Select committee: Housing, Communities and Local Government Committee
Conclusion 19
Second Report - Local authority financial sustainability and the section 114 regime
Published 19 Jul 2021
Paragraph 89
Addressed to Ministry of Housing, Communities and Local Government
Housing, Communities and Local Government Committee Local Authority Financial Sustainability and the Section 114 Regime All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
The absence of section 114 notices before 2018 is adduced as evidence that the regime has been broadly successful. The consequences for a council of issuing a notice are serious, however, and we are concerned that, rather than concentrating minds, the regime might be hindering good financial management, as it lacks intermediary measures that councils can use to flag up concerns. Croydon Council delayed issuing a notice for fear of the negative publicity and the statement it would make about its financial position. Northamptonshire Council also delayed. We believe that an intermediary “yellow card” measure that could be applied by the Chief Finance Officer might have forced these councils to confront much earlier the seriousness of the problems facing them.
From: Housing, Communities and Local Government Committee, Second Report - Local authority financial sustainability and the section 114 regime (HC 33), paragraph 89, 19 July 2021
Government response
The government responded to the whole report on 21 October 2021 (deadline 19 September 2021).
Summary written by Accountability Index from the government's response. It is not the government's own words.The government welcomes the Committee's report and responds recommendation by recommendation, agreeing on some audit and funding-stability points while setting out its existing approach on council tax, business rates and the section 114 regime.
- On social care, it points to its 7 September 2021 announcement of an additional £5.4 billion over 3 years and says it will publish further detail in a White Paper "later this year".
- On council tax, it states it "has no plans to replace or fundamentally reform council tax", saying a revaluation "would be expensive to undertake" and could raise bills for many households.
- On multi-year settlements, it "agrees that a stable funding environment ensures local authorities can plan effectively"; the approach to the next settlement "will be informed by the ongoing Spending Review".
- On local audit, it considers PSAA "best placed" as appointing body and will keep arrangements "under review". It agrees the new system leader should be able to join up auditor findings.