Fourth Report - COVID-19: Local government finance

Select Committee

Public Accounts Committee HC 239 4 June 2021

Report Status Response document linked Recorded deadline: 4 Aug 2021

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Conclusions & Recommendations 26 items (18 recs)

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Government response

Treasury minutes: Government response to the Committee of Public Accounts on the Fourth report from Session 2021-22 · published 2 Sep 2021

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Recommendations & Conclusions

26 results

2 Recommendation

The pandemic has exposed limitations in the data that the Department normally collects from local...

Recommendation

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 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 covering areas such as service spending and income from sources such as council tax, business rates and sales fees and charges was generally undertaken on an annual basis. This approach could not provide information quickly enough to navigate a fast-moving and unprecedented pandemic. The Department has put in place a monthly survey collecting data on authorities’ spending and income pressures due to COVID-19. The data from the monthly survey has underpinned decision making in the Department and has also informed decision making in some other government departments. The Department’s new approach to data collection included gathering experimental data on the level of reserves authorities had available to respond to the pandemic. Information on the financial reserves held by local authorities is central to understanding local authorities’ financial resilience and their ability to balance their budgets. However, the Department accepts that its experimental approach has not been entirely successful, with 65 local authorities responding that they had no reserves available to respond to the pandemic. In addition to data collected specifically in the pandemic to assess financial sustainability the Department has an existing financial risk framework with which it monitors the sector. Using information collected through this framework, the Department was aware of some financial weaknesses at Croydon Council before the pandemic. However, the Department did not fully understand the depths of the commercial and other problems facing the council, and had not begun intensive work with the council until April 2020. The financial 6 COVID-19: Local government finance pressures faced by the council have ultimately resulted i Show less

HM Treasury

Fourth Report - COVID-19: Local government finance

Recommendations & Conclusions

The pandemic has exposed limitations in the data that the Department normally collects from local...

Government support schemes during the pandemic were not always designed with sufficient knowledge of local...

The Department has not fulfilled previous assurances that it will be transparent about financial risk...

The Department’s over-optimism about the impact of the pandemic on local authorities risks leading to...

The Department has yet to address the longstanding structural issues within local government finance.

It is unacceptable that local authorities continue to face uncertainty about the level of financial...

On the basis of a report by the Comptroller and Auditor General, we took evidence...

In addition to the March and April unringfenced funding, the Department provided two further tranches...

The Department introduced a monthly survey in April 2020 to collect data on the financial...

Local authorities need to hold sufficient reserves to deal with known future needs and the...

The Department’s monthly survey is an addition to a broader framework of risk monitoring that...

We asked representatives of the local government sector how well the Department had engaged with...

The Department highlighted “the excellent work” within the Department for Health and Social Care (DHSC)...

We received written evidence from representative of the local government sector criticising a range of...

The Department told us that during the early months of the pandemic it developed greater...

The Department told the NAO that sharing information on the number of authorities interested in...

We previously discussed the provision of this type of information with the Department as part...

In its examinations of the local government sector prior to the pandemic, our previous Committee...

Manchester City Council told us that government support has not fully mitigated the impact of...

The Department and HM Treasury explained that their judgement of the sustainability of the local...

Government has had plans to enact a range of local government financial reforms for a...

CIPFA and SOLACE called for a broader review of potential reform options rooted in a...

Local authority representatives told us about the unprecedented level of financial uncertainty they have faced...

Representatives of the local government sector told us that the way in which government support...

We received written evidence from SOLACE, which told us that “one-year financial settlements, which are...

We asked the Department about the sector’s concerns that government information coming late in the...