UK Inquiry Tracker

Local Government Financial Sustainability

Public Accounts Committee Closed Inquiry

Opened: 15 Jan 2025 Closed: 21 Aug 2025 Parliament page

Local government is under extreme financial pressure. The National Audit Office found in 2021 that English local authorities had lost around a quarter of their spending power over the preceding decade, with government-funded spending power over 50% lower. While a £4.5bn funding increase was provided to local authorities in 2024-25 … Read more Local government is under extreme financial pressure. The National Audit Office found in 2021 that English local authorities had lost around a quarter of their spending power over the preceding decade, with government-funded spending power over 50% lower. While a £4.5bn funding increase was provided to local authorities in 2024-25 by Government as compared to 2023-24, councils continue to experience rising costs and increased demand across a whole range of services. The PAC’s 2022 report on the local government finance system warned of a chronic lack of accountability and transparency in the system which would hamper recovery from the COVID-19 pandemic. It highlighted the real risk that much-heralded extra funding in the 2021 spending review would only allow local government to stand still, rather than addressing the significant service pressures and risks built up over the decade. The NAO’s 2025 overview report looked at what local government in England spends, how this spending is funded and the effect of changes in recent years, with the aim of enhancing financial transparency in the sector. Based on the NAO report, the PAC will hear from senior officials from the Ministry of Housing, Communities and Local Government (MHCLG) and HM Treasury on subjects including: Drivers of financial distress for local authorities, including adult and children’s social care, temporary accommodation, and special educational needs and disability services for children and young people; Challenges and support for individuals in accessing local authority services; and Support for financially failing local authorities and action to tackle systemic issues. Please look at the requirements for written evidence submissions and note that the Committee cannot accept material as evidence that is published elsewhere. Please note that the Committee is unable to consider or assist with individual cases and does not have a role in the audit or financial oversight of individual local authorities. If you have evidence on these issues please submit it here by 23:59 on Thursday 20 March 2025. Show less

10 Recommendations

21 Conclusions

1 Report

1 Oral session

5 Letters

1 Event

Activity timeline 9 events

27 Apr
2026

Correspondence

Letter from The Permanent Secretary to the Ministry of Housing, Communities and Local Government relating to Treasury Minutes progress rep…

8 Jan
2026

Correspondence

Letter from the Permanent Secretary at the Ministry for Housing, Communities & Local Government relating to Local Government Financial Sust…

18 Sep
2025

Report published

Treasury minutes: Government response to the Committee of Public Accounts on the Thirty-first report from Session 2024-26

4 Sep
2025

Correspondence

Letter from the Permanent Secretary of the HM Treasury relating to the response to Recommendation 3 of the 31st Report of Session 2024-25, …

7 Jul
2025

Correspondence

Letter from the Permanent Secretary of the Ministry of Housing, Communities and Local Government relating to the launch of the Local Govern…

18 Jun
2025

Report published

31st Report - Local Government Financial Sustainability

24 Apr
2025

Correspondence

Letter from the Permanent Secretary of Ministry of Housing, Communities and Local Government relating to the oral evidence session held on …

3 Apr
2025

Oral evidence

Oral evidence session

3 Apr
2025

Formal meeting (oral evidence session) · The Thatcher Room, Portcullis House

Committee event

Oral evidence sessions 1 session

3 Apr 2025

View on parliament.uk

Conrad Smewing · HM Treasury Councillor Peter Marland · Local Government Association Councillor Peter Marland · Milton Keynes City Council Iain Murray · Chartered Insititute of Public Finance and Accountancy (CIPFA) Nico Heslop · Ministry of Housing, Communities and Local Government Professor Tony Travers · The LSE School of Public Policy Sarah Healey · Department for Digital, Culture, Media and Sport Will Garton · Ministry of Housing, Communities and Local Government Will Garton · Department for Levelling Up, Housing and Communities

Reports 1 report · click to expand

Title	HC No.	Published	Items	Response
31st Report - Local Government Financial Sustainability	HC 647	18 Jun 2025	31	Responded

Recommendations & Conclusions

1 result

6 Recommendation Rejected

31st Report - Local Government Fin…

Set out detailed timetable of local government finance reforms, implementation plans, and transitional arrangements.

There is significant uncertainty around how the proposed local government finance reforms and reorganisation will be implemented. Long standing plans for funding and service reforms have been delayed several times. The government has now announced a huge reform agenda for … Read more There is significant uncertainty around how the proposed local government finance reforms and reorganisation will be implemented. Long standing plans for funding and service reforms have been delayed several times. The government has now announced a huge reform agenda for local government, including an overhaul of local audit, local finance reform, service reform including for SEND and children’s social care, and extensive local government reorganisation. With these reforms happening simultaneously, there are significant risks. There are capacity constraints within local authorities which risks their ability to plan for and implement such wholesale changes at once. And with the Casey Commission not concluding on adult social care until 2028, plans may yet need to be adapted. Professor Tony Travers warned that given the delays in finance reform, updating how funding is distributed will now result in significant shifts of spending power between local authorities, but transitional arrangements are currently still unclear. It is uncertain whether the reforms will significantly improve local government’s financial position given MHCLG’s acknowledgement that there is not enough money to go around. RECOMMENDATION a. To allow local authorities to plan, MHCLG should set out a detailed timetable of its proposed reforms and implementation plans as part of the provisional settlement, including what transitional arrangements it will put in place. 7 b. MHCLG should include detail on what the timetable is for reducing the financial pressure on social care, special educational needs provision and temporary accommodation and an indicative proportion of remaining resources it expects Councils to have to manage commonly used discretionary services. c. MHCLG and HM Treasury should also review how the switch from government to council tax funding has affected the provision of local services. 8 1 Challenges to delivering local services Introduction Show less

Government Response

The government rejected the recommendation to review the impact of switching to council tax funding, arguing that council tax is a locally determined and flexible funding stream, and existing mechanisms like the Fair Funding Review 2.0 already address proposals for better accounting for tax generating ability.

HM Treasury

View details

Government Response AI assessment · 31 of 10 classified

Accepted 30

Rejected 1

Total 10 recs + 21 conclusions

Correspondence 5 letters

27 Apr 2026 To committee Letter from The Permanent Secretary to the Ministry of Housing, Communities and Local Government relating to Treasury Minutes progress report, 9 February 2026

Parliament page

8 Jan 2026 To committee Letter from the Permanent Secretary at the Ministry for Housing, Communities & Local Government relating to Local Government Financial Sustainability, 16 December 2025

Parliament page

4 Sep 2025 To committee Letter from the Permanent Secretary of the HM Treasury relating to the response to Recommendation 3 of the 31st Report of Session 2024-25, Local Government Financial Sustainability, 07 August 2025

Parliament page

7 Jul 2025 To committee Letter from the Permanent Secretary of the Ministry of Housing, Communities and Local Government relating to the launch of the Local Government Outcomes Framework, 03 July 2025

Parliament page

24 Apr 2025 To committee Letter from the Permanent Secretary of Ministry of Housing, Communities and Local Government relating to the oral evidence session held on 03 April 2025 on Local Government Financial Sustainability, 16 April 2025

Parliament page