Recommendations & Conclusions
29 items
2
Recommendation
Thirty-Fourth Report - Local Government…
Too often the Department has failed to act with sufficient urgency to address risks to financial sustainability in the sector, leading to problems becoming entrenched. This Committee warned in 2016 that the local capital finance framework might not be able to cope with changes in local authority activity, particularly in …
Government response. 2025. This should be broken down by how much coverage is being achieved by: • individual commercial suppliers, such as Openreach, Virgin Media O2 and smaller suppliers know as alternative networks or “alt-nets” etc., and the extent to which it …
HM Treasury
3
Conclusion
Thirty-Fourth Report - Local Government…
The Department did not act with sufficient urgency, nor has it set out an overarching plan and timetable, to address the severe and pressing problems with the local government audit market. Significantly delayed audits are a serious gap in local authorities’ accountability to taxpayers and risk undermining public confidence and …
Government response. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: Spring 2022 3.2 The department remains committed to strengthening the local audit market. Since July 2021 the department has acted as interim system leader, leading work across the system …
HM Treasury
4
Conclusion
Thirty-Fourth Report - Local Government…
The Department is making some welcome improvements to its oversight of the sector although it remains to be seen what concrete difference these changes will make. Over time the Department has improved its analysis of financial Local Government Finance System: Overview and Challenges 7 risk and its engagement with local …
Government response. 4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 In addition to the approach outlined under recommendation one, the department is strengthening its data collections on local authority risk and reserves to improve its oversight of local government. …
HM Treasury
5
Conclusion
Thirty-Fourth Report - Local Government…
We are concerned the Department is worryingly complacent in its view that the spending review will put local services on a sustainable footing. The spending review provided an extra £4.8 billion, £1.6 billion per year for the period 2022– 23 to 2024–25, along with assumed council tax rises (although lower …
Government response. 5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 The department recognises the pressures on local services and the importance of a sustainable funding platform. To support services, the 2021 Spending Review settlement provides local authorities with an …
HM Treasury
6
Conclusion
Thirty-Fourth Report - Local Government…
The sector is still facing uncertainty and stop-gap financial arrangements until such time as the longer-term reforms are put in place. The sector is once again faced with a single-year settlement for the 2022–23 finance year. It has now had three one-year settlements, preceded by a four year settlement full …
Government response. 2030. To build a credible and evidence-based profile for delivery beyond 2025 in the UK’s dynamic market, the department will need to reach three key milestones: • completion of all remaining market surveys to identify and understand the relevant suppliers’ …
HM Treasury
7
Recommendation
Thirty-Fourth Report - Local Government…
It is still not clear how the government will take a strategic, cross-government approach to rationalising local authority funding, which is particularly important for cross-cutting priorities like net zero and levelling up. Responding to concerns about the burden of bidding for multiple funding pots, the recently-appointed Secretary of State for …
Government response. 2021. Greensill Capital marketed its salary advance scheme, Earnd, to NHS trusts from 2019 and charged no fee to employers and employees for using the service Based on a report by the National Audit Office, the Committee took evidence on …
HM Treasury
1
Conclusion
Thirty-Fourth Report - Local Government…
On the basis of a Report by the Comptroller and Auditor General, we took evidence from the Department for Levelling Up, Housing & Communities (the Department) and HM Treasury (the Treasury) about local government finance in England.1 The Department is responsible for working across government to support the Treasury to …
Government response. 1.1 The government agrees with the Committee’s recommendation. Target implementation date: End of 2022 1.2 In December 2021, the department concluded a comprehensive review of the regular local authority expenditure and borrowing statistics published by the government. The review identified …
HM Treasury
8
Conclusion
Thirty-Fourth Report - Local Government…
This Committee highlighted in 2016 that the Department appeared complacent about the risks from local authorities increasingly acting as property developers and commercial landlords with the primary aim of generating income. It also pointed out a risk that the local capital finance framework might not be able to cope with …
Government response. 2.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2022 2.2 The government published its policy paper Local authority capital finance framework: planned improvements on 28 July 2021. This sets out the range of measures being taken …
HM Treasury
9
Conclusion
Thirty-Fourth Report - Local Government…
Where a local authority borrows, it must set aside money each year to repay the debt, so the costs do not fall wholly on future council taxpayers; this is known as Minimum Revenue Provision (MRP). MRP ensures councils reflect the cost of borrowing 16 C&AG’s Report, p. 39; Committee of …
Government response. 2.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2022 2.2 The government published its policy paper Local authority capital finance framework: planned improvements on 28 July 2021. This sets out the range of measures being taken …
HM Treasury
10
Conclusion
Thirty-Fourth Report - Local Government…
When we asked about a potential ballooning effect due to local authorities continually delaying and deferring payments on borrowing the Department told us the measures being consulted on would ensure that local authorities are paying MRP from revenue rather than other sources, and their MRP covers all their assets.33 We …
Government response. 2.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2022 2.2 The government published its policy paper Local authority capital finance framework: planned improvements on 28 July 2021. This sets out the range of measures being taken …
HM Treasury
11
Conclusion
Thirty-Fourth Report - Local Government…
The Institute of Chartered Accountants in England and Wales (ICAEW) noted that while the local audit market is in crisis, government’s response to date has not recognised 25 Committee of Public Accounts, Local authority investment in commercial property, Eleventh Report of Session 2019–21, HC 312, 13 July 2020, para 15. …
Government response. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: Spring 2022 3.2 The department remains committed to strengthening the local audit market. Since July 2021 the department has acted as interim system leader, leading work across the system …
HM Treasury
12
Recommendation
Thirty-Fourth Report - Local Government…
This Committee recently recommended the Department should set out a detailed plan and timetable for getting local audit timeliness back on track. We also recommended the Department explain how it intended to work with the Department for Business, Energy and Industrial Strategy to set up the new system leader for …
Government response. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: Spring 2022 3.2 The department remains committed to strengthening the local audit market. Since July 2021 the department has acted as interim system leader, leading work across the system …
HM Treasury
13
Recommendation
Thirty-Fourth Report - Local Government…
In 2018, this Committee recommended the Department should review the way local authority audit committees operate in examining and challenging local risks to financial sustainability.47 In 2019 this Committee highlighted that 27% of external auditors did not agree that audit committees provided sufficient assurance about authorities’ governance arrangements.48 CIPFA had …
HM Treasury
14
Conclusion
Thirty-Fourth Report - Local Government…
The Department’s Accounting Officer is responsible for the overall accountability system for local government, including providing assurance that it is working effectively and understanding risk, both across the system and in relation to individual councils.54 The Department has improved aspects of its oversight of local government finance since 2010–11, for …
Government response. 4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 In addition to the approach outlined under recommendation one, the department is strengthening its data collections on local authority risk and reserves to improve its oversight of local government. …
HM Treasury
15
Conclusion
Thirty-Fourth Report - Local Government…
This Committee recommended in 2016 that the Department should strengthen its understanding of the scale and nature of authorities’ commercial activities, ensure that the purpose and geographical location of capital spending can be ascertained, and strengthen its use of quantitative data to ensure it understands risks across the sector relating …
Government response. 1.1 The government agrees with the Committee’s recommendation. Target implementation date: End of 2022 1.2 In December 2021, the department concluded a comprehensive review of the regular local authority expenditure and borrowing statistics published by the government. The review identified …
HM Treasury
16
Conclusion
Thirty-Fourth Report - Local Government…
The Department told us that from April 2022, it will regularly collect much fuller information on local authority commercial property, companies and financial investments, the latter two of which it described as “an obvious risk”.62 The information on property investment will include location, which the Department acknowledged “in hindsight …
Government response. 1.1 The government agrees with the Committee’s recommendation. Target implementation date: End of 2022 1.2 In December 2021, the department concluded a comprehensive review of the regular local authority expenditure and borrowing statistics published by the government. The review identified …
HM Treasury
17
Conclusion
Thirty-Fourth Report - Local Government…
The Department told us about a policy paper it had recently published about its framework for detecting, managing and preventing risk.65 In relation to concrete actions, the Department told us it was “looking at the statutory powers that we have to cap borrowing” and the policy paper also says the …
Government response. 2.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2022 2.2 The government published its policy paper Local authority capital finance framework: planned improvements on 28 July 2021. This sets out the range of measures being taken …
HM Treasury
18
Conclusion
Thirty-Fourth Report - Local Government…
The spending review announced on 27 October 2021, covering 2022–23 to 2024–25, provided £4.8 billion (£1.6 billion each year) of new grant funding for local authorities.68 It also announced that council tax would be able to rise by 2% each year without triggering a council tax referendum.69 In addition, authorities …
Government response. 5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 The department recognises the pressures on local services and the importance of a sustainable funding platform. To support services, the 2021 Spending Review settlement provides local authorities with an …
HM Treasury
19
Conclusion
Thirty-Fourth Report - Local Government…
The Department told us the spending review “gives local government, looking at the sectoral level, the resources that it needs” to respond to rising demand and cost pressures, and “leaves the sector in a sustainable position.”73 The Department and the Treasury stressed the work carried out to underpin this conclusion. …
Government response. 5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 The department recognises the pressures on local services and the importance of a sustainable funding platform. To support services, the 2021 Spending Review settlement provides local authorities with an …
HM Treasury
20
Conclusion
Thirty-Fourth Report - Local Government…
When we pressed witnesses about the fragile state of adult social care services and continuing demographic pressure, the Department agreed the demographic pressures from both working-age and older people are quite significant but listed three sources of funding to sustain “business-as-usual social care”. These were rises in council tax (including …
Government response. 5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 The department recognises the pressures on local services and the importance of a sustainable funding platform. To support services, the 2021 Spending Review settlement provides local authorities with an …
HM Treasury
21
Conclusion
Thirty-Fourth Report - Local Government…
We have previously been critical of the Department for Education’s understanding of costs within children’s social care services, and we have not yet been reassured that funding for local authorities to support unaccompanied asylum-seeking children, and care leavers who were formerly unaccompanied asylum-seeking children, is sufficient.84 When pressed, the Department …
HM Treasury
22
Conclusion
Thirty-Fourth Report - Local Government…
This Committee noted in 2016 that local authorities were facing an uncertain environment due to the Department considering further significant changes to local authority funding.86 In 2018 the Committee highlighted the use of short-term funding arrangements since 2016 and a series of proposed reforms awaiting decisions; the same points arose …
Government response. 6.1 The government agrees with the Committee’s recommendation. Recommendation implemented 6.2 The government agrees with the Committee and recognises how important certainty is to local authorities. The department’s approach to supporting the sector ahead of any potential reform is set …
HM Treasury
23
Conclusion
Thirty-Fourth Report - Local Government…
We have previously concluded that the implications of reductions in service spending for service users and taxpayers are unclear. We have made several recommendations that the Department should work to improve its information on and understanding of pressures on services.91 The funding formula currently in use, and which includes measures …
Government response. 7.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2022 7.2 The government agrees with the Committee’s recommendation. The department has an established policy to rationalise funding for local government so that local authorities can make decisions …
HM Treasury
24
Conclusion
Thirty-Fourth Report - Local Government…
The spending review confirmed the timing of the next and future business rates revaluations and stated the government would consult on the possible introduction of an Online Sales Tax to partially replace business rates.93 However, much remained undecided. When we challenged the Department on decisions to come, it noted that …
Government response. 7.2 The government agrees with the Committee’s recommendation. The department has an established policy to rationalise funding for local government so that local authorities can make decisions based on local priorities. There is, however, a balance to be struck between …
HM Treasury
25
Conclusion
Thirty-Fourth Report - Local Government…
We have previously recommended that reform of local government finance should take place in a measured fashion to ensure the new arrangements are fit for purpose and built to last. We recommended that a stable funding environment, ideally based on a multi-year settlement, is established as a bridging mechanism while …
Government response. 6.2 The government agrees with the Committee and recognises how important certainty is to local authorities. The department’s approach to supporting the sector ahead of any potential reform is set out in the Local Government Finance Settlement 2022-23, which was …
HM Treasury
26
Conclusion
Thirty-Fourth Report - Local Government…
A Local Government Association review found 448 individual grants to local authorities between 2015–16 and 2018–19, and in any one of those years local authorities received around 250 grants.103 Twenty-two grant funds were available for net zero work alone in 2020–21, many of which were competitive funds with limited delivery …
Government response. 7.2 The government agrees with the Committee’s recommendation. The department has an established policy to rationalise funding for local government so that local authorities can make decisions based on local priorities. There is, however, a balance to be struck between …
HM Treasury
27
Conclusion
Thirty-Fourth Report - Local Government…
The new Secretary of State told the Housing, Communities and Local Government Committee that he recognises there are too many funding pots, with potentially overlapping criteria. He concluded “There needs to be some simplification and rationalisation” of funding arrangements and has asked the Department to lead on this.107 When we …
Government response. 7.2 The government agrees with the Committee’s recommendation. The department has an established policy to rationalise funding for local government so that local authorities can make decisions based on local priorities. There is, however, a balance to be struck between …
HM Treasury
28
Conclusion
Thirty-Fourth Report - Local Government…
The Treasury told us the balance between formula and competitive funding should be different for different areas of government activity, giving levelling up and social care as examples of areas where formula funding should predominate. In contrast, the Treasury felt that net zero is an area where it is the …
Government response. 7.2 The government agrees with the Committee’s recommendation. The department has an established policy to rationalise funding for local government so that local authorities can make decisions based on local priorities. There is, however, a balance to be struck between …
HM Treasury
29
Conclusion
Thirty-Fourth Report - Local Government…
We noted the interactions between different government policy areas and the “tab” that ultimately falls to local government, including, for example, the impact of changes to health spending or universal credit.111 The Treasury said that, as part of the spending review, it had discussed those settlements for other departments and …
Government response. 5.3 The department continues to work closely with the local government sector and other government departments to ensure that councils have the resources to meet pressures and maintain current service levels. Alongside monitoring local authority finances, the department engages regularly …
HM Treasury