Source · Select Committees · Public Accounts Committee
Recommendation 23
23
Local authority representatives told us about the unprecedented level of financial uncertainty they have faced...
Conclusion
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 been planned for or fully mitigated in the budget and reserves”.62 DCN similarly told us that councils faced significant uncertainties on the income they will receive from business rates and council tax. It explained that the long-term impact of the pandemic on business was still to be seen and increasing numbers of households were seeking support with council tax.63 Business failures can reduce authority business rates income, for example if properties become vacant.64 If a household receives council tax support, then the council tax income received by the authority is reduced by up to 100% .65 SIGOMA stressed that council 2020–21 budgets and plans included changes to increase efficiency which would have delivered savings into 2021–22 and beyond. These changes, and so these savings, may now not be possible.66 Manchester City Council told us that the pandemic had created pressures in its services due to ongoing demand for homelessness, adult social care and children’s services. CIPFA, SOLACE and Manchester City Council suggested that public expectations of some local authority services, such as libraries, parks and open spaces, may well have also increased.67
Government Response
Acknowledged
HM Government
Acknowledged
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 the importance of giving local authorities clarity on future resources to support effective financial planning. HM Treasury wrote to the Committee on 22 June 2021 on this topic. 7.3 The government intends to confirm the overall funding settlement for local government in 2022-23 at the 2021 Spending Review, and the department is hoping to give the sector as much early financial certainty as possible. The review will deliver on the government’s priorities, with further details to be set out in due course. 7.4 Following the 2021 Spending Review, MHCLG will provide further details of the proposed allocation of resources to each local authority through the provisional Local Government Finance Settlement (LGFS). The LGFS will be timed to ensure that all local authorities are able to confirm their budgets ahead of the start of the 2022-23 financial year.