Source · Select Committees · Housing, Communities and Local Government Committee
Second Report - Local authority financial sustainability and the section 114 regime
Housing, Communities and Local Government Committee
HC 33
Published 19 July 2021
Government response
Local authority financial sustainability and the Section 114 regime: Government response to the Select Committee report · published 21 Oct 2021
Recommendations & Conclusions
8
Recommendation
Accepted in Part
Para 37
We recommend that the Government widen the funding base of local government to make it...
Recommendation
We recommend that the Government widen the funding base of local government to make it less vulnerable to shocks such as the covid-19 pandemic, including by giving councils more flexibility over local taxes and other revenue-raising powers. This would also …
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Government Response Summary
The government largely upholds the current charging regime and council tax flexibility, while noting an ongoing review of business rates that will conclude in the Autumn. It also highlighted a new Health and Social Care Levy that will provide revenue to local authorities.
Ministry of Housing, Communities and Local Government
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15
Conclusion
Accepted in Part
Para 71
Furthermore, whilst we welcome the Minister’s commitment to gathering the best quality data to better...
Conclusion
Furthermore, whilst we welcome the Minister’s commitment to gathering the best quality data to better understand councils’ exposure to commercial investment, we think this should have been done by now. We are also concerned about the lack of a statutory …
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Government Response Summary
The government is improving its monitoring of the sector through enhanced data collection, intelligence gathering, and developing tools for earlier risk identification, and requires local authorities to submit three-year capital spending and borrowing plans. However, it does not directly address the concern about the lack of a statutory requirement for compliance with the prudential code.
Ministry of Housing, Communities and Local Government
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16
Recommendation
Accepted in Part
We recommend that the Government legislate to make compliance with the prudential code by local...
Recommendation
We recommend that the Government legislate to make compliance with the prudential code by local authorities a statutory duty. The Government should also make good on its commitment to improving the data it collects on local authority commercial investment. (Paragraph …
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Government Response Summary
The government states that local authorities already have a duty to "have regard to" the Prudential Code and is working with CIPFA to make changes to statutory codes, with implementation from April 2022. It also details a programme of work to strengthen the capital system and compliance, including improving data for monitoring sector risk and tightening related legislation.
Ministry of Housing, Communities and Local Government
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17
Conclusion
Accepted in Part
Para 80
As highlighted in Sir Tony Redmond’s independent review of local authority audit, the local audit...
Conclusion
As highlighted in Sir Tony Redmond’s independent review of local authority audit, the local audit market is deeply flawed. We are particularly concerned about the shortage of specialist local auditors, about the principle of allowing local councils 42 Local authority …
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Government Response Summary
The government has undertaken several activities in response to the Redmond review, including extending audit deadlines and confirming its intention to establish ARGA as the new system leader for local audit, while also keeping existing arrangements under review following a consultation.
Ministry of Housing, Communities and Local Government
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