for restructuring teams:

•  Transparent spend management: Real-time tracking and reporting
•  Governance by design: Embedded controls and audit trails
•  No infrastructure headaches: Hosted and maintained externally
•  Rapid deployment: Enables quick adoption with minimal disruption
•  Ability to scale: Easy to scale provision as needed

The cloud: Efficiency without complexity

In times of structural change, councils need technology that simplifies operations and supports continuity. Cloud platforms offer a scalable, cost-effective foundation for financial systems – reducing the burden on internal teams while maintaining high performance and reliability.

By shifting infrastructure to the cloud, councils can avoid the overhead of on-premise systems and gain the flexibility to adapt quickly to new organisational models. With built-in security and automatic updates, cloud deployment ensures that financial operations stay uninterrupted during reorganisation.

Benefits of cloud-based financial systems for local government:

• Lower total cost of ownership: No hardware, no surprise maintenance costs
• Scalable performance: Grows with your organisation, without re-architecture
• Automatic updates: Keeps systems current with minimal disruption
• Business continuity: Ensures access and uptime during transitions
• Anywhere access: Restructuring staff can work collaboratively from any location

AI that understands the sector – and the sovereignty

AI can support cost reduction for restructuring councils – but only when it’s designed for the public sector and fully compliant with UK data sovereignty requirements. Platforms must ensure that all data storage, processing, and analytics occur within UK borders, not just be hosted locally. This is essential for meeting GDPR obligations, safeguarding sensitive public sector information, and maintaining trust.

Just as critical is sector specificity: generic AI tools often overlook the regulatory, operational, and ethical nuances of public service delivery. Purpose-built platforms ensure relevance, accountability, and actionable insights.

The importance of sector-specific, UK sovereign AI:

• Data residency: Keeps sensitive information within UK borders
• Tailored intelligence: Built for public sector use cases
• Control: Allows for strict access control, protecting sensitive data
• Cost efficiency: Delivers real value while enhancing service delivery

Conclusion: Technology – a pivotal role

Council mergers may offer long-term potential, but they’re unlikely to deliver immediate financial relief – especially without robust planning and oversight. What’s clear is that technology plays a pivotal role in helping local authorities navigate uncertainty and drive cost savings.

With the right tech stack – SaaS, cloud, and sovereign AI – councils can build resilience, maintain compliance, and deliver services efficiently – even in the face of rising costs.

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Discover the blueprint for transformation in our must-read white paper: A 5-point guide to Local Government Reorganisation: Partnering for Progress. Featuring exclusive insights from Pam Duke – finance lead behind Cumbria’s LGR programme – whose leadership was instrumental in establishing two new unitary authorities.