Local government financial sustainability: how will planned reforms help councils’ budgets?
The Public Accounts Committee (PAC) will question experts and officials on the Government’s efforts to improve local government financial sustainability at 10am on Thursday 3 April. The session follows a report published by the National Audit Office (NAO) on the same issue.
Meeting details
Local authorities have been under significant financial strain for years. Real terms funding has increased by 4% between 2015-16 and 2023-24, but this has not kept pace with population growth, demand for services, the complexity of need, or the rising cost of delivering services. Seven local authorities since 2018 have found themselves unable to balance their revenue budgets, with 42 receiving Exceptional Financial Support from Government since 2020-21.
The Government announced a set of reforms for local government in 2024. The reforms, including a return to multi-year finance settlements in 2026-27, aim to return local government to a sustainable financial position over the medium-term. The PAC will seek the view of experts and local government representatives on these reforms in its first panel. Likely topics include local government efficiency, funding for services, and the Government’s support for local authorities.
A second panel will then be held with senior Government officials with responsibility for local government. The PAC is likely to explore how reforms will be implemented. A likely area of scrutiny will be what is being done to tackle local authorities’ deficit from overspending on their high needs budgets (an estimated £2.9bn by the end of 2024-25), with the accounting override allowing authorities to ignore this overspend set to expire next March.