The Funding and Sustainability of Local Government Finance
Housing, Communities and Local Government Committee
Closed
Inquiry
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 …
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22
Recommendations
36
Conclusions
1
Report
4
Oral sessions
4
Events
Activity timeline 10 events
21 Oct
2025
2025
23 Jul
2025
2025
7 May
2025
2025
Oral evidence
7 May
2025
2025
Formal meeting (oral evidence session) · The Thatcher Room, Portcullis House
8 Apr
2025
2025
Oral evidence
8 Apr
2025
2025
Formal meeting (oral evidence session) · The Wilson Room, Portcullis House
11 Mar
2025
2025
Oral evidence
11 Mar
2025
2025
Formal meeting (oral evidence session) · The Thatcher Room, Portcullis House
11 Feb
2025
2025
Oral evidence
11 Feb
2025
2025
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 4 sessions
7 May 2025
View on parliament.uk
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
View on parliament.uk
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
View on parliament.uk
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
Reports 1 report · click to expand
| Title | HC No. | Published | Items | Response |
|---|---|---|---|---|
| 2nd Report - The Funding and Sustainability of Local Government … | HC 514 | 23 Jul 2025 | 58 | Responded |
Recommendations & Conclusions
9 results
20
Conclusion
Rejected
2nd Report - The Funding and Susta…
New Burdens doctrine insufficient to prevent local government unfunded mandates
The New Burdens doctrine, which requires government departments to ensure any new responsibilities for local authorities are fully costed and funded, is a vitally important part of government financing but is not robust enough to prevent unfunded mandates. (Conclusion, Paragraph …
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Government Response
The Government does not accept the recommendation to devolve full responsibility for setting council tax to individual councils at this time, citing existing local authority control over tax levels and discretionary powers.
Ministry of Housing, Communities and Local Government
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38
Conclusion
Rejected
2nd Report - The Funding and Susta…
Council tax is a regressive and unfair tax requiring urgent reform.
Council tax is a regressive and unfair tax. We note the Government’s decision to prioritise other areas of local government funding for reform, but any local government reform that does not address council tax will be undermined by the current …
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Government Response
The government notes the recommendation for council tax reform but states it currently has no plans to reform it, although it is focusing on the approach to accounting for council tax income in funding proposals.
Ministry of Housing, Communities and Local Government
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40
Conclusion
Rejected
2nd Report - The Funding and Susta…
Stable council tax income and collection rates are insufficient reasons to avoid reform.
The Government’s arguments that council tax has high collection rates and leads to stable income levels are not sufficient reasons to avoid reforming council tax. (Conclusion, Paragraph 156)
Government Response
The government notes the recommendation to reform council tax but states it currently has no plans to do so, though it is focusing on how council tax income is accounted for in funding allocations.
Ministry of Housing, Communities and Local Government
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41
Conclusion
Rejected
2nd Report - The Funding and Susta…
Devolution of council tax powers enhances democratic engagement by residents.
Council tax is one of the main interactions with local government that residents will have. Giving councils more power over, and therefore more responsibility for, setting council tax will improve democratic engagement by residents. (Conclusion, Paragraph 157)
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Government Response
The government explicitly rejects the implied recommendation to devolve full responsibility for setting council tax to individual councils, stating that council tax is already localized with authorities having powers over setting levels and administering the tax.
Ministry of Housing, Communities and Local Government
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42
Recommendation
Rejected
2nd Report - The Funding and Susta…
Begin overhauling or replacing council tax, clarifying its purpose, impact, and fairness.
The Government should begin the process of overhauling or replacing council tax. This should look at options for a significant reform of local government funding, which could include replacing council tax. Whatever form of taxation is eventually adopted, the Government …
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Government Response
The government notes the recommendation to reform or replace council tax but provides no commitment to begin such a process, stating that tax policy decisions are made by the Chancellor at fiscal events.
Ministry of Housing, Communities and Local Government
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43
Recommendation
Rejected
2nd Report - The Funding and Susta…
Devolve power to councils to revalue properties, set bands, and apply council tax discounts.
A significant and considered reform of council tax will take several years to take effect. Until it does, the Government should devolve power and responsibility for setting council tax to councils. This should include the power for individual councils to …
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Government Response
The government explicitly rejects devolving full responsibility for setting council tax to individual councils at this time, stating that council tax is already localized with existing discretionary powers for local authorities.
Ministry of Housing, Communities and Local Government
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46
Recommendation
Rejected
2nd Report - The Funding and Susta…
Devolve more powers to local authorities for setting business rates multipliers and discounts.
The Government must devolve more powers to local authorities to set multipliers, discounts and premiums relating to business rates. (Recommendation, Paragraph 170)
Government Response
The government rejects devolving more powers to local authorities for setting business rates multipliers, citing the need for national certainty and highlighting existing powers councils have for reliefs and supplements.
Ministry of Housing, Communities and Local Government
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53
Conclusion
Rejected
2nd Report - The Funding and Susta…
Exceptional Financial Support allocation process for councils lacks transparency.
The process by which the Government chooses which councils will receive EFS, and what it will look like, is not transparent. (Conclusion, Paragraph 204)
Government Response
The government rejects the committee's conclusion that the process for EFS is not transparent, stating it has always maintained transparency with external assurance reviews and support requests published on GOV.UK.
Ministry of Housing, Communities and Local Government
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55
Recommendation
Rejected
2nd Report - The Funding and Susta…
Mandate minimum financial training for all councillors and statutory officers.
The Government must mandate a minimum level of financial training for all councillors and statutory officers, so that all councillors are at least able to understand their council’s financial accounts and use them to compare their actual performance with the …
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Government Response
The government rejects mandating financial training, stating it is the responsibility of local authorities, but highlights its funding of the LGA's Sector Support Programme, which already provides financial training for councillors and officers.
Ministry of Housing, Communities and Local Government
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