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
18 Recommendations
8 Conclusions
1 Report
2 Oral sessions
4 Letters
2 Events
Activity timeline 8 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
15 Mar
2021
Oral evidence
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
15 results
Clear
3 Recommendation Accepted
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
The government accepts the recommendation and commits to coordinating a written response by October 2021 from relevant departments, outlining their plans to improve and maintain their understanding of local government finance and pressures.
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5 Recommendation Accepted
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
The government agrees with the recommendation, stating it has already engaged with other departments and established analytical working groups to understand the long-term impacts of COVID-19 for the 2021 Spending Review, and will report back to the Committee in October 2021.
HM Treasury
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7 Recommendation Accepted
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
The government agrees to explore ways to provide more financial certainty, stating it wrote to the committee on 22 June 2021 and plans to confirm the 2022-23 funding settlement at the 2021 Spending Review, aiming for early financial certainty and timely release of the Local Government Finance Settlement.
HM Treasury
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1 Conclusion Accepted
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
The government acknowledges the committee's introductory conclusion and states it will write to the Committee by the end of 2021 to detail how it is improving its oversight of local government finance to prepare for future emergencies.
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9 Recommendation Accepted
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
The government agrees with the recommendation and has launched a review of existing local government finance data collections, with a first steering group meeting in June 2021. The department commits to writing to the Committee by October 2021 to provide an update on the review and how it is incorporating lessons learned from pandemic data collection.
HM Treasury
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10 Recommendation Accepted
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
The government agrees to collect more detailed information on local authority reserves. It intends to make changes to its revenue and financing collections to require more granular data on earmarked reserves and will consult with stakeholders on these proposed changes, committing to provide an update to the Committee by October 2021.
HM Treasury
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11 Recommendation Accepted
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
The government agrees with the implied recommendation to improve engagement with local authorities at risk and states it has already increased its engagement and improved internal risk processes since the pandemic. It notes lessons learned from Croydon Council are reflected in new external assurance reviews and commits to writing to the Committee in October 2021 to set out its full response.
HM Treasury
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12 Conclusion Accepted
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
Government Response
The government agrees with the implied recommendation to improve inter-departmental understanding of local government finance. It commits to working with other departments to achieve this and will coordinate a written response to the Committee by October 2021, detailing how each department plans to improve their understanding and engagement.
HM Treasury
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13 Conclusion Accepted
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
The government agrees, stating it has worked closely with other departments and will coordinate a written response by October 2021 outlining how each department plans to improve and maintain their understanding of the operational realities of local government finance.
HM Treasury
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18 Recommendation Accepted
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
The government agrees with the recommendation and has launched a review of existing local government finance data collections, with a first steering group meeting in June 2021. The department commits to writing to the Committee by October 2021 to provide an update on the review and how it is incorporating lessons learned from pandemic data collection.
HM Treasury
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19 Recommendation Accepted
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
The government agrees with the recommendation, but states it believes its existing £6 billion in un-ringfenced funding and rapid monitoring have realistically assessed and met the sector's pressures, claiming existing resources are sufficient. It will continue its supportive role and report back.
HM Treasury
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22 Conclusion Accepted
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
The government agrees to set out the future plan for local government funding at the 2021 Spending Review, stating it will take stock of the pandemic's impact on local authority resources and service pressures in its determination.
HM Treasury
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23 Conclusion Accepted
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
The government agrees with the need for earlier financial certainty, committing to confirm the 2022-23 funding settlement at the 2021 Spending Review and ensuring the Local Government Finance Settlement is timed for local authorities to confirm budgets ahead of the financial year.
HM Treasury
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24 Conclusion Accepted
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
The government agrees with the need for earlier financial certainty, committing to confirm the 2022-23 funding settlement at the 2021 Spending Review and ensuring the Local Government Finance Settlement is timed for local authorities to confirm budgets ahead of the financial year.
HM Treasury
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25 Conclusion Accepted
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
The government agrees with the need for earlier financial certainty, committing to confirm the 2022-23 funding settlement at the 2021 Spending Review and ensuring the Local Government Finance Settlement is timed for local authorities to confirm budgets ahead of the financial year.
HM Treasury
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Government Response AI assessment · 26 of 18 classified
Accepted 15
Acknowledged 4
Deferred 5
Not Addressed 2
Total 18 recs + 8 conclusions
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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