Local government finance in the pandemic

To ensure that risks to value for money are managed going forward, the Department needs to learn lessons from 2020-21. To maintain successful elements of its approach: a) the Department should continue with the effective aspects of its approach to supporting the sector during the pandemic: intensive sector engagement, improved monitoring and providing unringfenced general grants.

Ref Page 12, paragraph 34, point a · Implemented Q3 2021-22

To further improve other elements: b) other departments, drawing on the support of the Department, should improve their links with, and understanding of, local authorities, drawing on learning from the Social Care Sector COVID-19 Support Taskforce;

Ref Page 12, paragraph 34, point b · Implemented Q3 2021-22

c) the Department and HM Treasury should explore how to provide the sector with greater clarity over future funding both during the pandemic and the recovery including: • signalling clearly on a timely basis the likelihood of further funding or support; and • supporting value for money in local decision-making by looking for ways to reduce uncertainty in time to be of use to next year’s local authority budget-setting process.

Ref Page 13, paragraph 34, point c · Implemented Q4 2021-22

d) In recognition that the sector remains under significant financial stress in the short term, the Department should: • maintain its exceptional support offer, with appropriate capacity within the Department to ensure timely consideration of requests; and • consider how it can present information about levels of financial stress in the sector without undermining engagement with individual authorities.

Ref Page 13, paragraph 34, point d · Implemented Q2 2021-22

To address long-standing issues and ensure the government and the sector are prepared for the future: e) the Department, working with other departments, should focus more fully on risks to service sustainability. Government, led by the Department should: • assess authorities’ 2021-22 budgets to understand the impact on service budgets and the implications for service users, other service providers and long-term value for money; and • use this service-level information, alongside its financial monitoring data, to inform in-year and future funding decisions.

Ref Page 13, paragraph 34, point e · Implemented Q3 2021-22

f) The Department, supported by the rest of government, should carry out a review of the lessons from the pandemic in order to understand better the information it needs to manage financial risk in the sector, including: • the Department’s reliance on its additional COVID-19 monitoring activities to identify the broad range and high level of risk in Croydon Council, and the implicit limitations of its standard risk monitoring work; and • the problems that the pandemic has exposed with data on authorities’ reserves, which led to the Department collecting experimental data on reserves in-year.

Ref Page 13, paragraph 34, point f · Implemented Q3 2021-22

g) In time to be of use to authorities’ 2022-23 budget-setting processes the Department and HM Treasury should produce a long-term financial plan for the sector that: • sets out when the various paused elements of the local government finance reform programme will be restarted; and • considers any further steps that will be needed to support the sector to recover from the financial scarring from the pandemic.

Ref Page 14, paragraph 34, point g · Implemented Q3 2021-22

h) In preparation for, and to mitigate the impacts of, future pandemics or similar crises, the Department needs to: • incorporate an assessment of the sector’s resilience to a future pandemic or similar crisis as part of its ongoing monitoring and assessment of financial sustainability; and • undertake a review of the government’s response in relation to local authorities and use this information to create an emergency financial response framework.

Ref Page 14, paragraph 34, point h · Implemented Q3 2021-22