Recommendations & Conclusions
4 items
8
Recommendation
Second Report - Local authority financi…
Accepted in Part
We recommend that the Government widen the funding base of local government to make it less vulnerable to shocks such as the covid-19 pandemic, including by giving councils more flexibility over local taxes and other revenue-raising powers. This would also align with giving local authorities more powers over spending, which …
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We recommend that the Government widen the funding base of local government to make it less vulnerable to shocks such as the covid-19 pandemic, including by giving councils more flexibility over local taxes and other revenue-raising powers. This would also align with giving local authorities more powers over spending, which we will consider in our future report on devolution in England. Giving local government more powers to raise and spend money is a position supported by our predecessor Committee. We also recommend that the Government reform business rates, in particular by finding a mechanism by which to level the playing field between bricks- and-mortar and online retailers. This is an issue we will return to in our upcoming report on supporting high streets after covid-19.
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Government response AI summary
The government largely upholds the current charging regime and council tax flexibility, while noting an ongoing review of business rates that will conclude in the Autumn. It also highlighted a new Health and Social Care Levy that will provide revenue to local authorities.
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Ministry of Housing, Communities and Local Government
15
Conclusion
Second Report - Local authority financi…
Accepted in Part
Furthermore, whilst we welcome the Minister’s commitment to gathering the best quality data to better understand councils’ exposure to commercial investment, we think this should have been done by now. We are also concerned about the lack of a statutory requirement on local councils to comply with the prudential code.
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Furthermore, whilst we welcome the Minister’s commitment to gathering the best quality data to better understand councils’ exposure to commercial investment, we think this should have been done by now. We are also concerned about the lack of a statutory requirement on local councils to comply with the prudential code.
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Government response AI summary
The government is improving its monitoring of the sector through enhanced data collection, intelligence gathering, and developing tools for earlier risk identification, and requires local authorities to submit three-year capital spending and borrowing plans. However, it does not directly address the concern about the lack …
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Ministry of Housing, Communities and Local Government
16
Recommendation
Second Report - Local authority financi…
Accepted in Part
We recommend that the Government legislate to make compliance with the prudential code by local authorities a statutory duty. The Government should also make good on its commitment to improving the data it collects on local authority commercial investment. (Paragraph 72) Audit and control
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We recommend that the Government legislate to make compliance with the prudential code by local authorities a statutory duty. The Government should also make good on its commitment to improving the data it collects on local authority commercial investment. (Paragraph 72) Audit and control
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Government response AI summary
The government states that local authorities already have a duty to "have regard to" the Prudential Code and is working with CIPFA to make changes to statutory codes, with implementation from April 2022. It also details a programme of work to strengthen the capital system …
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Ministry of Housing, Communities and Local Government
17
Conclusion
Second Report - Local authority financi…
Accepted in Part
As highlighted in Sir Tony Redmond’s independent review of local authority audit, the local audit market is deeply flawed. We are particularly concerned about the shortage of specialist local auditors, about the principle of allowing local councils 42 Local authority financial sustainability and the section 114 regime to choose their …
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As highlighted in Sir Tony Redmond’s independent review of local authority audit, the local audit market is deeply flawed. We are particularly concerned about the shortage of specialist local auditors, about the principle of allowing local councils 42 Local authority financial sustainability and the section 114 regime to choose their own auditor and about the lack of a co-ordinating body responsible for monitoring the performance of auditors and joining up auditor findings across the country. We are pleased the Government has now announced its plans for instituting a new audit system leader, and we can see the argument for separating regulation and procurement. We are also pleased that the Department has accepted the recommendation in the Redmond Review that the new system leader produce annual reports on the state of local audit, although it is not clear to what extent it will be able to join up individual auditor findings with a view to identifying systemic issues across local government. We also note that the new Audit, Reporting and Governance Authority, in which the standalone unit will sit, is being set up primarily to audit the private sector. Given that local authority audit is different from private sector audit, in that it must consider such additional matters as public interest and value for money, it remains to be seen if a standalone unit within ARGA can provide the necessary specialism that local authority audit requires. We have concerns that the Government has not established a regulator along the lines suggested in Sir Tony Redmond’s independent review, rather than as a standalone unit within another regulator.
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Government response AI summary
The government has undertaken several activities in response to the Redmond review, including extending audit deadlines and confirming its intention to establish ARGA as the new system leader for local audit, while also keeping existing arrangements under review following a consultation.
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Ministry of Housing, Communities and Local Government