Source · Select Committees · Public Accounts Committee
Recommendation 2
2
The pandemic has exposed limitations in the data that the Department normally collects from local...
Recommendation
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 such as council tax, business rates and sales fees and charges was generally undertaken on an annual basis. This approach could not provide information quickly enough to navigate a fast-moving and unprecedented pandemic. The Department has put in place a monthly survey collecting data on authorities’ spending and income pressures due to COVID-19. The data from the monthly survey has underpinned decision making in the Department and has also informed decision making in some other government departments. The Department’s new approach to data collection included gathering experimental data on the level of reserves authorities had available to respond to the pandemic. Information on the financial reserves held by local authorities is central to understanding local authorities’ financial resilience and their ability to balance their budgets. However, the Department accepts that its experimental approach has not been entirely successful, with 65 local authorities responding that they had no reserves available to respond to the pandemic. In addition to data collected specifically in the pandemic to assess financial sustainability the Department has an existing financial risk framework with which it monitors the sector. Using information collected through this framework, the Department was aware of some financial weaknesses at Croydon Council before the pandemic. However, the Department did not fully understand the depths of the commercial and other problems facing the council, and had not begun intensive work with the council until April 2020. The financial 6 COVID-19: Local government finance pressures faced by the council have ultimately resulted i
Government Response
Acknowledged
HM Government
Acknowledged
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 in Spring 2020, and has evolved continuously, benefitting from extremely high response rates and engagement. To date, 12 rounds of information have been published. The process has been informed by close sector collaboration, and the data are collected on a voluntary basis, in recognition of the pressures local authorities are facing. 2.3 The monthly monitoring returns have been a valuable source of evidence, providing near-real time data at a time of significant volatility. These figures are, however, based on self- reported ‘best estimates’, and are management information rather than official certified returns and should therefore be treated with appropriate caution. This contrasts with regular data collection where timeliness is less important and greater accuracy and assurance desired. 2.4 The department has recently launched a review of pre-existing local government finance data collections, and the review's first steering group met on 15 June 2021. The review will consider issues around local authority expenditure and borrowing data, consult stakeholders to identify which data needs are currently being met, and prioritise changes to 14 consider. In addition, the review will set out recommendations for a sustainable process for identifying and implementing changes. The department will consider the future of the monitoring collection as part of this review. 2.5 The department will write to the Committee in October 2021 to provide an update on the review and how it is taking forwards the lessons learned.