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
42
Rejected
Begin overhauling or replacing council tax, clarifying its purpose, impact, and fairness.
Recommendation
The Government should begin the process of overhauling or replacing council tax. This should look at options for a significant reform of local government funding, which could include replacing council tax. Whatever form of taxation is eventually adopted, the Government …
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Government Response Summary
The government notes the recommendation to reform or replace council tax but provides no commitment to begin such a process, stating that tax policy decisions are made by the Chancellor at fiscal events.
Ministry of Housing, Communities and Local Government
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43
Rejected
Devolve power to councils to revalue properties, set bands, and apply council tax discounts.
Recommendation
A significant and considered reform of council tax will take several years to take effect. Until it does, the Government should devolve power and responsibility for setting council tax to councils. This should include the power for individual councils to …
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Government Response Summary
The government explicitly rejects devolving full responsibility for setting council tax to individual councils at this time, stating that council tax is already localized with existing discretionary powers for local authorities.
Ministry of Housing, Communities and Local Government
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46
Rejected
Devolve more powers to local authorities for setting business rates multipliers and discounts.
Recommendation
The Government must devolve more powers to local authorities to set multipliers, discounts and premiums relating to business rates. (Recommendation, Paragraph 170)
Government Response Summary
The government rejects devolving more powers to local authorities for setting business rates multipliers, citing the need for national certainty and highlighting existing powers councils have for reliefs and supplements.
Ministry of Housing, Communities and Local Government
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55
Rejected
Mandate minimum financial training for all councillors and statutory officers.
Recommendation
The Government must mandate a minimum level of financial training for all councillors and statutory officers, so that all councillors are at least able to understand their council’s financial accounts and use them to compare their actual performance with the …
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Government Response Summary
The government rejects mandating financial training, stating it is the responsibility of local authorities, but highlights its funding of the LGA's Sector Support Programme, which already provides financial training for councillors and officers.
Ministry of Housing, Communities and Local Government
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Conclusions (5)
20
Conclusion
Rejected
The New Burdens doctrine, which requires government departments to ensure any new responsibilities for local authorities are fully costed and funded, is a vitally important part of government financing but is not robust enough to prevent unfunded mandates. (Conclusion, Paragraph 75)
Government Response Summary
The Government does not accept the recommendation to devolve full responsibility for setting council tax to individual councils at this time, citing existing local authority control over tax levels and discretionary powers.
38
Conclusion
Rejected
Council tax is a regressive and unfair tax. We note the Government’s decision to prioritise other areas of local government funding for reform, but any local government reform that does not address council tax will be undermined by the current system. Council tax reform should be a higher priority on …
Government Response Summary
The government notes the recommendation for council tax reform but states it currently has no plans to reform it, although it is focusing on the approach to accounting for council tax income in funding proposals.
40
Conclusion
Rejected
The Government’s arguments that council tax has high collection rates and leads to stable income levels are not sufficient reasons to avoid reforming council tax. (Conclusion, Paragraph 156)
Government Response Summary
The government notes the recommendation to reform council tax but states it currently has no plans to do so, though it is focusing on how council tax income is accounted for in funding allocations.
41
Conclusion
Rejected
Council tax is one of the main interactions with local government that residents will have. Giving councils more power over, and therefore more responsibility for, setting council tax will improve democratic engagement by residents. (Conclusion, Paragraph 157)
Government Response Summary
The government explicitly rejects the implied recommendation to devolve full responsibility for setting council tax to individual councils, stating that council tax is already localized with authorities having powers over setting levels and administering the tax.
53
Conclusion
Rejected
The process by which the Government chooses which councils will receive EFS, and what it will look like, is not transparent. (Conclusion, Paragraph 204)
Government Response Summary
The government rejects the committee's conclusion that the process for EFS is not transparent, stating it has always maintained transparency with external assurance reviews and support requests published on GOV.UK.