Source · Select Committees · Public Accounts Committee
Recommendation 22
22
This Committee noted in 2016 that local authorities were facing an uncertain environment due to...
Conclusion
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 again in 2019.87 Since 2016 the sector has faced a four-year settlement that in practice was characterised by one-off and short-term funding initiatives, followed by two one-year settlements.88 In December 2021, the government announced a further single settlement for the 2022–23 financial year.89 In the run-up to the 2021 Spending Review, decisions about multiple significant reforms or updates relevant to local government finance were still outstanding, some of which had been first raised in 2015 or 2016. The outstanding decisions included potential changes to the underlying nature of business rates themselves, redistributing business rates growth between local authorities, updating the funding formula for calculating the spending need of local authorities and determining the distribution of much local government funding, changing the proportion of business rates retained by local authorities, and reforming the funding of adult social care (the service on which local authorities spend the most).90 80 Q 91 81 Committee of Public Accounts, COVID-19: Local government finance, Fourth Report of Session 2021–22, HC 239, 4 June 2021, para 21 82 Office for Budget Responsibility, Economic and fiscal outlook: October 2021, CP 545, October 2021, paragraph 2.89 83 Qq 91, 99, 100 84 Committee of Public Accounts, Transforming children’s services, Eighty-Eighth Report of Session 2017–2019, HC 1741, March 2019, conclusion 1; Qq 101–104 85 Q 101 86 Committee of Public Accounts, Financial sustainability of local authorities, Twenty-Sixth Report of Session 2016–17, HC 708, 18 November 2016, conclusion 6 87 Committee of Public Accounts, Financial
Government Response
Not Addressed
HM Government
Not Addressed
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 out in the Local Government Finance Settlement 2022-23, which was published on 7 February, and which passed the House on 9 February. This settlement provides the resources and stability councils need, following the impact of pandemic and to support the levelling up agenda. It makes available £54.1 billion in 2022-23 for local government in England, an increase of up to £3.7 billion on 2021-22, including funding for adult social care reform. This significant investment includes over £1 billion specifically for councils to meet social care pressures and a new one-off 2022-23 Services Grant worth £822 million, which will be un-ringfenced in recognition that local leaders know the priorities for their local communities best. 6.3 The government knows how important it is for local authorities to be able to plan for any potential reforms. That is why the government have committed to work closely with local partners and take stock of the challenges and opportunities they face, before consulting on any potential funding reform. 6.4 The department wrote to the Committee in April alongside this Treasury Minute setting out its plans to support the local government sector ahead of any potential longer-term reforms.