Source · Select Committees · Housing, Communities and Local Government Committee
Third Report - Financial distress in local authorities
Housing, Communities and Local Government Committee
HC 56
Published 1 February 2024
Government response
Response to Committee's Third Report Financial distress in local authorities · published 26 Mar 2024
Recommendations & Conclusions
7
Conclusion
Deferred
Para 50
Using capital funding for revenue is unsustainable, risking asset sales and delaying reforms.
Conclusion
However, local authorities’ use of capital funding for revenue expenditure is not sustainable and at best it can only be a temporary solution to short-term financial pressures. We have concerns that the Government, if it does grant these additional flexibilities, …
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Government Response Summary
The government has launched a call for views on options for capital resource flexibility and will publish a response before summer recess, while affirming that existing exceptional financial support via capitalisation directions is only for specific local issues.
Ministry of Housing, Communities and Local Government
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10
Recommendation
Deferred
Implement business rates reset and Fair Funding Review; commit to long-term reform.
Recommendation
We renew our previous recommendation that the Government implements the business rates reset and Fair Funding Review. This should include transitional arrangements to ensure stability in funding levels after reset and review. The Government must commit to a fundamental long-term …
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Government Response Summary
The government states the business rates retention system reset will not happen before 2025-26 due to sector calls for stability, thereby deferring its implementation. It also acknowledges the need for improvements in the local government finance landscape and commits to considering further improvements in the next Parliament, without committing to a specific fundamental long-term review of the business rates system.
Ministry of Housing, Communities and Local Government
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27
Recommendation
Deferred
Para 148
Review local authority funding and taxation, including land value taxes and fiscal devolution
Recommendation
The next Government must embark on a fundamental review of the system of local authority funding and local taxation, exploring all options for removing its current regressive elements and bringing it into the 21st Century. This should include consideration of …
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Government Response Summary
The government commits to improving the local government finance system in the next Parliament, requiring significant consultation, but explicitly rejects the consideration of land value taxation.
Ministry of Housing, Communities and Local Government
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