Source · Select Committees · Public Accounts Committee
Recommendation 31
31
Accepted
Local government reforms and reorganisation present opportunities but begin from a fragile financial position.
Conclusion
Written evidence we received from the Chartered Institute of Public Finance and Accountancy pointed out that funding reform and local government reorganisation were opportunities to improve sustainability in the sector, but that local government approached these extensive reforms from a very fragile position.88 While MHCLG recognised there would be upfront costs to reorganisation, it expected to see savings in local government quite quickly due to simpler local government structures.89 Professor Tony Travers was unconvinced that reorganisation would lead to savings in local government and highlighted the challenge of distributing deficits between local authorities.90 88 LGFS0019 89 Q 62 90 Qq 8, 22 21
Government Response Summary
The government agrees to address the need for funding reform and sustainability, highlighting its Fair Funding Review 2.0 consultation, plans to simplify and consolidate local authority grants, and new spending commitments for key services including children's and adult social care, and SEND.
Government Response
Accepted
HM Government
Accepted
2.1 The government agrees with the Committee’s recommendation. Target implementation date: by the end of 2025, as part of the upcoming multi-year Local Government Finance Settlement. 2.2 On 20 June 2025, the government published the Fair Funding Review 2.0 consultation which set out the approach to radically simplify local authority funding, to provide local authorities with more flexibility and certainty over a greater proportion of funding. This will be supported by the Local Government Outcomes Framework, establishing 15 national outcomes... To simplify local authority funding... the government intends to bring together grants from across departments into large ringfenced consolidated grants... 2.3 The government also proposes to simplify existing Settlement grant funding, including for adult social care... 2.4 The upcoming multi-year Settlement will pave the way for further consolidation in future years. 6.1 The government agrees with the Committee’s recommendation. Target implementation date: end of 2025. 6.2 The government issued invitations to councils... to submit proposals for unitary local government on 5 February 2025... 6.3 On 20 June 2025 the government published the Fair Funding Review 2.0 consultation, which invites views on proposals to reform local government funding... including proposed transitional arrangements. The government is committed to providing the sector as much certainty as possible... followed by a multi-year provisional Local Government Finance Settlement later this year. 6.4 The government agrees with the Committee’s recommendation. Target implementation date: end of 2025. 6.5 The government will provide further details on funding to support local authorities with key service pressures at the provisional Local Government Finance Settlement later in 2025. 6.6 The government is committed to reforming children’s social care... 2025 Spending Review confirmed over £2 billion over the next three years... 6.7 For adult social care, the Spending Review allows for an increase of over £4 billion in 2028-29... 6.9 Baroness Casey of Blackstock is leading an independent commission into adult social care... Phase 1 will report in 2026... 6.10 The Department for Education Spending Review settlement confirmed funding for reform of the Special Education Needs and Disabilities (SEND) system... 6.11 The government invested £1 billion in homelessness and rough sleeping services in 2025-26... A long-term homelessness and rough sleeping strategy will be published later in 2025.