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Select Committee · Housing, Communities and Local Government Committee

The Funding and Sustainability of Local Government Finance

Status: Closed Opened: 11 Dec 2024 Closed: 18 Mar 2026 22 recommendations 36 conclusions 1 report

As Government seeks to reform local government finance, this inquiry will consider whether the local government finance system is fit for purpose and assess how it can meet the needs of local authorities and service users. It will explore how much control local authorities have over their own finances and whether this is enough to … Show more

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Reports

1 report
Title HC No. Published Items Response
2nd Report - The Funding and Sustainability of Local Govern… HC 514 23 Jul 2025 58 Responded

Recommendations & Conclusions

3 items
32 Recommendation 2nd Report - The Funding and Sustainabi… Not Addressed

Consider options for reforming and improving efficiency of home-to-school transport services

As part of its ongoing service reform for the SEND sector, the Ministry must consider options for reforming or improving the efficiency of home-to-school transport services. Potential options include wider use of sharing transport, and capital investment to enable councils to use efficient ways to meet their statutory requirements. (Recommendation, … Read more

Government response AI summary
The government attributes rising transport costs to challenges in the wider SEND system and outlines significant funding for SEND reform and capital for school facilities, which it states will indirectly reduce the need for long journeys, but does not directly address reforming or improving the …
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Ministry of Housing, Communities and Local Government
39 Conclusion 2nd Report - The Funding and Sustainabi… Not Addressed

Using 1991 property values for council tax is increasingly inappropriate.

Using property values from 1991, or proxy 1991 values where actual values are not available, is inappropriate and becoming increasingly inappropriate as time goes on. (Conclusion, Paragraph 155)

Government response AI summary
The government notes the broader recommendation to reform council tax but states it has no plans for such reform, though it is focusing on how council tax income is accounted for in funding proposals, without addressing the inappropriateness of using 1991 property values.
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Ministry of Housing, Communities and Local Government
49 Conclusion 2nd Report - The Funding and Sustainabi… Not Addressed

Section 114 notices prove unproductive for long-term local authority financial unsustainability.

The process of issuing and responding to a section 114 notice is not a productive solution to financial unsustainability caused by long-term underfunding and increasing responsibilities. The need to avoid a section 114 notice can itself lead to poor financial management. (Conclusion, Paragraph 191) Read more

Government response AI summary
The government states s114 notices are part of a wider system but acknowledges that financial flexibilities can help manage pressures, having invited views on such flexibilities and promising further detail in the autumn, without directly addressing the committee's criticism of the s114 process itself.
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Ministry of Housing, Communities and Local Government

Oral evidence sessions

4 sessions
Date Witnesses
7 May 2025 Jim McMahon MP · Ministry of Housing, Communities and Local Government, Nico Heslop · Ministry of Housing, Communities and Local Government View ↗
8 Apr 2025 Abdool Kara · National Audit Office, Dan Bates · OnTor Limited, Gareth Davies · National Audit Office, Jane Pearson · Ribble Valley Borough Council, Owen Mapley · Chartered Institute of Public Finance and Accountancy (CIPFA), Rob Powell · Warwickshire County Council, Vicky Davis · National Audit Office View ↗
11 Mar 2025 Councillor Barry Lewis · County Councils Network, Councillor Bill Revans · Somerset Council, Councillor Grace Williams · London Councils, Councillor Jeremy Newmark · District Councils Network, Councillor Neghat Khan · Nottingham City Council, Councillor Peter Marland · Local Government Association, Councillor Tony Dyer · Bristol City Council View ↗
11 Feb 2025 Aileen Murphie, Charlotte Pickles · Reform, David Phillips · Institute for Fiscal Studies, Jonathan Carr-West · Local Government Information Unit, Professor Andy Pike · Newcastle University, Professor Tony Travers · London School of Economics, Stuart Hoddinott · Institute for Government View ↗

Who gave evidence

23 witnesses
WitnessOrganisationSessions
Abdool Kara · Executive Director National Audit Office 1
Aileen Murphie — 1
Charlotte Pickles · Director Reform 1
Councillor Barry Lewis · CCN Spokesperson for Finance, and Leader of Derby… County Councils Network 1
Councillor Bill Revans · Leader Somerset Council 1
Councillor Grace Williams · Deputy Chair and Executive Member for Housing and… London Councils 1
Councillor Jeremy Newmark · DCN Spokesperson for Finance, and Leader of Herts… District Councils Network 1
Councillor Neghat Khan · Leader Nottingham City Council 1
Councillor Peter Marland · Chair of LGA Economy and Resources Board, and Lea… Local Government Association 1
Councillor Tony Dyer · Leader Bristol City Council 1
Dan Bates · Finance Specialist OnTor Limited 1
David Phillips · Associate Director Institute for Fiscal Studies 1
Gareth Davies · Comptroller and Auditor General National Audit Office 1
Jane Pearson · Section 151 Officer Ribble Valley Borough Council 1
Jim McMahon MP · Minister of State for Local Government and Englis… Ministry of Housing, Communities and Local Government 1
Jonathan Carr-West · Chief Executive Local Government Information Unit 1
Nico Heslop · Director of Local Government Finance Ministry of Housing, Communities and Local Government 1
Owen Mapley · Chief Executive Chartered Institute of Public Finance and Accountancy (CIPFA) 1
Professor Andy Pike · Henry Daysh Professor of Regional Development Stu… Newcastle University 1
Professor Tony Travers · Director of LSE London and Associate Dean of the … London School of Economics 1
Rob Powell · Section 151 Officer Warwickshire County Council 1
Stuart Hoddinott · Senior Researcher Institute for Government 1
Vicky Davis · Director of Housing, Communities and Local Govern… National Audit Office 1