Financial distress in local authorities

Housing, Communities and Local Government Committee Closed Inquiry
Opened: 2 Nov 2023 Closed: 19 Mar 2024 Parliament page
Since 2018 eight English local authorities have issued section 114 notices. The results can be significant for local service delivery and local democracy. Various sources continue to report that other authorities are financially unsustainable and are at risk issuing a section 114 notice. This inquiry examines the current landscape of … Read more
15 Recommendations
13 Conclusions
1 Report
4 Oral sessions
6 Letters
4 Events
Activity timeline 16 events
14 May
2024
Correspondence
26 Mar
2024
Report published
1 Feb
2024
Report published
14 Dec
2023
Correspondence
6 Dec
2023
Oral evidence
6 Dec
2023
Formal meeting (oral evidence session) · Room 8, Palace of Westminster
5 Dec
2023
Correspondence
5 Dec
2023
Correspondence
5 Dec
2023
Correspondence
28 Nov
2023
Correspondence
20 Nov
2023
Oral evidence
20 Nov
2023
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 4 sessions
6 Dec 2023
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Oral Evidence
Joanna Key · Department for Levelling Up, Housing and Communities Nico Heslop · Ministry of Housing, Communities and Local Government Rt Hon Michael Gove · Department for Levelling Up, Housing and Communities
20 Nov 2023
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Oral Evidence
Nico Heslop · Ministry of Housing, Communities and Local Government Simon Hoare MP · Department for Levelling Up, Housing and Communities
13 Nov 2023
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Oral Evidence
Abdool Kara · National Audit Office Bob Watson · Surrey Heath Borough Council Gary Fielding · North Yorkshire Council Jonathan Carr-West · Local Government Information Unit Lorna Baxter · Association of Local Authorities’ Treasurer Societies Mr David Phillips · Institute for Fiscal Studies Paul Dossett · Grant Thornton Steve Thompson · Blackpool Council
8 Nov 2023
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Oral Evidence
Councillor Barry Lewis · County Councils Network Councillor Claire Holland · London Councils Councillor Graham Chapman · SIGOMA Councillor John Fuller OBE · Local Government Association Councillor Sam Chapman-Allen · District Councils Network Stephen Jones · Core Cities UK
Title HC No. Published Items Response
Third Report - Financial distress in local authorities HC 56 1 Feb 2024 28 Responded
Recommendations & Conclusions
3 results
Clear
7 Conclusion Deferred
Third Report - Financial distress …
Using capital funding for revenue is unsustainable, risking asset sales and delaying reforms.
However, local authorities’ use of capital funding for revenue expenditure is not sustainable and at best it can only be a temporary solution to short-term financial pressures. We have concerns that the Government, if it does grant these additional flexibilities, … Read more
Government Response
The government has launched a call for views on options for capital resource flexibility and will publish a response before summer recess, while affirming that existing exceptional financial support via capitalisation directions is only for specific local issues.
Ministry of Housing, Communities and Local Government
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10 Recommendation Deferred
Third Report - Financial distress …
Implement business rates reset and Fair Funding Review; commit to long-term reform.
We renew our previous recommendation that the Government implements the business rates reset and Fair Funding Review. This should include transitional arrangements to ensure stability in funding levels after reset and review. The Government must commit to a fundamental long-term … Read more
Government Response
The government states the business rates retention system reset will not happen before 2025-26 due to sector calls for stability, thereby deferring its implementation. It also acknowledges the need for improvements in the local government finance landscape and commits to considering further improvements in the next Parliament, without committing to a specific fundamental long-term review of the business rates system.
Ministry of Housing, Communities and Local Government
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27 Recommendation Deferred
Third Report - Financial distress …
Review local authority funding and taxation, including land value taxes and fiscal devolution
The next Government must embark on a fundamental review of the system of local authority funding and local taxation, exploring all options for removing its current regressive elements and bringing it into the 21st Century. This should include consideration of … Read more
Government Response
The government commits to improving the local government finance system in the next Parliament, requiring significant consultation, but explicitly rejects the consideration of land value taxation.
Ministry of Housing, Communities and Local Government
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Government Response AI assessment · 28 of 15 classified
Accepted 13
Accepted in Part 2
Acknowledged 4
Deferred 3
Not Addressed 1
Rejected 5
Total 15 recs + 13 conclusions
Correspondence 6 letters
14 May 2024 To committee Letter from the Chair to the Parliamentary Under Secretary of State for Local Government dated 13 May 2024 concerning the Government’s response to the Committee’s Financial Distress in Local Authorities Report
Parliament page
14 Dec 2023 To committee Letter from the Chair to the Secretary of State dated 13 December 2023 concerning Financial Distress in Local Authorities
Parliament page
5 Dec 2023 To committee Letter from Councillor Susan Hinchcliffe relating to Financial Distress in Local Authorities, dated 29 November 2023.
Parliament page
5 Dec 2023 To committee Letter from CIPFA, relating to Financial Distress in Local Authorities, dated 30 November 2023
Parliament page
5 Dec 2023 To committee Letter from the Chair to Chartered Institute of Public Finance and Accountancy dated 27 November 2023 concerning changes to local government financing
Parliament page
28 Nov 2023 To committee Letter from the Chair to the Secretary of State dated 27 November concerning Financial Distress in Local Authorities
Parliament page