Source · Select Committees · Housing, Communities and Local Government Committee
2nd Report - The Funding and Sustainability of Local Government Finance
Housing, Communities and Local Government Committee
HC 514
Published 23 July 2025
Recommendations
34
Accepted in Part
Reconsider freeze on Local Housing Allowance rates and extend support for housing acquisition
Recommendation
As we recommended in our previous report, England’s Homeless Children, the Government should reconsider its decision to freeze Local Housing Allowance rates and should extend its support for local authorities to acquire new housing stock through the Local Authority Housing …
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Government Response Summary
The government confirms it will not reconsider freezing Local Housing Allowance rates, citing fiscal context and prioritization of other support funds. However, it accepts the recommendation to extend support for the Local Authority Housing Fund, announcing £950 million in capital for its fourth round, running until 2030.
Ministry of Housing, Communities and Local Government
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37
Accepted in Part
Require the new funding formula to consider sub-ward disparities and local housing costs.
Recommendation
The Government’s new funding formula must consider the effect of disparities between wards and sub-wards within single local authorities, which can be hidden when only considering the data at the level of whole local authorities. Measures of deprivation used in …
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Government Response Summary
The government states its needs assessments vary in granularity and that MHCLG is working with DWP to incorporate housing costs into the 2025 Index of Multiple Deprivation, with a final decision on its inclusion to be made in the autumn.
Ministry of Housing, Communities and Local Government
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45
Accepted in Part
Design business rates system to incentivise councils to encourage local economic growth.
Recommendation
The business rates system, or any alternative tax system for business property, must be designed to incentivise councils to encourage growth in their areas. We are concerned that any full, cliff-edge reset of business rates will reduce this incentive by …
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Government Response Summary
The government acknowledges concerns about cliff-edges, stating it will design transitional arrangements for the 2026 reset and will not reset the system again during the current multi-year settlement. It defers the timing and design of the next reset to a later period, allowing for consideration of phased resets.
Ministry of Housing, Communities and Local Government
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48
Accepted in Part
Devolve comprehensive tax-setting powers to local authorities, including for new local taxes.
Recommendation
The Government must be more courageous with its long-term plans for the funding of local government. While stabilisation is important in the short term, both the Ministry and HM Treasury need to start considering how to get the sector back …
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Government Response Summary
The government has committed new grant funding and plans fundamental funding reforms from 2026-27, while also advancing measures through a Bill to empower Mayors with fiscal powers, including the ability to charge a Mayoral Community Infrastructure Levy (CIL) and add a council tax precept.
Ministry of Housing, Communities and Local Government
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