Local Authority Financial Sustainability and the Section 114 Regime
Housing, Communities and Local Government Committee
Closed
Inquiry
This inquiry will consider the scale and depth of financial sustainability issues within local authorities with the potential to lead to the issuing of S114 notices, including the effect of commercial investments and the impact of Covid-19, and the role of central government in helping councils avoid this outcome.
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9
Recommendations
11
Conclusions
1
Report
3
Oral sessions
3
Events
Activity timeline 5 events
21 Oct
2021
2021
19 Jul
2021
2021
25 Mar
2021
2021
Oral evidence
22 Feb
2021
2021
Oral evidence
8 Feb
2021
2021
Oral evidence
Oral evidence sessions 3 sessions
25 Mar 2021
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Oral evidence
Chris Buss · Croydon Council
Cllr Hamida Ali · Croydon Council
Katherine Kerswell · Croydon Council
Sarah Ironmonger · Grant Thornton
22 Feb 2021
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Oral evidence
Alex Skinner · Department for Levelling Up, Housing and Communities
Luke Hall · Ministry of Housing, Communities and Local Government
8 Feb 2021
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Oral evidence
Cllr Richard Watts · Local Government Association (LGA)
Rob Whiteman · CIPFA
Reports 1 report · click to expand
| Title | HC No. | Published | Items | Response |
|---|---|---|---|---|
| Second Report - Local authority financial sustainability and the… | HC 33 | 19 Jul 2021 | 20 | Responded |
Recommendations & Conclusions
5 results
2
Conclusion
Rejected
Second Report - Local authority fi…
We agree with the principle of incentivising councils to grow business rates in their area,...
We agree with the principle of incentivising councils to grow business rates in their area, as a means of making them less reliant on central funding, but we are concerned about the impact on councils that, through no fault of …
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Government Response
The government stated it would not proceed with the implementation of the Fair Funding Review and business rates reset in 2021/22. It confirmed that decisions on the future direction of local government finance reform will be taken at the ongoing Spending Review.
Ministry of Housing, Communities and Local Government
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4
Recommendation
Rejected
Second Report - Local authority fi…
We recommend that the Government implement the Fair Funding Review and business rates reset as...
We recommend that the Government implement the Fair Funding Review and business rates reset as soon as possible, as the quickest way of partly restoring the link between funding and need. The Government should also allow councils to retain 75% …
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Government Response
The government explicitly rejected the immediate implementation of the Fair Funding Review and 75% Business Rates Retention, stating that decisions on the way forward will be taken at the ongoing Spending Review.
Ministry of Housing, Communities and Local Government
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5
Conclusion
Rejected
Second Report - Local authority fi…
We are pleased that the allocation of the £300 million grant for social care mitigates...
We are pleased that the allocation of the £300 million grant for social care mitigates the distributional impact of the council tax rises, but we do not think the fairness of the funding model should be reliant on one-off, short-term …
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Government Response
The government rejects the implied recommendation for council tax reform and revaluation, stating it has no plans for fundamental change. It argues that a revaluation would be expensive, lead to higher bills for many households, potentially penalise those on fixed incomes, and not address disparities in council tax base strength.
Ministry of Housing, Communities and Local Government
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6
Recommendation
Rejected
Second Report - Local authority fi…
The Government should reform council tax by undertaking a revaluation of properties and introducing additional...
The Government should reform council tax by undertaking a revaluation of properties and introducing additional council tax bands, in line with the recommendations of our predecessor Committee. In the longer term, the Government should consider options for wider reform of …
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Government Response
The government rejects the recommendation, stating it has no plans to replace or fundamentally reform council tax. It argues that a revaluation would be expensive, lead to bill increases for many households, potentially penalise people on fixed incomes, and not address disparities in council tax base strength.
Ministry of Housing, Communities and Local Government
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19
Conclusion
Rejected
Second Report - Local authority fi…
The absence of section 114 notices before 2018 is adduced as evidence that the regime...
The absence of section 114 notices before 2018 is adduced as evidence that the regime has been broadly successful. The consequences for a council of issuing a notice are serious, however, and we are concerned that, rather than concentrating minds, …
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Government Response
The government defends Section 114 notices as an important and effective part of the finance system, stating they operate within a wider system of checks and balances that should lead to earlier action, thus not committing to an intermediary "yellow card" measure.
Ministry of Housing, Communities and Local Government
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