COVID-19: Local Government finance

Public Accounts Committee Closed Inquiry
Opened: 8 Feb 2021 Closed: 5 Aug 2021 Parliament page
Local authority finances are under significant pressure in the context of the COVID-19 pandemic, with central government asking local authorities to deliver many additional services on top of the cost of many existing services increasing, opportunities to implement savings programmes being disrupted, and various locally generated income streams have fallen. … Read more
2 Recommendations
24 Conclusions
1 Report
2 Oral sessions
4 Letters
2 Events
Activity timeline 10 events
16 Nov
2021
Correspondence
2 Sep
2021
Report published
29 Jun
2021
Correspondence
4 Jun
2021
Report published
20 Apr
2021
Correspondence
18 Mar
2021
Oral evidence
18 Mar
2021
Correspondence
18 Mar
2021
Formal meeting (oral evidence session) · The Wilson Room, Portcullis House
15 Mar
2021
Oral evidence
15 Mar
2021
Formal meeting (oral evidence session) · The Wilson Room, Portcullis House
Oral evidence sessions 2 sessions
18 Mar 2021
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COVID-19: Local Government Finance
Alex Skinner · Department for Levelling Up, Housing and Communities Catherine Frances · Department for Levelling Up, Housing and Communities Cat Little · Cabinet Office Jeremy Pocklington CB · Ministry of Defence
15 Mar 2021
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COVID-19: Local Government Finance
Carol Culley · Manchester City Council Lorna Baxter · Oxfordshire County Council Martin Reeves · Solace Rob Whiteman · CIPFA
Title HC No. Published Items Response
Fourth Report - COVID-19: Local government finance HC 239 4 Jun 2021 26 Responded
Recommendations & Conclusions
26 results
2 Recommendation
Fourth Report - COVID-19: Local go…
The pandemic has exposed limitations in the data that the Department normally collects from local...
The pandemic has exposed limitations in the data that the Department normally collects from local authorities, meaning it has not had a proper picture of local financial resilience. Prior to the pandemic, the Department’s collection of local authority finance data … Read more
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3 Conclusion
Fourth Report - COVID-19: Local go…
Government support schemes during the pandemic were not always designed with sufficient knowledge of local...
Government support schemes during the pandemic were not always designed with sufficient knowledge of local government finance or input from the sector. Representatives of the local government sector assert that government departments other than MHCLG did not always engage with … Read more
Government Response
3.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 3.2 The department has worked closely with other government departments to ensure a coordinated response that takes … Read more
HM Treasury
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4 Conclusion
Fourth Report - COVID-19: Local go…
The Department has not fulfilled previous assurances that it will be transparent about financial risk...
The Department has not fulfilled previous assurances that it will be transparent about financial risk in the sector by sharing information with the National Audit Office. The Department previously told us that it would ensure the National Audit Office can … Read more
Government Response
4.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 4.2 The department is mindful of the need for the National Audit Office (NAO) to receive information … Read more
HM Treasury
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5 Conclusion
Fourth Report - COVID-19: Local go…
The Department’s over-optimism about the impact of the pandemic on local authorities risks leading to...
The Department’s over-optimism about the impact of the pandemic on local authorities risks leading to reductions in services for local people. The Department is confident about the sector’s stability and sustainability in relation to the immediate and short-term impacts of … Read more
Government Response
5.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 5.2 The department believes it has made a realistic assessment of the impact of the pandemic on … Read more
HM Treasury
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6 Conclusion
Fourth Report - COVID-19: Local go…
The Department has yet to address the longstanding structural issues within local government finance.
The Department has yet to address the longstanding structural issues within local government finance. Since 2015–16, the government has been planning to put in place significant changes to local government finance, but these have yet to be introduced. Parts of … Read more
Government Response
6.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 6.2 The government will set out the future plan for local government funding at the 2021 Spending … Read more
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7 Conclusion
Fourth Report - COVID-19: Local go…
It is unacceptable that local authorities continue to face uncertainty about the level of financial...
It is unacceptable that local authorities continue to face uncertainty about the level of financial support they can expect from government on top of the other pressures and uncertainty with which they are currently required to cope. The pandemic has … Read more
Government Response
7.1 The government agrees with the Committee’s recommendation. Target implementation date: End 2021 7.2 HM Treasury, MHCLG and other departments will continue to monitor the pressures that local authorities are … Read more
HM Treasury
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1 Conclusion
Fourth Report - COVID-19: Local go…
On the basis of a report by the Comptroller and Auditor General, we took evidence...
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Ministry of Housing, Communities & Local Government (the Department) and HM Treasury about local government finance in England during the COVID-19 pandemic.1 We … Read more
Government Response
1.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2021 1.2 In the run-up to the COVID-19 pandemic, the Ministry for Housing, Communities and Local Government (MHCLG … Read more
HM Treasury
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8 Conclusion
Fourth Report - COVID-19: Local go…
In addition to the March and April unringfenced funding, the Department provided two further tranches...
In addition to the March and April unringfenced funding, the Department provided two further tranches of unringfenced funding in 2020–21, bringing the total value of these grants to £4.55 billion. The Department took us through the ways in which its … Read more
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9 Conclusion
Fourth Report - COVID-19: Local go…
The Department introduced a monthly survey in April 2020 to collect data on the financial...
The Department introduced a monthly survey in April 2020 to collect data on the financial pressures faced by local authorities due to the pandemic. Prior to the pandemic, the majority of its regular financial data sets tended to be collected … Read more
Government Response
2a: PAC recommendation: The Department should draw on the experience of collecting data during the COVID-19 pandemic to improve its regular collections of local government financial data. In particular, it … Read more
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10 Conclusion
Fourth Report - COVID-19: Local go…
Local authorities need to hold sufficient reserves to deal with known future needs and the...
Local authorities need to hold sufficient reserves to deal with known future needs and the financial risks they face. Accordingly, reserve levels are a key measure of the financial sustainability of local authorities over the medium-term.20 As part of its … Read more
Government Response
2.6 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 2.7 The department agrees that collecting more detailed information on local authority reserves levels will increase understanding … Read more
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11 Conclusion
Fourth Report - COVID-19: Local go…
The Department’s monthly survey is an addition to a broader framework of risk monitoring that...
The Department’s monthly survey is an addition to a broader framework of risk monitoring that draws on a range of other information sources.22 Through the use of this framework the Department had placed Croydon Council on its ‘long list’ of … Read more
Government Response
2.10 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 2.11 Whilst the department has stewardship of the overarching system, local authorities remain independent from central government, … Read more
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12 Recommendation
Fourth Report - COVID-19: Local go…
We asked representatives of the local government sector how well the Department had engaged with...
We asked representatives of the local government sector how well the Department had engaged with it over the last year. We heard and received evidence praising the quality of the Department’s engagement with the sector during the pandemic. For example, … Read more
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13 Conclusion
Fourth Report - COVID-19: Local go…
The Department highlighted “the excellent work” within the Department for Health and Social Care (DHSC)...
The Department highlighted “the excellent work” within the Department for Health and Social Care (DHSC) as an example of “that deepening of the connection with local government”.28 In June 2020, DHSC created the Social Care Sector COVID-19 Support Taskforce to … Read more
Government Response
3.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 3.2 The department has worked closely with other government departments to ensure a coordinated response that takes … Read more
HM Treasury
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14 Conclusion
Fourth Report - COVID-19: Local go…
We received written evidence from representative of the local government sector criticising a range of...
We received written evidence from representative of the local government sector criticising a range of support schemes that were introduced during the pandemic, particularly business grants, as being complex or challenging to administer.30 Pandemic business rates relief started in March … Read more
Government Response
3.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 3.2 The department has worked closely with other government departments to ensure a coordinated response that takes … Read more
HM Treasury
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15 Conclusion
Fourth Report - COVID-19: Local go…
The Department told us that during the early months of the pandemic it developed greater...
The Department told us that during the early months of the pandemic it developed greater structure and a stronger framework around exceptional financial support for individual authorities. Exceptional financial support is used where the Department accepts authorities face unmanageable financial … Read more
Government Response
2.10 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 2.11 Whilst the department has stewardship of the overarching system, local authorities remain independent from central government, … Read more
HM Treasury
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16 Conclusion
Fourth Report - COVID-19: Local go…
The Department told the NAO that sharing information on the number of authorities interested in...
The Department told the NAO that sharing information on the number of authorities interested in exceptional financial support or at risk more generally would invite public speculation on the identity of the authorities affected. However, the information the Department does … Read more
Government Response
4.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 4.2 The department is mindful of the need for the National Audit Office (NAO) to receive information … Read more
HM Treasury
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17 Conclusion
Fourth Report - COVID-19: Local go…
We previously discussed the provision of this type of information with the Department as part...
We previously discussed the provision of this type of information with the Department as part of our examination of the Department’s Starter Home programme. We recognised that sensitive information should not necessarily be made public, but we asked the Department … Read more
Government Response
4.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 4.2 The department is mindful of the need for the National Audit Office (NAO) to receive information … Read more
HM Treasury
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18 Conclusion
Fourth Report - COVID-19: Local go…
In its examinations of the local government sector prior to the pandemic, our previous Committee...
In its examinations of the local government sector prior to the pandemic, our previous Committee raised concerns in 2018 that “the Department may not know if pressures in one service area quickly transfer to others or the extent of the … Read more
Government Response
2a: PAC recommendation: The Department should draw on the experience of collecting data during the COVID-19 pandemic to improve its regular collections of local government financial data. In particular, it … Read more
HM Treasury
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19 Conclusion
Fourth Report - COVID-19: Local go…
Manchester City Council told us that government support has not fully mitigated the impact of...
Manchester City Council told us that government support has not fully mitigated the impact of the pandemic, and the average pressure on next year’s budget is £15 million across the 10 authorities in Greater Manchester and £32 million across the … Read more
Government Response
5.1 The government agrees with the Committee’s recommendation. Target implementation date: October 2021 5.2 The department believes it has made a realistic assessment of the impact of the pandemic on … Read more
HM Treasury
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20 Conclusion
Fourth Report - COVID-19: Local go…
The Department and HM Treasury explained that their judgement of the sustainability of the local...
The Department and HM Treasury explained that their judgement of the sustainability of the local government sector was not a long-term one and any government assessment of funding needs beyond 2021–22 was a matter for the next spending review.50 Sector … Read more
Government Response
5.7 The government agrees with the Committee's recommendation. Target implementation date: Autumn 2021 5.8 The department will use historic and any future monitoring information from local authorities to inform work … Read more
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21 Conclusion
Fourth Report - COVID-19: Local go…
Government has had plans to enact a range of local government financial reforms for a...
Government has had plans to enact a range of local government financial reforms for a number of years, but these have not yet been introduced.55 Witnesses from the sector were clear that this reform was still required. The Society of … Read more
Government Response
6.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 6.2 The government will set out the future plan for local government funding at the 2021 Spending … Read more
HM Treasury
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22 Conclusion
Fourth Report - COVID-19: Local go…
CIPFA and SOLACE called for a broader review of potential reform options rooted in a...
CIPFA and SOLACE called for a broader review of potential reform options rooted in a deeper understanding of the impact of the pandemic on council tax and business rates, encompassing the government’s promised reforms to adult social care funding, and … Read more
Government Response
6.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2021 6.2 The government will set out the future plan for local government funding at the 2021 Spending … Read more
HM Treasury
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23 Conclusion
Fourth Report - COVID-19: Local go…
Local authority representatives told us about the unprecedented level of financial uncertainty they have faced...
Local authority representatives told us about the unprecedented level of financial uncertainty they have faced and continue to face as a result of the pandemic.61 Manchester City Council said that the impact on local authority commercial income, which does not … Read more
Government Response
7.1 The government agrees with the Committee’s recommendation. Target implementation date: End 2021 7.2 HM Treasury, MHCLG and other departments will continue to monitor the pressures that local authorities are … Read more
HM Treasury
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24 Conclusion
Fourth Report - COVID-19: Local go…
Representatives of the local government sector told us that the way in which government support...
Representatives of the local government sector told us that the way in which government support had been designed or announced has also created or perpetuated uncertainty. SIGOMA explained that “2020–21 has been a year of month to month existence with … Read more
Government Response
7.1 The government agrees with the Committee’s recommendation. Target implementation date: End 2021 7.2 HM Treasury, MHCLG and other departments will continue to monitor the pressures that local authorities are … Read more
HM Treasury
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25 Conclusion
Fourth Report - COVID-19: Local go…
We received written evidence from SOLACE, which told us that “one-year financial settlements, which are...
We received written evidence from SOLACE, which told us that “one-year financial settlements, which are delivered late in the budget planning cycle, presents risks and can result in very damaging cuts to services residents and businesses rely on.” Similarly, CIPFA … Read more
Government Response
7.1 The government agrees with the Committee’s recommendation. Target implementation date: End 2021 7.2 HM Treasury, MHCLG and other departments will continue to monitor the pressures that local authorities are … Read more
HM Treasury
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26 Conclusion
Fourth Report - COVID-19: Local go…
We asked the Department about the sector’s concerns that government information coming late in the...
We asked the Department about the sector’s concerns that government information coming late in the day and leaving little time to finalise plans tended to lead to decisions that were not the best value for money. We also asked when … Read more
Government Response
7.1 The government agrees with the Committee’s recommendation. Target implementation date: End 2021 7.2 HM Treasury, MHCLG and other departments will continue to monitor the pressures that local authorities are … Read more
HM Treasury
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Correspondence 4 letters
16 Nov 2021 Correspondence from Jeremy Pocklington CB, Permanent Secretary, Department for Levelling Up, Housing and Communities, re Fourth Report of the Public Accounts Committee (PAC) from Session 2021-22, on COVID-19 Local Government Finance, dated 29 October 2021
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29 Jun 2021 Correspondence from Tom Scholar, Permanent Secretary, HM Treasury, re Local government finance, dated 22 June 2021
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20 Apr 2021 Correspondence from Jeremy Pocklington CB, Permanent Secretary, Ministry of Housing, Communities and Local Government, re Local Government and the Pandemic: Supplementary information, dated 15 April 2021
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18 Mar 2021 Correspondence from Jeremy Pocklington CB, Permanent Secretary Ministry, of Housing, Communities & Local Government, re Exceptional financial support, dated 17 March 2021
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