Second Report - Local authority financial sustainability and the section 114 regime
Select Committee
Housing, Communities and Local Government Committee
HC 33
19 July 2021
Government response
Local authority financial sustainability and the Section 114 regime: Government response to the Select Committee report · published 21 Oct 2021
Recommendations & Conclusions
5 results
1
Recommendation
Accepted
The failure to properly fund children’s and adult social care, especially adult social care, is...
Recommendation
The failure to properly fund children’s and adult social care, especially adult social care, is the single biggest threat facing local government financial resilience. Given that the cost of providing social care consumes between 60% and 70% of the budgets …
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Government Response Summary
The government has committed to investing an additional £5.4 billion over three years, following a 7 September 2021 announcement, to begin a comprehensive programme of reform for adult social care. Further details will be published in a White Paper later this year.
Ministry of Housing, Communities and Local Government
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12
Conclusion
Accepted
Para 54
The Government deserves credit for having responded to an unprecedented crisis with significant emergency funding...
Conclusion
The Government deserves credit for having responded to an unprecedented crisis with significant emergency funding that, from a national perspective, broadly covers all the additional financial pressures consequent on the pandemic and lockdowns in 2021–22. The effects of the pandemic …
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Government Response Summary
The government highlighted over £12 billion in funding already committed to councils, stating that allocations are based on need and that it continues to monitor local authority finances to inform the ongoing Spending Review and support individual authorities.
Ministry of Housing, Communities and Local Government
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14
Conclusion
Accepted
Para 70
Commercial investment appears to pose no clear threat to local government financial resilience overall, and...
Conclusion
Commercial investment appears to pose no clear threat to local government financial resilience overall, and where it has contributed to financial instability, the councils concerned must bear ultimate responsibility. We also welcome the Government’s reforms to the PWLB’s lending terms, …
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Government Response Summary
The government is strengthening the capital system and Prudential Framework by working with CIPFA to amend statutory codes, with planned implementation from April 2022, and by tightening legislation on Minimum Revenue Provision duty and borrowing capping powers.
Ministry of Housing, Communities and Local Government
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18
Recommendation
Accepted
Para 81
We recommend the Government remove the ability of local authorities to choose their own auditors.
Recommendation
We recommend the Government remove the ability of local authorities to choose their own auditors. The risk is that auditors will be reluctant to flag up potential problems for fear of losing their contract. The Government should consider who will …
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Government Response Summary
The government has confirmed its intention to establish the Audit, Reporting and Governance Authority (ARGA) as the new system leader for local audit and considers the Public Sector Auditor Appointments Ltd (PSAA) as the best placed appointing body. It has also undertaken a consultation on the local audit framework and will keep arrangements under review.
Ministry of Housing, Communities and Local Government
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20
Recommendation
Accepted
We recommend that the Government consider changing the section 114 regime to provide Chief Finance...
Recommendation
We recommend that the Government consider changing the section 114 regime to provide Chief Finance Officers with intermediary measures that can be applied at a much earlier stage to highlight concerns before a council’s finances deteriorate so far as to …
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Government Response Summary
The government defends the existing Section 114 regime as effective and states that a wider system of checks and balances, including statutory reporting duties for Section 151 Officers and powers for external auditors, already provides mechanisms to highlight financial concerns.
Ministry of Housing, Communities and Local Government
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