Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 51
51
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
A response document is linked to this report, dated 21 October 2025. Response attribution to this conclusion has not been verified. Read the response document ↗