Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 51
51
Acknowledged
Exceptional Financial Support via capitalisation directions weakens long-term council finances and investment.
Conclusion
Exceptional Financial Support (EFS) by means of capitalisation direction is a stopgap measure that avoids section 114 notices and allows councils to produce short-term balanced budgets, but can weaken councils’ finances and capital investment in the long term. Capitalisation directions have been over-used for many years, and Exceptional Financial Support is now neither exceptional nor supportive. We approve of the Government’s goal to end the use of EFS by the end of the upcoming multi-year funding settlement. (Conclusion, Paragraph 199)
Government Response Summary
The government states it is committed to fair funding distribution and has consulted on transitional arrangements and financial flexibilities for local authorities, with further details on an updated support framework to be set out in the autumn.
Government Response
Acknowledged
HM Government
Acknowledged
The Government is committed to improving how we assess the need to ensure central government funding is distributed fairly to the places who need it most. The Government recognises the importance of transitional arrangements and as noted above, we invited views in the consultation on a package of transitional arrangements that enable local authorities to plan for these changes. This included views on the approach to financial flexibilities to support local authorities in the context of reform, during the transitional period. The Government will set out further detail on an updated support framework in the autumn.