Recommendations & Conclusions
26 items
2
Recommendation
Fourth Report - COVID-19: Local governm…
The pandemic has exposed limitations in the data that the Department normally collects from local authorities, meaning it has not had a proper picture of local financial resilience. Prior to the pandemic, the Department’s collection of local authority finance data covering areas such as service spending and income from sources …
Government response. 2.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 2.2 The department agrees that the Local authority COVID-19 financial impact monthly monitoring collection has been a valuable source of information. The collection was developed at pace …
HM Treasury
3
Conclusion
Fourth Report - COVID-19: Local governm…
Government support schemes during the pandemic were not always designed with sufficient knowledge of local government finance or input from the sector. Representatives of the local government sector assert that government departments other than MHCLG did not always engage with the sector during the pandemic sufficiently and consequently were not …
Government response. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 3.2 The department has worked closely with other government departments to ensure a coordinated response that takes close account of local government financial pressures, including on the …
HM Treasury
4
Conclusion
Fourth Report - COVID-19: Local governm…
The Department has not fulfilled previous assurances that it will be transparent about financial risk in the sector by sharing information with the National Audit Office. The Department previously told us that it would ensure the National Audit Office can see any information that it needs to about local authority …
Government response. 4.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 4.2 The department is mindful of the need for the National Audit Office (NAO) to receive information that will allow for them to make robust conclusions about …
HM Treasury
5
Conclusion
Fourth Report - COVID-19: Local governm…
The Department’s over-optimism about the impact of the pandemic on local authorities risks leading to reductions in services for local people. The Department is confident about the sector’s stability and sustainability in relation to the immediate and short-term impacts of the pandemic. However, it recognises that there will be financial …
Government response. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 5.2 The department believes it has made a realistic assessment of the impact of the pandemic on local authorities and the resultant risk of service reductions. 5.3 …
HM Treasury
6
Conclusion
Fourth Report - COVID-19: Local governm…
The Department has yet to address the longstanding structural issues within local government finance. Since 2015–16, the government has been planning to put in place significant changes to local government finance, but these have yet to be introduced. Parts of the current finance system are broken or flawed. The pandemic …
Government response. 6.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 6.2 The government will set out the future plan for local government funding at the 2021 Spending Review. The government has been clear that in determining a …
HM Treasury
7
Conclusion
Fourth Report - COVID-19: Local governm…
It is unacceptable that local authorities continue to face uncertainty about the level of financial support they can expect from government on top of the other pressures and uncertainty with which they are currently required to cope. The pandemic has created financial uncertainty for local authorities about their future commercial …
Government response. 7.1 The government agrees with the Committee’s recommendation. Target implementation date: End 2021 7.2 HM Treasury, MHCLG and other departments will continue to monitor the pressures that local authorities are facing as a result of the COVID-19 pandemic and recognise …
HM Treasury
1
Conclusion
Fourth Report - COVID-19: Local governm…
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Ministry of Housing, Communities & Local Government (the Department) and HM Treasury about local government finance in England during the COVID-19 pandemic.1 We also took evidence from the Society of County Treasurers, the …
Government response. 1.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2021 1.2 In the run-up to the COVID-19 pandemic, the Ministry for Housing, Communities and Local Government (MHCLG or the department) had participated in Operation Cygnus, the pandemic …
HM Treasury
8
Conclusion
Fourth Report - COVID-19: Local governm…
In addition to the March and April unringfenced funding, the Department provided two further tranches of unringfenced funding in 2020–21, bringing the total value of these grants to £4.55 billion. The Department took us through the ways in which its approach to allocating unringfenced funding changed. It used three different …
HM Treasury
9
Conclusion
Fourth Report - COVID-19: Local governm…
The Department introduced a monthly survey in April 2020 to collect data on the financial pressures faced by local authorities due to the pandemic. Prior to the pandemic, the majority of its regular financial data sets tended to be collected on an annual basis. The Department told us that the …
Government response. 2a: PAC recommendation: The Department should draw on the experience of collecting data during the COVID-19 pandemic to improve its regular collections of local government financial data. In particular, it should write to us by October 2021, setting out: i) …
HM Treasury
10
Conclusion
Fourth Report - COVID-19: Local governm…
Local authorities need to hold sufficient reserves to deal with known future needs and the financial risks they face. Accordingly, reserve levels are a key measure of the financial sustainability of local authorities over the medium-term.20 As part of its monthly survey the Department collected data on local authorities’ reserves …
Government response. 2.6 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 2.7 The department agrees that collecting more detailed information on local authority reserves levels will increase understanding and transparency around reserves. This will improve understanding of local …
HM Treasury
11
Conclusion
Fourth Report - COVID-19: Local governm…
The Department’s monthly survey is an addition to a broader framework of risk monitoring that draws on a range of other information sources.22 Through the use of this framework the Department had placed Croydon Council on its ‘long list’ of councils at financial risk for some years. However, it was …
Government response. 2.10 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 2.11 Whilst the department has stewardship of the overarching system, local authorities remain independent from central government, are responsible for managing their budgets in line with local …
HM Treasury
12
Recommendation
Fourth Report - COVID-19: Local governm…
We asked representatives of the local government sector how well the Department had engaged with it over the last year. We heard and received evidence praising the quality of the Department’s engagement with the sector during the pandemic. For example, Manchester City Council told us that the Department’s engagement had …
Government response. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 3.2 The department has worked closely with other government departments to ensure a coordinated response that takes close account of local government financial pressures, including on the …
HM Treasury
13
Conclusion
Fourth Report - COVID-19: Local governm…
The Department highlighted “the excellent work” within the Department for Health and Social Care (DHSC) as an example of “that deepening of the connection with local government”.28 In June 2020, DHSC created the Social Care Sector COVID-19 Support Taskforce to oversee the delivery of two packages of support for the …
Government response. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 3.2 The department has worked closely with other government departments to ensure a coordinated response that takes close account of local government financial pressures, including on the …
HM Treasury
14
Conclusion
Fourth Report - COVID-19: Local governm…
We received written evidence from representative of the local government sector criticising a range of support schemes that were introduced during the pandemic, particularly business grants, as being complex or challenging to administer.30 Pandemic business rates relief started in March 2020 and the first business support grants distributed through local …
Government response. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 3.2 The department has worked closely with other government departments to ensure a coordinated response that takes close account of local government financial pressures, including on the …
HM Treasury
15
Conclusion
Fourth Report - COVID-19: Local governm…
The Department told us that during the early months of the pandemic it developed greater structure and a stronger framework around exceptional financial support for individual authorities. Exceptional financial support is used where the Department accepts authorities face unmanageable financial pressures despite other government support measures.36 The Department asserted that …
Government response. 2.10 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 2.11 Whilst the department has stewardship of the overarching system, local authorities remain independent from central government, are responsible for managing their budgets in line with local …
HM Treasury
16
Conclusion
Fourth Report - COVID-19: Local governm…
The Department told the NAO that sharing information on the number of authorities interested in exceptional financial support or at risk more generally would invite public speculation on the identity of the authorities affected. However, the information the Department does not share is valuable for assessing the level of financial …
Government response. 4.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 4.2 The department is mindful of the need for the National Audit Office (NAO) to receive information that will allow for them to make robust conclusions about …
HM Treasury
17
Conclusion
Fourth Report - COVID-19: Local governm…
We previously discussed the provision of this type of information with the Department as part of our examination of the Department’s Starter Home programme. We recognised that sensitive information should not necessarily be made public, but we asked the Department to commit to ensuring “the National Audit Office can see …
Government response. 4.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 4.2 The department is mindful of the need for the National Audit Office (NAO) to receive information that will allow for them to make robust conclusions about …
HM Treasury
18
Conclusion
Fourth Report - COVID-19: Local governm…
In its examinations of the local government sector prior to the pandemic, our previous Committee raised concerns in 2018 that “the Department may not know if pressures in one service area quickly transfer to others or the extent of the risk that this poses to local authorities or service users” …
Government response. 2a: PAC recommendation: The Department should draw on the experience of collecting data during the COVID-19 pandemic to improve its regular collections of local government financial data. In particular, it should write to us by October 2021, setting out: i) …
HM Treasury
19
Conclusion
Fourth Report - COVID-19: Local governm…
Manchester City Council told us that government support has not fully mitigated the impact of the pandemic, and the average pressure on next year’s budget is £15 million across the 10 authorities in Greater Manchester and £32 million across the eight core cities.45 In written evidence, SIGOMA told us that …
Government response. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 5.2 The department believes it has made a realistic assessment of the impact of the pandemic on local authorities and the resultant risk of service reductions. 5.3 …
HM Treasury
20
Conclusion
Fourth Report - COVID-19: Local governm…
The Department and HM Treasury explained that their judgement of the sustainability of the local government sector was not a long-term one and any government assessment of funding needs beyond 2021–22 was a matter for the next spending review.50 Sector representatives told us “the impact of Covid will be with …
Government response. 5.7 The government agrees with the Committee's recommendation. Target implementation date: Autumn 2021 5.8 The department will use historic and any future monitoring information from local authorities to inform work for the 2021 Spending Review, as well as engaging with …
HM Treasury
21
Conclusion
Fourth Report - COVID-19: Local governm…
Government has had plans to enact a range of local government financial reforms for a number of years, but these have not yet been introduced.55 Witnesses from the sector were clear that this reform was still required. The Society of Local Authority Chief Executives (SOLACE) described current arrangements as “a …
Government response. 6.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 6.2 The government will set out the future plan for local government funding at the 2021 Spending Review. The government has been clear that in determining a …
HM Treasury
22
Conclusion
Fourth Report - COVID-19: Local governm…
CIPFA and SOLACE called for a broader review of potential reform options rooted in a deeper understanding of the impact of the pandemic on council tax and business rates, encompassing the government’s promised reforms to adult social care funding, and potentially leading to more radical reforms than current proposals.58 However, …
Government response. 6.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 6.2 The government will set out the future plan for local government funding at the 2021 Spending Review. The government has been clear that in determining a …
HM Treasury
23
Conclusion
Fourth Report - COVID-19: Local governm…
Local authority representatives told us about the unprecedented level of financial uncertainty they have faced and continue to face as a result of the pandemic.61 Manchester City Council said that the impact on local authority commercial income, which does not attract any government support, was beyond what could “have reasonably …
Government response. 7.1 The government agrees with the Committee’s recommendation. Target implementation date: End 2021 7.2 HM Treasury, MHCLG and other departments will continue to monitor the pressures that local authorities are facing as a result of the COVID-19 pandemic and recognise …
HM Treasury
24
Conclusion
Fourth Report - COVID-19: Local governm…
Representatives of the local government sector told us that the way in which government support had been designed or announced has also created or perpetuated uncertainty. SIGOMA explained that “2020–21 has been a year of month to month existence with incremental and mostly reactive funding without which all of our …
Government response. 7.1 The government agrees with the Committee’s recommendation. Target implementation date: End 2021 7.2 HM Treasury, MHCLG and other departments will continue to monitor the pressures that local authorities are facing as a result of the COVID-19 pandemic and recognise …
HM Treasury
25
Conclusion
Fourth Report - COVID-19: Local governm…
We received written evidence from SOLACE, which told us that “one-year financial settlements, which are delivered late in the budget planning cycle, presents risks and can result in very damaging cuts to services residents and businesses rely on.” Similarly, CIPFA argued that delayed or incomplete information from government adds to …
Government response. 7.1 The government agrees with the Committee’s recommendation. Target implementation date: End 2021 7.2 HM Treasury, MHCLG and other departments will continue to monitor the pressures that local authorities are facing as a result of the COVID-19 pandemic and recognise …
HM Treasury
26
Conclusion
Fourth Report - COVID-19: Local governm…
We asked the Department about the sector’s concerns that government information coming late in the day and leaving little time to finalise plans tended to lead to decisions that were not the best value for money. We also asked when local authorities can expect to see a long-term financial plan …
Government response. 7.1 The government agrees with the Committee’s recommendation. Target implementation date: End 2021 7.2 HM Treasury, MHCLG and other departments will continue to monitor the pressures that local authorities are facing as a result of the COVID-19 pandemic and recognise …
HM Treasury