Financial distress in local authorities – Levelling Up Committee Chair writes to Michael Gove, Secretary of State, on finance and service pressures

The Chair’s letter to the Secretary of State (SoS) calls for the Government to set out what advice and support it is providing to councils to help them plan for the annual cuts in unprotected spending which are forecast by the Office for Budget Responsibility from 2025.

Chair comment

Clive Betts, Chair of the Levelling Up, Housing and Communities (LUHC) Committee, said: “During our inquiry, we’ve heard that councils across England are facing very severe financial and service pressures. The Secretary of State confirmed the Department maintains a watchlist of local authorities that are facing significant financial pressures – he should now take the opportunity to set out his Department’s view of these challenges and whether these are one-off issues or systemic challenges.

“The Secretary of State was unwilling to comment directly on the future financial implications for local authorities of the announcements made at the Autumn Statement. However, the fact is that, in the wake of the Autumn Statement and the OBR’s forecasts, many councils will need to confront the implications of forecasted annual cuts in unprotected spending now when setting their medium-term financial plans. The Secretary of State should spell out what his Department is doing now to help councils plan for potential funding cuts and what assistance they are providing to ensure councils can deliver their services.”

The Committee’s letter also asks for information on the real terms spending power of local councils and follows up on Secretary of State commitments to provide further information on a number of areas, including the impact of Local Housing Allowance (LHA) being frozen again in 2025 and the number of unaccompanied asylum-seeking children entering the care system and what role this has played in increased demand for children’s services.

The correspondence follows the evidence session with the Secretary of State on Wednesday 6 December, as part of the Committee’s current inquiry on financial distress in local authorities, where a range of questions were raised on local authority funding and on service pressures in areas such as adult social care, children’s services, and homelessness support.

Further information

• Levelling-up, Housing and Communities Committee
• About Parliament: Select committees
• Visiting Parliament: Watch committees

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