Recommendations & Conclusions
24 items
4
Recommendation
2nd Report - The Funding and Sustainabi…
Deferred
The Government must undertake a review of which local government services should, and which should not, be statutory requirements. This review must begin by the end of calendar year 2025 and go to consultation by June 2026. If changes are needed to legislation to bring statutory requirements in line with …
Government response. The government's response focused on ongoing and planned reforms for specific services like children's social care, SEND, and homelessness, including funding commitments and upcoming strategies/white papers, rather than committing to a review of which services should be statutory requirements.
Ministry of Housing, Communities and Local Government
8
Recommendation
2nd Report - The Funding and Sustainabi…
Deferred
The Government has committed over £1.5 billion from the Transformation Fund to reform adult social care, children’s social care, SEND, and homelessness services so that they are focused on prevention. Reforms to these services are urgently needed, but the Government must provide further clarity about what these service reforms will …
Government response. The government's response detailed the consolidation of capital funds into a new Local Regeneration Fund and a commitment to move towards allocative funding, but did not provide clarity on the implementation and measurement of reforms for adult social care, children's …
Ministry of Housing, Communities and Local Government
11
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
The Ministry must prioritise funding and support for local preventative services to fix the foundations, reduce the demand for acute services, and bring down costs in the longer term. (Recommendation, Paragraph 50)
Government response. The government detailed funding allocated at the Autumn Budget 2024 to support the public sector with increased employer National Insurance Contributions, rather than committing to prioritising new funding specifically for local preventative services.
Ministry of Housing, Communities and Local Government
12
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
Successive Governments have relied too much on ringfencing of funding to control the activities of local government. Through ringfencing, the Government has required local authorities to spend their money in specified ways, which may not be the most efficient use of that money in the local context. Local authorities would …
Government response. The government's response focused on the roles of various departments in the local tax system and plans to move the Valuation Office Agency into HMRC, without addressing the recommendation to move away from ringfencing to an outcomes-based system.
Ministry of Housing, Communities and Local Government
13
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
We are encouraged by the recent launch of the Local Government Outcomes Framework and the beginning of a transition towards an outcomes-based system of accountability for local government, and we look forward to further detail, as it emerges during the call for evidence, about how the Ministry will use the …
Government response. The government outlined the independent commission into adult social care and detailed various funding and reform initiatives for social care, but did not provide further detail on how the Local Government Outcomes Framework will be used.
Ministry of Housing, Communities and Local Government
14
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
After the conclusion of the Framework’s live call for evidence and before the start of the 2026/27 financial year, the Ministry must implement the agreed outcomes-based system, by which local authorities will be held accountable for achieving the agreed outcomes within their overall budgets and not for meeting spending targets …
Government response. The government's response detailed ongoing reforms to NHS Integrated Care Boards and efforts to strengthen partnerships between the NHS and local government, rather than committing to implement an outcomes-based accountability system for local government.
Ministry of Housing, Communities and Local Government
15
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
The Ministry must end ringfencing by removing the standard spending requirements that are placed on the funding available to local authorities, whether the funding was provided by Government or collected locally. Spending requirements, such as ringfencing, should only be used in response to financial mismanagement. (Recommendation, Paragraph 64)
Government response. The government's response focused on funding for Special Educational Needs and Disabilities (SEND) reform and managing associated deficits, rather than addressing the broader recommendation to end ringfencing of local authority funding.
Ministry of Housing, Communities and Local Government
16
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
We welcome the Government’s desire to move away from the competitive bidding process as outlined in the Plan for Neighbourhoods, but further clarity is needed around what alternative funding programmes will replace competitive bidding. (Conclusion, Paragraph 65) 75
Government response. The government responded by outlining funding and reforms within the Special Educational Needs and Disabilities (SEND) system aimed at reducing home-to-school travel costs, but did not clarify general alternative funding programmes to replace competitive bidding.
Ministry of Housing, Communities and Local Government
17
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
The Ministry must outline how it plans to allocate funding to local authorities in future investment programmes and move away from competitive bidding between councils. Any allocation must use a transparent process, based on clear criteria, and be focused on achieving desired outcomes. (Recommendation, Paragraph 66)
Government response. The government described current funding allocations for the Household Support Fund, Discretionary Housing Payments, and the Local Authority Housing Fund, along with future considerations for Local Housing Allowance rates, without outlining a general transparent and outcomes-based process for future investment …
Ministry of Housing, Communities and Local Government
18
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
As part of the Ministry’s reduction of the use of funding pots and competitive bidding, it must consider and reduce the number of funding pots managed across multiple government departments, not just those managed by the Ministry. (Recommendation, Paragraph 67)
Government response. The government responded by outlining plans to update the funding formulae in the Settlement and incorporate new deprivation data, including housing costs, into the Index of Multiple Deprivation, rather than addressing the reduction of funding pots across multiple government departments.
Ministry of Housing, Communities and Local Government
19
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
Unfunded mandates (responsibilities for local authorities without adequate funding or compensation) contribute to the lack of sustainability in the local government sector. (Conclusion, Paragraph 74)
Government response. The government noted a recommendation to reform or replace council tax (not the provided conclusion) and stated that all tax policy remains under review, with decisions made by the Chancellor at fiscal events.
Ministry of Housing, Communities and Local Government
21
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
The New Burdens doctrine must be reviewed, updated, and put on a stronger statutory footing. It must focus not only on new responsibilities, but on any increase in the costs of mandatory services delivered by local authorities. For any such increase in cost, there must be a proportionate increase in …
Government response. The Government did not address the recommendation to review and strengthen the New Burdens doctrine, instead discussing national business rates multipliers, local relief powers, and generally keeping all tax policy under review.
Ministry of Housing, Communities and Local Government
22
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
The increase in the rate of employer National Insurance Contributions has placed a significant financial burden on local authorities that has not been sufficiently covered by new funding. It is an unfunded mandate of the Government’s making. (Conclusion, Paragraph 81)
Government response. The Government did not address the conclusion regarding unfunded employer National Insurance Contributions, instead discussing the Business Rates Retention System reset in 2026, transitional arrangements, and future reset timings.
Ministry of Housing, Communities and Local Government
24
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
The Ministry and HM Treasury must work together to align accountability over decisions that affect local government, including around national taxation. Authority over tax decisions that affect local government and responsibility for the financial sustainability of local government should be held together, perhaps by a single Minister who can work …
Government response. The Government did not address aligning accountability for local government finance across departments, instead discussing Section 114 notices, financial flexibilities for councils, and an upcoming consultation on support frameworks.
Ministry of Housing, Communities and Local Government
25
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
We support and echo the conclusions of the recent report Adult Social Care Reform by the Health and Social Care committee. As they have said in the summary of their report, successive Governments have not fully considered the human and financial costs of inaction on social care reform, including costs …
Government response. The Government did not address the urgent need for social care reform, instead committing to improving assessment of central government funding distribution and setting out further detail on an updated support framework in the autumn.
Ministry of Housing, Communities and Local Government
26
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
While we support the new independent commission into adult social care led by Baroness Casey, we are concerned that the proposed timescale means that urgent reforms to social care services will not be implemented soon enough to overcome the severity of the crisis in adult social care. If no action …
Government response. The Government did not address concerns about the timescale for social care reform, instead discussing the transparency and external assurance reviews for councils receiving Exceptional Financial Support (EFS).
Ministry of Housing, Communities and Local Government
27
Recommendation
2nd Report - The Funding and Sustainabi…
Deferred
The timescale for the commission into adult social care should be brought forward, and it must present actionable reforms to the sector as part of its interim findings in 2026. The Government must not wait for the commission to publish its final report, and treat its interim findings with due …
Government response. The Government did not address speeding up the social care commission or fully funding adult social care, instead discussing local authorities' responsibility for workforce management and financial training for councillors and officers.
Ministry of Housing, Communities and Local Government
28
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
The Department for Health and Social Care must ensure that the ongoing reforms and cuts to Integrated Care Systems and Integrated Care Boards are aligned both with wider reorganisation of local government and with necessary reforms to the adult social care sector. (Recommendation, Paragraph 99)
Government response. The Government did not address aligning health and social care system reforms with local government reorganisation, instead detailing a local audit strategy, the establishment of the Local Audit Office, and a review of local authority accounts.
Ministry of Housing, Communities and Local Government
29
Conclusion
2nd Report - The Funding and Sustainabi…
Deferred
The statutory override that allows local authorities to keep deficits of the Dedicated Schools Grant (DSG) off their books is an unsustainable measure that hides the true cost burden on local authorities. The recent extension of the override until 2028 is a necessary step to protect local authorities from the …
Government response. The Government did not address the sustainability of the Dedicated Schools Grant (DSG) deficit override, instead outlining a commitment to review the Code of Audit Practice by the end of 2027 and championing auditors' statutory reporting powers.
Ministry of Housing, Communities and Local Government
30
Recommendation
2nd Report - The Funding and Sustainabi…
Deferred
The Government’s upcoming reforms to the Special Educational Needs and Disabilities (SEND) system must be bold enough to eliminate local authorities’ deficits on the DSG going forwards before March 2028, while ensuring SEND children receive the support they need. The Ministry must commit not to extend the statutory override further …
Government response. The government acknowledges DSG deficits and confirms funding for SEND reform, with a White Paper expected soon. It states the statutory override is extended to 2027-28 and promises more detail and a plan for supporting local authorities with historic and …
Ministry of Housing, Communities and Local Government
47
Recommendation
2nd Report - The Funding and Sustainabi…
Deferred
Pending a fuller reform of the business rates system, business rates resets must avoid cliff-edges for local authorities by means of a phased reset, by which growth is reset to a fixed prior period, say seven years before the date of the reset. This would eliminate hard resets, allow authorities …
Government response. The government acknowledges concerns about cliff-edges and will consider transitional arrangements for the 2026 reset, but defers a decision on a phased reset mechanism, stating it will confirm the timing and design of the next reset by the end of …
Ministry of Housing, Communities and Local Government
50
Recommendation
2nd Report - The Funding and Sustainabi…
Deferred
The Government must amend the section 114 process so that an inability to set a balanced budget in a single year because of financial pressure does not cause long-term additional financial pressure. This could be done by extending the requirements to a rolling two-year basis (that is, allowing councils to …
Government response. The government acknowledges the potential benefits of financial flexibilities and has invited views on the matter through the FFR 2.0 consultation, promising further details in the autumn.
Ministry of Housing, Communities and Local Government
52
Recommendation
2nd Report - The Funding and Sustainabi…
Deferred
The Government should aim to end the use of capitalisation directions as a standard part of EFS. Alternative measures to support local authorities must improve local government sustainability not only in the short term, but in the long term as well. EFS should remain a short-term measure, after which the …
Government response. The government has invited views on transitional arrangements and financial flexibilities as part of a consultation and will set out further detail on an updated support framework in the autumn, without explicitly committing to ending capitalisation directions.
Ministry of Housing, Communities and Local Government
58
Recommendation
2nd Report - The Funding and Sustainabi…
Deferred
The Ministry must act on other recommendations from the predecessor Committee’s report on Financial Reporting and Audit in Local Authorities that have not yet been addressed. Specifically, the Ministry should work with the organisation that prepares the Audit Code (currently the National Audit Office, transferring to the Local Audit Office …
Government response. The government commits to a post-implementation review of the Code of Audit Practice by the end of 2027, which will consider expanding VFM assessments, and notes that the LAO's responsibilities include championing auditors' early warning powers.
Ministry of Housing, Communities and Local Government