Recommendations & Conclusions
12 items
2
Recommendation
2nd Report - The Funding and Sustainabi…
Accepted
The Government must assess the role of local government and, by the end of 2025, publish its vision for local government’s role in the state, including whether they see its role changing as a result of reorganisation and devolution to Strategic Combined Authorities. This vision should be submitted to consultation. …
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The Government must assess the role of local government and, by the end of 2025, publish its vision for local government’s role in the state, including whether they see its role changing as a result of reorganisation and devolution to Strategic Combined Authorities. This vision should be submitted to consultation. Decisions around local government made by central government, including reorganisation and any changes to services and funding, should be informed by this view of local government’s role. (Recommendation, Paragraph 16)
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Government response AI summary
The government announced a review of statutory duties placed on local government, launched on 3 July 2025, which will explore simplification and improvement of requirements over approximately one year, with recommendations to be tested with councils.
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Ministry of Housing, Communities and Local Government
3
Conclusion
2nd Report - The Funding and Sustainabi…
Accepted
The statutory and non-statutory responsibilities of local government have not been reviewed holistically for many years, contributing to the fragmented system of requirements that local authorities are required to deliver. What is needed to satisfy statutory requirements is too often unclear, which causes confusion and leads to inconsistency between service …
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The statutory and non-statutory responsibilities of local government have not been reviewed holistically for many years, contributing to the fragmented system of requirements that local authorities are required to deliver. What is needed to satisfy statutory requirements is too often unclear, which causes confusion and leads to inconsistency between service provision at different local authorities. (Conclusion, Paragraph 22)
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Government response AI summary
The government is coordinating a programme of local government finance reform (FFR 2.0) which will implement an updated assessment of local need following consultation, and will set out its proposed approach to reviewing the sales, fees, and charges system in the Autumn consultation response.
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Ministry of Housing, Communities and Local Government
5
Conclusion
2nd Report - The Funding and Sustainabi…
Accepted
Decisions made by departments other than the Ministry can have a significant impact on services delivered through local government, and it is local authorities and residents that must bear the brunt of the impact. 73 For example, those affected by welfare cuts such as the freezing of Local Housing Allowance …
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Decisions made by departments other than the Ministry can have a significant impact on services delivered through local government, and it is local authorities and residents that must bear the brunt of the impact. 73 For example, those affected by welfare cuts such as the freezing of Local Housing Allowance may no longer be able to afford council tax and may even present as homeless, drastically increasing the level of support that local authorities must provide. (Conclusion, Paragraph 37)
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Government response AI summary
The government recognizes the importance of a cross-government approach to local government financial sustainability and is coordinating various cross-government reforms, including finance reform, funding simplification, and a review of sales, fees, and charges, with a regular cross-departmental review group informing decisions.
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Ministry of Housing, Communities and Local Government
6
Conclusion
2nd Report - The Funding and Sustainabi…
Accepted
The Ministry is in regular contact with other departments and government bodies about the needs of local government, but it lacks the levers that it needs to control decisions across central government. In our view, merely discussing the issues with other departments is not enough. To properly reform and stabilise …
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The Ministry is in regular contact with other departments and government bodies about the needs of local government, but it lacks the levers that it needs to control decisions across central government. In our view, merely discussing the issues with other departments is not enough. To properly reform and stabilise these vital services, clear lines of accountability between relevant departments are needed, with the responsibilities for overall delivery and for funding being held together in a single department (even if delivery in practice is managed by several). (Conclusion, Paragraph 38)
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Government response AI summary
The government announced the Local Government Outcomes Framework (LGOF) on 3 July 2025, which will be published alongside the provisional Local Government Finance Settlement for 2026–27, and will be actively used from April 2026 to guide outcome-based accountability.
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Ministry of Housing, Communities and Local Government
7
Recommendation
2nd Report - The Funding and Sustainabi…
Accepted
We support the calls by the National Audit Office and Public Accounts Committee that the Government must provide cross-government reform to ensure that the entire system of local government is sustainable. The Ministry must collaborate with other departments on this and there must be clear lines of accountability. We also …
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We support the calls by the National Audit Office and Public Accounts Committee that the Government must provide cross-government reform to ensure that the entire system of local government is sustainable. The Ministry must collaborate with other departments on this and there must be clear lines of accountability. We also recommend that, for each mandatory service delivered by local government, a single Minister should have both the responsibility for delivering that service and the authority to coordinate work across all relevant departments. The power and responsibility for decision-making should be held by the same person so that effective action can be taken across departmental boundaries. (Recommendation, Paragraph 39)
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Government response AI summary
The government committed to further funding simplification for 2026–27, intending to consolidate grants from across government into large ringfenced grants delivered via the Settlement and rolling suitable grants into the Revenue Support Grant, building on previous consolidations.
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Ministry of Housing, Communities and Local Government
9
Conclusion
2nd Report - The Funding and Sustainabi…
Accepted
We support the Government’s current stated intention to focus more on prevention to reduce the demand for more expensive acute services in the long term. These preventative services have been weakened by a decade of underfunding in local government. However, bolstering preventative services must not come at the expense of …
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We support the Government’s current stated intention to focus more on prevention to reduce the demand for more expensive acute services in the long term. These preventative services have been weakened by a decade of underfunding in local government. However, bolstering preventative services must not come at the expense of acute services, such as temporary accommodation provision, lacking the funding they need today. (Conclusion, Paragraph 48) 74
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Government response AI summary
The government plans to radically simplify the grant landscape for local authorities in 2026–27 by consolidating grants across various service areas into large, multi-year grants delivered through the Local Government Finance Settlement (LGFS) and rolling suitable grants into the Revenue Support Grant.
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Ministry of Housing, Communities and Local Government
23
Recommendation
2nd Report - The Funding and Sustainabi…
Accepted
The Government must fully compensate councils for the additional costs arising from the increase to employer National Insurance Contributions. (Recommendation, Paragraph 82)
Government response AI summary
The Government did not commit to fully compensating councils for increased NICs, instead detailing over £5 billion in new grant funding, a 2.6% real terms increase in Core Spending Power, and planned funding reforms from 2026-27, alongside new Mayoral fiscal powers.
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Ministry of Housing, Communities and Local Government
31
Conclusion
2nd Report - The Funding and Sustainabi…
Accepted
Home-to-school transport is a particular area of concern for the affordability of local government services. We support the Government’s proposed update to the assessment of local authority’s needs relating to home-to-school transport, but while this more fairly distributes money between local authorities, it does not make the service as a …
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Home-to-school transport is a particular area of concern for the affordability of local government services. We support the Government’s proposed update to the assessment of local authority’s needs relating to home-to-school transport, but while this more fairly distributes money between local authorities, it does not make the service as a whole more affordable. Reforms to the service itself will also be necessary. (Conclusion, Paragraph 114)
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Government response AI summary
The government acknowledges the rising costs of home-to-school transport are linked to the SEND system and commits to improving inclusivity in mainstream schools through significant new SEND funding, a forthcoming White Paper, and £740 million in high needs capital.
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Ministry of Housing, Communities and Local Government
36
Conclusion
2nd Report - The Funding and Sustainabi…
Accepted
We acknowledge the trade-offs that the Government is making in updating the local government funding formula, and we support the Government’s decision to focus funding towards areas with higher need, which will help correct an existing imbalance in the system. We are pleased to see that factors considered in the …
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We acknowledge the trade-offs that the Government is making in updating the local government funding formula, and we support the Government’s decision to focus funding towards areas with higher need, which will help correct an existing imbalance in the system. We are pleased to see that factors considered in the Fair Funding Review take account of the different pressures faced by urban and rural authorities. (Conclusion, Paragraph 132)
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Government response AI summary
The government is committed to targeting funding effectively at areas with the greatest need through the Fair Funding Review 2.0, utilizing updated needs assessments that account for deprivation at local authority and sub-ward levels for social care.
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Ministry of Housing, Communities and Local Government
54
Recommendation
2nd Report - The Funding and Sustainabi…
Accepted
When the Ministry announces new cases of EFS, it must publish alongside its announcement sufficient supporting information to demonstrate how it determined that EFS was necessary, how much it would provide, and what form it would take. This published information should be the same information that the Ministry used to …
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When the Ministry announces new cases of EFS, it must publish alongside its announcement sufficient supporting information to demonstrate how it determined that EFS was necessary, how much it would provide, and what form it would take. This published information should be the same information that the Ministry used to make its decision. (Recommendation, Paragraph 205)
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Government response AI summary
The government states it already maintains transparency regarding EFS and publishes external assurance reviews, which cover the reasons, assessment, and amount of support, on GOV.UK.
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Ministry of Housing, Communities and Local Government
56
Conclusion
2nd Report - The Funding and Sustainabi…
Accepted
We support the Government’s moves to clear the local audit backlog and get the local audit system functioning, including the creation of the Local Audit Office and amendments to the Code of Accounting Practice, noting that these are in line with recommendations made by the predecessor Committee in its report …
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We support the Government’s moves to clear the local audit backlog and get the local audit system functioning, including the creation of the Local Audit Office and amendments to the Code of Accounting Practice, noting that these are in line with recommendations made by the predecessor Committee in its report on Financial Reporting and Audit in Local Authorities. However, without reforms to the audit requirements, significant resources are still spent to comply with requirements that were written for the private sector and that do not apply to public sector bodies like local authorities. (Conclusion, Paragraph 215) 81
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Government response AI summary
The government has laid statutory instruments to ensure proportionate audit regimes for smaller and major local audits and committed to review the content and format of local authority accounts in April 2025 to address the committee's concerns about audit requirements.
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Ministry of Housing, Communities and Local Government
57
Recommendation
2nd Report - The Funding and Sustainabi…
Accepted
The Ministry must review the purpose and requirements of local audit to ensure that they are proportionate and deliver maximum value for the public and users of the accounts. There must be clarity about the purpose of local audit, and no effort, time or money should be spent on local …
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The Ministry must review the purpose and requirements of local audit to ensure that they are proportionate and deliver maximum value for the public and users of the accounts. There must be clarity about the purpose of local audit, and no effort, time or money should be spent on local audit activities that do not support this purpose. (Recommendation, Paragraph 216)
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Government response AI summary
The government has published a strategy setting out local audit's purpose, established the Local Audit Office, laid statutory instruments for proportionality, and committed to review local authority accounts by April 2025 to ensure they deliver value.
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Ministry of Housing, Communities and Local Government