Ann McGauran 06 February 2019

Government in 'denial' over councils' finances, warn MPs

Marsham Street has ‘an unacceptable lack of ambition’ for local government –  with no aspiration for improving finances beyond merely ‘coping’, according to a scathing Public Accounts Committee (PAC) report.

The report on local government spending said It was  ‘not acceptable’ that the Ministry of Housing, Communities and Local Government (MHCLG) ‘repeatedly states that the sector as a whole is sustainable but refuses to provide evidence about how it has reached these conclusions’.

It called on the department to detail the steps it will take in the medium-term to ‘move the sector to a stronger financial position’ without simply relying on this year’s Spending Review and a move to 75% business rates retention.

The PAC also said Government’s financial support for councils is characterised by ‘one-off, short-term initiatives, which do not provide value for money - rather than a meaningful long-term plan for the sector’.

It called on the MHLG to work with councils to collect and analyse the impact both on value for money and on service users of providing funding on a one-off basis late in the budgetary cycle rather than through long-term funding arrangements.

PAC chair Meg Hilllier said: ‘The Government is in denial about the perilous state of local finances. It insists the sector is sustainable yet is unwilling or unable to back up this claim.

‘Government needs to get real, listen fully to the concerns of local government and take a hard look at the real impact funding reductions have on local services.’

Chair of the LGA’s resources board Cllr Richard Watts said that the Spending Review would be ‘make or break for vital local services and securing the financial sustainability of councils must be the top priority’.

He said: 'We agree with the Committee that the financial sustainability of local government cannot be defined by the ability of councils to just provide statutory duties.'

Last night in the Commons MPs approved the final local government finance settlement for 2019/20.

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