Fourth Report - COVID-19: Local government finance

Select Committee

Public Accounts Committee HC 239 4 June 2021

Report Status Government responded

Conclusions & Recommendations 26 items (18 recs)

Source View on Parliament website

Government Response (AI assessment · 26 of 26 classified)

Accepted 15

Acknowledged 4

Deferred 5

Not Addressed 2

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

5 results

2 Recommendation Deferred

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

Government Response Summary

The government agrees to address data limitations and has launched a review of pre-existing local government finance data collections, which will also consider the future of the monthly COVID-19 monitoring, with an update to be provided to the Committee in October 2021.

HM Treasury

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6 Recommendation Deferred

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

Recommendation

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 Summary

The government agrees with the recommendation but defers providing concrete plans for local government finance reform and a stable funding environment until the conclusion of the 2021 Spending Review, which will set out the future plan.

HM Treasury

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20 Recommendation Deferred

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

Recommendation

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 Summary

The government agrees with the recommendation regarding long-term financial sustainability, committing to examine and model the pandemic's emerging long-term impact on local authority finances, and will report back after the 2021 Spending Review.

HM Treasury

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21 Recommendation Deferred

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

Recommendation

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 Summary

The government agrees with the recommendation to reform local government finance, but has deferred setting out the future plan until the conclusion of the 2021 Spending Review, where it will consider the pandemic's impact.

HM Treasury

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26 Recommendation Deferred

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

Recommendation

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 Summary

The government agrees with the recommendation for greater financial certainty, stating it will confirm the overall funding settlement for 2022-23 at the 2021 Spending Review and aims to provide early financial certainty to the sector.

HM Treasury

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