The Funding and Sustainability of Local Government Finance

Housing, Communities and Local Government Committee Closed Inquiry
Opened: 11 Dec 2024 Closed: 18 Mar 2026 Parliament page
As Government seeks to reform local government finance, this inquiry will consider whether the local government finance system is fit for purpose and assess how it can meet the needs of local authorities and service users. It will explore how much control local authorities have over their own finances and … Read more
22 Recommendations
36 Conclusions
1 Report
4 Oral sessions
4 Events
Activity timeline 10 events
21 Oct
2025
Report published
23 Jul
2025
Report published
7 May
2025
Oral evidence
7 May
2025
Formal meeting (oral evidence session) · The Thatcher Room, Portcullis House
8 Apr
2025
Oral evidence
8 Apr
2025
Formal meeting (oral evidence session) · The Wilson Room, Portcullis House
11 Mar
2025
Oral evidence
11 Mar
2025
Formal meeting (oral evidence session) · The Thatcher Room, Portcullis House
11 Feb
2025
Oral evidence
11 Feb
2025
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 4 sessions
7 May 2025
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Oral Evidence
Jim McMahon MP · Ministry of Housing, Communities and Local Government Nico Heslop · Ministry of Housing, Communities and Local Government
8 Apr 2025
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Oral Evidence
Abdool Kara · National Audit Office Dan Bates · OnTor Limited Gareth Davies · National Audit Office Jane Pearson · Ribble Valley Borough Council Owen Mapley · Chartered Institute of Public Finance and Accountancy (CIPFA) Rob Powell · Warwickshire County Council Vicky Davis · National Audit Office
11 Mar 2025
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Oral Evidence
Councillor Barry Lewis · County Councils Network Councillor Bill Revans · Somerset Council Councillor Grace Williams · London Councils Councillor Jeremy Newmark · District Councils Network Councillor Neghat Khan · Nottingham City Council Councillor Peter Marland · Local Government Association Councillor Tony Dyer · Bristol City Council
11 Feb 2025
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Oral Evidence
Aileen Murphie Charlotte Pickles · Reform David Phillips · Institute for Fiscal Studies Jonathan Carr-West · Local Government Information Unit Professor Andy Pike · Newcastle University Professor Tony Travers · London School of Economics Stuart Hoddinott · Institute for Government
Title HC No. Published Items Response
2nd Report - The Funding and Sustainability of Local Government … HC 514 23 Jul 2025 58 Responded
Recommendations & Conclusions
4 results
Clear
34 Recommendation Accepted in Part
2nd Report - The Funding and Susta…
Reconsider freeze on Local Housing Allowance rates and extend support for housing acquisition
As we recommended in our previous report, England’s Homeless Children, the Government should reconsider its decision to freeze Local Housing Allowance rates and should extend its support for local authorities to acquire new housing stock through the Local Authority Housing … Read more
Government Response
The government confirms it will not reconsider freezing Local Housing Allowance rates, citing fiscal context and prioritization of other support funds. However, it accepts the recommendation to extend support for the Local Authority Housing Fund, announcing £950 million in capital for its fourth round, running until 2030.
Ministry of Housing, Communities and Local Government
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37 Recommendation Accepted in Part
2nd Report - The Funding and Susta…
Require the new funding formula to consider sub-ward disparities and local housing costs.
The Government’s new funding formula must consider the effect of disparities between wards and sub-wards within single local authorities, which can be hidden when only considering the data at the level of whole local authorities. Measures of deprivation used in … Read more
Government Response
The government states its needs assessments vary in granularity and that MHCLG is working with DWP to incorporate housing costs into the 2025 Index of Multiple Deprivation, with a final decision on its inclusion to be made in the autumn.
Ministry of Housing, Communities and Local Government
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45 Recommendation Accepted in Part
2nd Report - The Funding and Susta…
Design business rates system to incentivise councils to encourage local economic growth.
The business rates system, or any alternative tax system for business property, must be designed to incentivise councils to encourage growth in their areas. We are concerned that any full, cliff-edge reset of business rates will reduce this incentive by … Read more
Government Response
The government acknowledges concerns about cliff-edges, stating it will design transitional arrangements for the 2026 reset and will not reset the system again during the current multi-year settlement. It defers the timing and design of the next reset to a later period, allowing for consideration of phased resets.
Ministry of Housing, Communities and Local Government
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48 Recommendation Accepted in Part
2nd Report - The Funding and Susta…
Devolve comprehensive tax-setting powers to local authorities, including for new local taxes.
The Government must be more courageous with its long-term plans for the funding of local government. While stabilisation is important in the short term, both the Ministry and HM Treasury need to start considering how to get the sector back … Read more
Government Response
The government has committed new grant funding and plans fundamental funding reforms from 2026-27, while also advancing measures through a Bill to empower Mayors with fiscal powers, including the ability to charge a Mayoral Community Infrastructure Levy (CIL) and add a council tax precept.
Ministry of Housing, Communities and Local Government
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Government Response AI assessment · 58 of 22 classified
Accepted 12
Accepted in Part 4
Acknowledged 6
Deferred 24
Not Addressed 3
Rejected 9
Total 22 recs + 36 conclusions