Source · Select Committees · Public Accounts Committee
Recommendation 19
19
Manchester City Council told us that government support has not fully mitigated the impact of...
Conclusion
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 despite government support, member councils would be “assessing the viability” of the services they provide in 2021–22.46 CIPFA noted that in the same financial year, council tax will rise by 4.3% on average, representing a funding gap of £217 million relative to the government’s assumption in the local government finance settlement.47 The Society of County Treasurers explained that “there will be real challenges across the country in balancing the budgets next year” and that it thought this would be “a combination of the use of reserves and having to make cuts in services”.48 An NAO survey found that 81% of respondents from district councils and 94% of respondents from single tier and county councils intended to make savings from service budgets in 2021–22.49 42 Committee of Public Accounts, Financial sustainability of local authorities, Fiftieth report of session 2017–19, HC 970, 4 July 2018 43 Committee of Public Accounts, Local government spending, Seventy-sixth report of session 2017–2019, HC 1775, 6 February 2019 44 Qq 84, 85, 132, 135–138 45 Q 9 46 LGF0007 submission from SIGOMA paragraph 3.6 47 Q13; LGF0010 submission from CIPFA paragraph 3.4 48 Q25 49 C&AG’s Report, para 4.24 COVID-19: Local government finance 17
Government Response
Acknowledged
HM Government
Acknowledged
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 The department responded rapidly in March 2020 in providing un-ringfenced funding to support local authorities with the pressures they faced and has provided over £6 billion in un- ringfenced funding since the start of the pandemic in total. The department also rapidly established its Local authority COVID-19 financial impact monthly monitoring data collection process to ensure government was able to effectively monitor pressures on the sector and respond accordingly. The latest data from this monthly monitoring (May 2021) suggests that pressures have been met for the sector. 5.4 Resources made available through the 2020 Spending Review and annual settlement allowed councils in England access to an overall increase in Core Spending Power from £49 billion in 2020-21 to up to £51.3 billion in 2021-22, a 4.6% increase in cash terms. This is in line with the available increase from 2019-20 to 2020-21. This recognises the resources councils need to meet their spending pressures and maintain current service levels. The 17 Exceptional Financial Support process is available if needed. Every local authority has now set a budget for 2021-22. 5.5 The department has also continued to engage with other government departments throughout the pandemic on service specific pressures and additional asks placed on local authorities as part of their vital role in the pandemic response to ensure that the sector was both engaged on the policy design and fully funded for the asks placed on them. As MHCLG prepares for the 2021 Spending Review, it has engaged with departments to understand the long-term impacts of COVID-19, this includes analytical working groups to develop robust and well evidenced projections. 5.6 The department will continue its key role in ensuring local authorities are supported in their role through the pandemic and will report back on this in October 2021 to the Committee.