Source · Select Committees · Public Accounts Committee
Recommendation 1
1
Accepted
Committee received evidence on local government financial sustainability from diverse stakeholders.
Conclusion
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Ministry of Housing, Communities and Local Government (MHCLG) and HM Treasury on local government financial sustainability.1 We also heard evidence from Professor Tony Travers, Professor in Practice and Associate Dean of the School of Public Policy at the London School of Economics and Political Science, Councillor Pete Marland, Leader of Milton Keynes City Council and Chair of the Local Government Association Economy and Resources Board, and Iain Murray, Director of Public Financial Management at the Chartered Institute of Public Finance and Accountancy. We received written submissions from many interested parties about local authority finances and the impact on specific services.2
Government Response Summary
The government stated that MHCLG already ensures value for money through its Local Government Accountability Framework, collects extensive financial data and intelligence, and is implementing reforms like the new Local Government Outcomes Framework from April 2026 to simplify funding and strengthen local audit.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented Through its Accounting Officer Statement, the Ministry of Housing, Communities and Local Government (MHCLG) has set out how it ensures value for money through the Local Government Accountability Framework, and how responsibility is split between local authorities and central government departments. MHCLG collects and analyses information from a wide range of sources to provide assurance that the core Local Government Accountability Framework is working and to assess risk. Sources include financial data, information on outcomes, and information relating to specific services, as well as soft intelligence. MHCLG also reviews publicly available statistical returns provided by local authorities and local intelligence collected through relationships built with local authorities by teams in the department. MHCLG is leading reforms to government oversight of local authorities, to move towards outcomes-based accountability, focused on the impact of spending on local communities. On 3 July 2025, the Deputy Prime Minister announced the new Local Government Outcomes Framework. MHCLG wrote to the Committee to provide further details. The Framework supports the simplification of local authority funding by setting 15 priority outcomes that central government wants to work with local government to deliver with their more flexible funding. With simpler funding and a focus on outcomes, local leaders will have greater flexibility to decide on approaches that provide the best value for money and deliver improvements for their areas. MHCLG’s work to strengthen the local audit system will also provide independent assurance that arrangements are in place to secure value for money from these decisions. The Framework will be published alongside the provisional Local Government Finance Settlement for 2026-27 and will be actively used to support outcome delivery from April 2026. As these reforms are developed, MHCLG will continue to update the Committee.