Housing, Communities and Local Government Committee
Oral evidence: The Work of the Ministry of Housing, Communities and Local Government, HC 46
Tuesday 9 June 2026
Ordered by the House of Commons to be published on 9 June 2026.
Members present: Florence Eshalomi (Chair); Andrew Cooper; Chris Curtis; Maya Ellis; Mr Will Forster; and Mr Gagan Mohindra.
Questions 1 to 65
Witnesses
I: Alison McGovern MP, Minister for Local Government and Homelessness, MHCLG; Sophie Langdale, Director of Local Government Reform and Strategy, MHCLG; and Catherine Bennion, Director of Homelessness and Rough Sleeping, MHCLG.
Witnesses: Alison McGovern MP, Sophie Langdale and Catherine Bennion.
Q1 Chair: Good morning everybody, and welcome to the Housing, Communities and Local Government Select Committee. My name is Florence Eshalomi, and I am the Chair of the Select Committee. I ask my Committee colleagues to introduce themselves.
Andrew Cooper: Andrew Cooper, Member of Parliament for Mid Cheshire.
Chris Curtis: Chris Curtis, Milton Keynes North.
Mr Will Forster: Will Forster, MP for Woking.
Mr Gagan Mohindra: Gagan Mohindra, Conservative Member of Parliament for South West Hertfordshire. I take this opportunity to declare an interest: my wife works for a travel company.
Q2 Chair: We have the Minister, Alison McGovern, before us today. She is the Minister for Local Government and Homelessness. Could you and your colleagues introduce yourselves, please?
Alison McGovern: Thank you, Chair. Alison McGovern, Labour Member of Parliament for Birkenhead. I am the Minister for Local Government and Homelessness.
Catherine Bennion: Catherine Bennion. I am the Director of Homelessness and Rough Sleeping at the Ministry of Housing, Communities and Local Government.
Sophie Langdale: Hello. I am Sophie Langdale, Director of Local Government Reform and Strategy, also at MHCLG.
Chair: Thank you for joining us and thank you for coming. This is your first session before the Committee, Minister, so we welcome you this morning and thank you for your time. We are aware that your portfolio covers quite a large span and many key challenges that you are juggling. Committee colleagues have a range of different questions to ask you. My colleague Will is going to start.
Q3 Mr Will Forster: Good morning, Alison. Will you be able to end the two-tier approach in local government by the end of this Parliament? If not, do the Government risk creating a more complicated local government system than the one it inherited?
Alison McGovern: Thank you, Mr Forster, for that question and thank you, Chair. Let me come to reorganisation in a moment. I just want to say thank you to the Committee for inviting me to give evidence.
I have been in post for about nine months and came to this brief when two really important processes were under way: the homelessness strategy, and the local government strategy that Mr Forster just mentioned. That overall approach of reorganisation is about trying to put stronger foundations underneath local government with the end in mind of the kind of economic and social growth that we want and that good councils can drive forward within a devolution framework.
To respond to your question directly, we set out a timetable to have new unitary authorities by 2028. You asked about the end of the Parliament; obviously when the Parliament ends is not entirely in my gift, but we are determined that we will stick to that timetable, with good reason.
While local government reorganisation ought not to be rushed, equally if this timetable is extended it means that the councils affected cannot be getting on with other really important areas of change, whether that is improving adult social care or children’s care or serving their residents in the way that we want once we have unitary councils. There is a sweet spot for getting the timing right to make sure that we can get the change we want in a way that is safe and legal and get the effective councils we are looking for.
Q4 Mr Will Forster: Thank you. You are quite right: obviously, we don’t know when the next election will be. It could be sooner than we thought. You don’t know exactly when the Parliament will end but you believe that MHCLG has the capacity to ensure that there are no two-tier authorities at the end of the next three and a bit years?
Alison McGovern: That is the timetable we have set out. Since I was appointed, I have worked very closely with Sophie and all her teams to make sure that we are offering local authorities the support they need to go through this process. I will bring in Sophie at this point to talk about what that looks like on the ground.
Sophie Langdale: In MHCLG capacity, we have significantly grown the place-based teams in support of all the local authorities. They have really clear points of contacting people who can get alongside them and help problem solve and provide advice and guidance. Equally, we are working closely with the LGA and other sector bodies to offer strong support to local authorities.
We have advisory groups made up of local government experts who can advise us and the sector and who have previous experience of local government reorganisation, so that we know what best practice starts looking like and we can learn important lessons from previous rounds of reorganisation.
We acknowledge that it is a big capacity challenge and deeply important. Exactly as the Minister has said, we need to do it thoughtfully and successfully. This is the first time that reorganisation has put any funding in support of local authorities to support transition.
Q5 Mr Will Forster: Sophie, I am pleased you have mentioned funding. Now that we are further down the road of LGR, do we have a better idea of the up-front cost of transformation but also what I hope is not too long term—the potential long-term savings? Do you have an idea of how much taxpayers will benefit or where that saving could be put into other services?
Alison McGovern: Thanks for that question. As Sophie just explained, this is the first time that we have supported local government reorganisation with resources, but I will take one step back in answer to your question if I may.
In thinking through the cost-benefit analysis of this, the cost side is a really important question, quite obviously. The situation for local authorities at the moment in dealing with the costs that they are facing is extremely challenging and, I would say, quite uncertain. We have seen spiking costs in temporary accommodation, in children’s care and we have had a really poor situation with SEND.
The Government have taken steps across those areas to address the costs that councils are having to deal with, but I would find it challenging for anybody in this environment to come up with the kind of cost-benefit analysis that you might do outside of those cost pressures.
I feel sure that if you look at the evidence across the piece you see that unitary councils are more efficient and effective; I am confident of that. At the moment, part of my job is to try to work with the whole local government family to deal with the quite extraordinary cost pressures that they are facing. There are underlying causes of that, policy failure across a whole number of areas. However, where we are in this environment of dealing with costs that are coming from significant policy failure, it is challenging for anybody to answer that question. Sophie, do you want to come in on how we are supporting local authorities practically?
Sophie Langdale: To build on what I said earlier, we also fund sector advisers who have previous experience of local government reorganisation. They are available to speak to chief executives and their teams in local authorities. The LGA is providing support to councillors and leaders. We want to continue to have a door open to the sector and feel that we are responding to things that are important for them as they go through the transition. As well as sharing best practice and trying to build on the lessons, we want to respond to new issues and make sure that we are coming up with shared solutions to those.
Our doors are very clearly open, and we want and are keen for officials and councillors to come and tell us what more they need from MHCLG and from Departments across Government. It is very much a joint endeavour across Government.
Q6 Mr Will Forster: Alison, you said it is challenging to answer that question, so does that mean that we don’t fully know what the cost or the benefit of LGR will be to MHCLG or local councils?
Alison McGovern: No, I am saying that because of the environment that we are facing with costs, the usual way in which we might answer that question is not available—but if you look at the evidence, unitary councils tend to be more effective.
If you think about the objective here, we want local authorities that are more sustainable and we know that unitary councils tend to be able to provide that. We want local authorities that can help their areas in housing and economic growth, and we know that there is evidence in those areas too. I am just describing the situation that we face with the cost of services that all local authorities are facing, whether or not they are in reorganisation areas.
Q7 Mr Will Forster: You cannot put a number on it. It is a gut reaction: this is a more efficient way of working?
Alison McGovern: There is evidence. It is more just counselling against a snapshot at this point when costs are so turbulent.
Q8 Chair: On that, Minister, a number of areas and councils are resistant and concerned about the process. Would you say that, with them probably challenging, that could slow down the implementation? To my colleague’s question that could have an increased cost even though you are saying you are not aware of the overall cost of LGR.
Alison McGovern: I know that not everybody will agree. That is perfectly normal; we are in a democracy. If people want to challenge our decisions, that is for them, that is their right. We need to act on the areas where we have seen really problematic cost spikes for local authorities. That is what we are doing. Whether that is the work that I am doing with DFE on SEND or the work that we are doing to try to get on top of the costs of temporary housing, working with the Treasury and DWP, it is important that we do that for the whole local government family and that will also support the work that we need to do in the reorganisation areas.
Q9 Chair: Do you agree that the cost of LGR depends on the scale and pace of the transition within relevant authorities?
Alison McGovern: I go back to what I said before, which is that there is a sweet spot in timing. As Sophie said, we want to do this in a thoughtful and careful way, but we don’t want to extend the time so much that it knocks out local authorities’ ability to get on with their other priorities. I think that pace is important. I want to stick to the timetable that we have set out. We are taking decisions in line with that and that is the best way to get to the 2028 point in time with new authorities and we kick on from there.
Q10 Mr Will Forster: Minister, my constituency of Woking is going through LGR at the moment, and we have West Surrey Council being created next year. How is MHCLG supporting West Surrey and other areas going through LGR with the risk management of that? It is quite difficult to break up merged services. I am particularly concerned about services such as adults and children, where literally life and death are at stake and there is a risk to breaking up those vital departments.
I have seen that the county council for a while now has stopped considering doing child support safety projects, so a pedestrian crossing request just gets turned down because by the time they have designed it, they will not be in a position to implement it. Is there a risk that, during LGR, some vulnerable-people services are transformed and then some quite important services are not able to be programmed because of the lack of certainty?
Alison McGovern: Thank you, Mr Forster. You and I have exchanged in the Commons and in Westminster Hall on the position in West Surrey and the consequences of previous decisions that were taken by Woking, and how challenging that is to deal with, but we must deal with it because we need to have financially sustainable councils. It is really important to learn the lessons of what happened there, too.
To turn to your point on reorganisation, I recently met leaders from Surrey to talk to them about this point. They are going first in the process, and my hope and expectation is that local authorities will share their experience through the LGA and other bodies. I am sure that Surrey will have a lot to tell other local authorities about how they have done that.
Disaggregation and reorganisation of services is complicated, and we have taken steps to support local authorities to understand the process they need to go through to make sure that our most vulnerable residents are protected. That means helping them understand, from other councils who have gone through reorganisation before, how they did it and what worked well. Sophie, is there anything that you want to add on the checklist and the infrastructure we have been providing for them?
Sophie Langdale: Yes. At an official level in MHCLG, Surrey has access to the place-based teams that I described. A commissioner, a sector adviser, John Metcalfe, is in place. He is hugely experienced. The place-based team offer means that we go to all the regular meetings of the Surrey implementation team that has been set up. We stand ready to support, on behalf of all of government, not just MHCLG—for example, if they have an ask of Education or the Department for Transport.
As you would expect, we are also in very regular contact with the constituent parts of the West Surrey authority through our commissioners, because we are keen that they are working really hard—which they are—to get the constituent parts of West Surrey in the best possible place for unitarisation. We stand ready to provide whatever additional support—on anything we are very carefully in dialogue about—to help the new West Surrey authority to be in the best possible space.
Q11 Andrew Cooper: Thank you, Minister, for your answer. I want to build a little bit more on the risk of services deteriorating as part of the creation of unitary authorities. I want to refer to Cheshire as part of this because, as you will be aware, as an almost-Cestrian, perhaps you could say; perhaps not—
Alison McGovern: Plastic Scouser and proud of it!
Andrew Cooper: —Cheshire County Council was split into Cheshire West and Chester and Cheshire East in 2008, with the shadow authority in place, and various district councils were merged in the unitaries at the time.
In 2009, Cheshire West and Chester was graded good, I think, for children’s services. By 2010 it was grade 1, inadequate, whereas Cheshire East managed to maintain its good rating for a time. That probably tells you that there are significant risks when the county council, which was responsible for children’s services, splits in that way—that perhaps officers go one side or the other or perhaps standards slip as a result of creating the unitary authority.
This is ancient history, and both local authorities have improved. However, given the particular risks around children’s services, can you say more about what proactive support you are putting in place from the Department for Education, Ofsted, and the Local Government Association?
I understand that you said in your answer that support is available, but given the particular risks around children’s services and how important it is that we don’t have any failures in that, what are you putting in place proactively? What are you insisting that local authorities that are going through this now do, and learn from unitaries like Cheshire that have already been through it?
Alison McGovern: Thank you, Mr Cooper. That is a really important question. Let me respond to the point on children’s services overall because we know that in children’s services councils are paying the cost of policy failure. That is why I have been working very closely with Minister Josh MacAlister on his Families First programme, putting significant amounts of resources into local authorities so that we can shift that spend to prevention. That is needed up and down the country.
The DFE is very focused on the areas where we have the worst outcomes for children, making sure that we are investing in prevention and that that money stays in supporting parents to prevent children having to go into care, to prevent the worst outcomes. You would expect, given that priority and the close working with DFE, that we are talking about this for reorganisation too, and that is right.
We have evidence on what causes poor performance of councils. CIPFA gives us that information and it is about leadership and governance. There are councils of different shapes and sizes that have had good performance or bad performance on children’s services and other things. Reorganisation and disaggregation is a change within that.
There is a risk, so we need to manage that in the way that Sophie has described. However, the main thing for children’s services—which I feel is important—is to make sure that the teams in MHCLG are working extraordinarily collaboratively with the teams in DFE to get the vision of preventative children’s services rolled out right across the country, so that councils feel able to invest in the things that we know help support families and make sure that our children have loving family relationships whatever circumstances they have to face in life. Minister MacAlister has a plan for that, which I am supporting in the areas that are having reorganisation or are not.
Q12 Mr Gagan Mohindra: Alison, it is lovely to see you, as always. I have two things. The first one is as a former councillor in all three tiers, I am not a fan of unitaries. I never thought that the savings envisaged came to fruition. My question is about money, though. There are rumours in the public about defence spending going up—rightly so, in my view—but that means a cross-Department reduction in budgets. Are you worried about that and will things like local government reorganisation be at threat if your budgets are cut by 1% or more?
Alison McGovern: Thanks, Mr Mohindra. That is a great question. I am sure you would not expect me to make any comment on the defence investment plan, but it is important for the whole country. As you said, you agree with that. The one thing I will add is that if any Minister for Local Government—looking at the situation for our councils and for places up and down the country—was not worried about money and funding, they would not be paying attention.
We have had a big process to reset the funding system through the fair funding review. That has been a very important process to reconnect funding with deprivation, and we will have more to do, not least all of the cost issues that we have been talking about, and making sure that our plans for the northern growth strategy, Ox-Cam and other things, can function. I wouldn’t say I am not worried, but I think worry is appropriate.
Q13 Mr Will Forster: This is our final question on LGR. The Government are pursuing plans for the next surge of LGR—particularly in Hampshire and the New Forest area—which breaks up borough and district councils despite previous assurances that that would not happen. Do you acknowledge that it is quite damaging to have changed that policy position and why have you done so?
Alison McGovern: The process of taking the considerations that the Secretary of State bears in mind is a balance across the criteria that we set out, and the Secretary of State has taken decisions that he thinks fulfil those important criteria.
As I said in response to the Chair earlier, I accept that not everybody will agree with the decisions that we have taken. That is perfectly fine and normal in a democracy, and I am sure we will continue to talk about it. The objective overall that I want to see is strong unitary councils within a system of devolution that makes sure every place has a plan to grow economically and socially. I think that the decisions we have taken in Hampshire and elsewhere are the right ones in pursuit of those goals.
Q14 Mr Will Forster: The Government made assurances that they would not break up boroughs and districts and now they are. I understand your point about it is a balance between criteria but that was not the original statement. It was there would be assurances that we would not break up boroughs and districts. Now the Government are breaking those up in the New Forest and other areas.
Alison McGovern: As I said, I think it is a balance of judgments. As Sophie has explained, we engage with local areas daily on these decisions and we have to try to find the best way forward to help everywhere in this country grow.
Chair: I am mindful of time because we have quite a number of questions.
Q15 Chris Curtis: This might be quite short. We think you have the overnight visitor levy within your brief.
Alison McGovern: I do, but obviously I work very closely with colleagues.
Q16 Chris Curtis: Why does it sit under your brief?
Alison McGovern: I am the Minister for Local Government, and this new levy will be an important money-raising power for local places that have a strong visitor sector and want to reinvest in. As I have said a couple of times, I am responsible for making sure that we can get all of our places to financially sustainable situations.
Q17 Chris Curtis: The reason for the question is that it will apply to mayoral authorities rather than local councils, but there is also a big open question at the moment about whether it will apply to foundation authorities as well. Do you have a view on that? Do you think it should apply to foundation or strategic authorities or be an option that is available to them?
Alison McGovern: The big caveat is that the final design has not been decided and we will have more to say on it soon. My view on it is that it is really important for the places that have a strong visitor economy that need a source of income to keep investing in the thing that has made that visitor economy strong.
In my own city region in Merseyside there is already something similar through the bid that does this. Where you see visitor economies that are absolutely thriving—for example Liverpool, which is the best city break destination in the whole country—you realise that that needs continual support.
This sits within an overall framework for devolution where we know that we will need fiscal devolution to support our overall vision for places, as the Chancellor set out in the Budget. That is the test against which I would set any of the practical decisions that we are looking for: how can we support thriving economies to be even more so?
Q18 Chris Curtis: If we agree—which I think we probably do—the overnight visitor levy is a good thing that is supportive for local areas. Are you worried about a two-tier system, where mayoral authorities and foundation or strategic authorities get their powers, but lots of other parts of the country—including places that have very strong visitor economies—do not have that available to them?
Alison McGovern: Mr Curtis, you are asking a slightly broader question about the nature of local government and devolution in England, and the fact that we have different kinds and types of devolution in different places. This has been true for a very long time. We had the return of London government in 1998, but it took some time before we get to the creation of combined authorities for other cities. Greater Manchester and others had arrangements locally to support city region growth.
I have to accept we have this arrangement in England where different places are in different stages of the journey when it comes to devolution. I think that means judging each case place by place on the circumstances in that place. We might wish for uniform structures of devolution and local government but that is not where we are right now. Similar to reorganisation, we are trying to judge what is best for each place based on the circumstances of that geography.
Q19 Chris Curtis: Thank you. On how it will be set up as a scheme, will all of the money that it raises be kept by the body that raises the money—the combined authority, the foundation or the strategic authority?
Alison McGovern: As I said before, the final design has not been decided yet. Again, we have different arrangements for devolution in different places and local government plays into devolution in different ways across the country. We are talking to local government and mayoral authorities and others about that.
Q20 Chris Curtis: Is there some sort of commitment that, either directly or indirectly, this money will not be recouped by central Government?
Alison McGovern: No, this is part of the fiscal devolution framework that the Chancellor set out.
Q21 Chris Curtis: Do you expect there to be ringfencing on the funding?
Alison McGovern: Forgive me, ringfencing for—
Chris Curtis: If the money is being raised by combined authorities, will there be an expectation or a ruling placed on combined authorities that that funding has to be spent on supporting the visitor economy, or can combined authorities have the freedom to spend it however they want?
Alison McGovern: This will be a local tax not a national tax. We are talking to mayoral authorities about that. However, I go back to the principle that I set out before, which is that the point of this is to help successful visitor economies sustain that success and do even more.
Q22 Chris Curtis: Will you be giving the powers to combined authorities so that it can apply to short-term lettings like Airbnb?
Alison McGovern: We will have to come back to you on that one.
Q23 Chris Curtis: A final question from me—and at this point we may be straying outside of your brief, but just in case—obviously this is the first step towards more fiscal devolution as set out by the Chancellor in the Mais lecture. Is your bit of the Department, or the Department more generally, starting to do work on how more fiscal devolution might be what might work in practice?
Alison McGovern: Yes. We have big plans to make sure that our cities and city regions can grow and as the Chancellor set out in her Mais lecture, we have to make sure that growth pays back to those areas. We are working extremely closely with the Treasury on it.
Q24 Chair: Thank you Chris, and thank you Minister. Just on that, you mentioned it is a local tax. You will be aware that the announcement has been met with mixed reviews. Some sectors are quite worried. For example, Visit Devon’s Sally Everton—the General Manager—said that unless the funding is reinvested into the sector instead of a general pot, it could harm the sector’s local tourism.
You have a situation where the group of 32 London councils want at least 50% of it kept locally. There are concerns about who will ultimately be spending that money and where that money is spent. Do you feel that if it is a local tax, the majority of it should be retained locally?
Alison McGovern: Thanks Chair. May I just say in response to concerns raised by the hospitality sector, I hear them. As per my previous responses, where we have a strong visitor economy we need to support it. Where the visitor economy has had more challenges, there are things that need to be done to support them.
I was very glad about the steps that the Chancellor has taken to support people being able to access leisure and visitor-economy type businesses over the summer. Families need to have a bit of fun this summer as well as dealing with everything else that they are dealing with. I will be listening to what the visitor and hospitality sector has to say as we proceed with the policy, and I thank them through you for feeding into that process.
Q25 Chair: I should declare an interest as one of the co-chairs of the All‐Party Parliamentary Group for London. Last year, according to the Mayor’s office, London saw over 20 million international visitors. I confess that I know nothing about football, but I do know that UEFA Euro 2028 will take place from June to July. Do you think this levy will be in place before then because a number of areas across the UK would want to capture the funding that it could generate?
Alison McGovern: Thank you for the question. We want to get on with this for the reason that you suggest. Seeing, as I do, week in and week out, the very great benefits of the beautiful game to the cities we love, I will not be dragging my feet to make sure that when we have important international tournaments, they do not just make everybody in this country happy, but they also add to our economic growth.
Chair: We will hold you to that. Hopefully, it will not be a red card, Minister.
Q26 Mr Will Forster: Minister, I am going to talk about exceptional financial support and that side of local government finance. What progress have you and the Government made towards ending the reliance on exceptional financial support for local councils? Do you think we can get to the point by the end of this Parliament or by 2029, whichever date you prefer, that they will not be relying on EFS?
In the most recent round, a lot of councils relied heavily on capitalisation directives, which we as a Committee have expressed concerns about. I know that the Government have said they know that does not work for everyone, particularly when it is not a transformational problem. What different approaches to EFS have you considered?
Alison McGovern: Thank you, Mr Forster. I think we would all have to acknowledge—anybody who cares about local government would have to acknowledge—that a system that is called exceptional financial support is really badly named in these circumstances because it has ceased to be the exceptional situation that was envisaged. There are reasons for that, and we have already talked about the situation in relation to costs that local government faces.
Our approach to financial sustainability has been first to get through the fair funding review process, to reconnect funding with deprivation and to try to match funding allocations with a better, more up-to-date analysis of the level of need that local authorities experience. That was a difficult process. Having done it, that now enables local authorities to have the first multi-year funding settlement—the first three-year settlement in over a decade.
That should allow local authorities to have much greater ability to plan and to think through the transformation where they need it, one of which we have already talked about in children’s services but in other areas, too. Getting the funding settlement sorted out has been a big part of it. While the number of local authorities needing EFS bothers me, it is not as many as it might have been. I think that is an important step forward.
Secondly, there is a mixed set of reasons why councils end up needing EFS. As I mentioned before, CIPFA gave us good evidence and analysis on this. There are still cases where we see leadership and governance issues and we have a process through intervention to deal with that where needs be.
Unfortunately, we have seen other local authorities where their financial position has just been not sustainable. There, we have to take action on costs, which is why the work I am doing on the cost of temporary accommodation with Treasury, DWP and others is important, as with DfE on children’s services and SEND and the big programme of work we have to transform SEND for parents but also for the financial sustainability of councils.
Let me say clearly that we have put a lot of extra resources in. This is not about cost-saving. It is about making sure that councils are not put in an unsustainable position. Finally, on adult social care, we are working closely with DHSC to try to make sure that that system, even before the Casey review, can improve. There is a huge bit of work there to try to work with the local government family to get councils in a more sustainable position, both on the funding side and on the cost side.
The final thing that I would say on EFS is that transformation is important. The Secretary of State set out his vision for public services reform in a speech recently. We know that where the public has power, where communities have power, they can often help change public services so that not only are they more financially sustainable, but they also prevent the costs of failure. Also, people feel more ownership and more control over the public services that they are experiencing, whether that is the running of their housing estate or the family hubs that they rely on.
It is in that spirit that I think about EFS. We do need to have better leadership, governance and financial management. We also need the public services delivered by local government to be more sustainable, but we want change. Put people in charge of public services. It tends to be better and cost less.
Q27 Mr Will Forster: Minister, I understand that you have given councils more certainty with the financial settlement and that you are tackling some of the long-term issues such as SEND. Because of that, do you expect fewer councils to need EFS next year than have needed it this year and that you will see a genuine reduction in applications for EFS?
Alison McGovern: If it were not for international events that might cause great problems for everybody running public services, I would have more confidence. I think that is true right across the public sector. Events in the Middle East and some of the challenges that we are facing are causing us all to worry. However, I think that we have the right approach to this, which is to be tough on governance in those areas where we do need intervention.
Given your geographical location, Mr Forster, I would expect that you will be in full support of that, given what we saw in Woking previously. We must have those guardrails in place and then look at these big challenges in public services where we have, as a nation, paid the cost of policy failure. If you do not prevent really bad things from happening to families, you will end up paying more. I think taking that approach will put us in a better place, alongside this change for public services, where we try to put the public more in charge.
Q28 Mr Will Forster: Woking has EFS and will continue to have EFS for one more year. It is likely that West Surrey Council will have EFS. I have asked about alternative approaches, and you did not cover that.
For Woking I want to thank you again. We have had genuine debt write-off of £500 million, and it is likely that that is tranche 1 of 2. For a small borough council, that is a significant write off of debt that was due to previous shocking mismanagement. Do you think that is a genuine one-off or is that going to be an alternative approach that the Government will consider when councils have got themselves into such a hole?
Alison McGovern: It is a challenging situation, and it is not just about the cost to all of us when this happens, when councils have taken decisions like that that end up going so badly. There is a cost to all of us as taxpayers. I would judge these situations very, very carefully because of the moral hazard concerns. We will come back to Parliament on these situations, but it is extremely important that we get the right guardrails in place to prevent it happening again.
Chair: Thank you, Minister. I am mindful of the time. Apologies. Questions now from Mr Mohindra.
Q29 Mr Gagan Mohindra: Thank you, Chair. I will be very quick. Tying this back to local government reform, how are we ensuring that current authorities are not using the uncertainty and transition to make either bad decisions or delayed decisions that have a negative impact on their communities? How are we ensuring that, where a council knows it is going to be in a different entity in the future, it is not piling itself with debt to be good locally but bad for the new entity?
Alison McGovern: Thank you. You raise a really important question, and the answer is that it comes back to the ongoing relationships that we have with local authorities. I think it is also safe to say that Members of Parliament who have those concerns are not shy about talking to me about them and I really welcome that so that we can be live to those concerns. Sophie, is there anything you want to add?
Sophie Langdale: We issued guidance specifically on this last summer in consultation with local government colleagues who informed it precisely because they were worried that this may be something that we may see happen. Again, in our transitional arrangements—as areas set up their implementation teams and their joint committees and make plans—attention is paid specifically to this concern.
In many areas, even before they are getting a decision, we are seeing them work well together, in part because we have released a lot of checklists and pre-work that they should be working through so that they can share where there are contracts in different places and where there is money. To get that agreed, open baseline and transparency also helps to avoid issues arising.
Q30 Mr Gagan Mohindra: You said “many”, not all, so which areas are not doing that?
Sophie Langdale: We are working constructively with all the local authorities that are involved in local government reorganisation.
Mr Gagan Mohindra: I will leave it there.
Q31 Maya Ellis: Good morning, Minister. I have a question about geographical diversity within local government finance. When we heard from previous Ministers in your role, we got a decent amount of encouragement that rurality would be considered as part of fair funding. However, when the fair funding formula eventually came out, I think a number of us from rural constituencies on the Back Benches were a bit disappointed in what was covered. That it was essentially adult social care, but things such as bin collections, SEND and children’s services were not covered.
I want to understand your freshest thinking on that dilemma, particularly looping it back to local government reorganisation. As areas and local authorities are going to get bigger, how are you going to ensure that those areas where there are deprivation and rurality are not going to get subsumed into even bigger areas and even more involved?
Alison McGovern: Thank you, Ms Ellis. That is an important question. We did take into account in the funding settlement the costs that local authorities face. That is in the settlement. We looked for evidence of where we could see that there were clearly additional costs, and that does most strongly come through in adult social care, as you mentioned, but we also took other steps—for example, lifting the potential travel limit for school travel as well. The most important thing as we move forward is to take decisions on the basis of that evidence of additional costs.
To your second point on pockets of deprivation, there is an important point which is that the universal credit system, and use of more real-time information to analyse poverty and deprivation, puts us in a better situation to identify pockets of poverty than we might have been in the past where we only had survey information. I am keen that, as we move forward, bringing forward the digital tools and the local outcomes framework and other things, we are able to help people understand where deprivation is and how we can collectively tackle it using that better quality of information that the Government now have.
Q32 Maya Ellis: Thank you. I think what often happens in rural areas is that there are pockets of deprivation, or near-deprivation. However, because the communities are strong, they often absorb some of those costs and sometimes that does not show up in the evidence of how communities are supporting and delivering some of those services.
It would be great to get your reassurance about where we can evidence more of that impact as things go on. Particularly, as costs of living start to bite in those communities that might not have ever been affected by it before, we can come back to you with that evidence and that there will be ongoing review of where rurality might become more pertinent.
Alison McGovern: That is right. In my role on the Child Poverty Taskforce, previously as Minister for Employment and now as Minister for Local Government, we took evidence from rural communities that described the situation that you mention—the challenge of trying to provide, for example, family hubs in rural villages, where it was very much the case that local communities were picking up the need.
There is a question for us all about how, in government, we can support that activity, making it more likely that it will happen, and not thinking that the state ought to do everything, but supporting people who are doing that and making it more likely. I will be taking that forward through my continuing work as a member of the Child Poverty Taskforce.
Q33 Chair: Thank you, Minister. On ESF again, one of the areas where a number of councils continue to see budgetary pressures is the HRA debt. You will recall decisions taken by the former Government in 2012 to move the HRA to a self-financing model, and the fact is that a number of councils are paying back in excess. That debt is around £29 billion. You mentioned discussions with Treasury colleagues. Is this a discussion you are having about removing the HRA debt to allow councils to have a better financial footing?
Alison McGovern: Forgive me, Chair, I will write to you on that, but I think it might be my colleague the Minister for Housing who would be responsible. I will ask Matthew to write to you on that, Chair, if that is okay.
Chair: Thank you.
Q34 Andrew Cooper: I have some questions for you, Minister, about the state of local audit, which I am sure is your favourite topic, as it is everybody’s. You will be aware that local government audit has been in crisis, arguably since the scrapping of the Audit Commission in 2011.
We have had some local authorities with up to seven years’ backlog in having their accounts signed off, and I think for the last two years the National Audit Office has disclaimed the whole of Government’s accounts as a result of the backlog in local government audit. The Government’s solution has been to create the Local Audit Office. I am interested to start with in your analysis of how it is that we arrived at this situation and how you think that the Local Audit Office will help.
Alison McGovern: Thank you, Mr Cooper. I do think audit is extremely important for all the reasons that we have been talking about. I have mentioned a couple of times the guardrails that ought to exist around local government and the wider public sector to make sure that we do not end up in extremely challenging situations that then have to be dealt with. The reintroduction of local audit properly is a very important part of that.
I served as a local councillor in the London Borough of Southwark when the Audit Commission was in place. I have served as a Member of Parliament in this place throughout the period that you mentioned, so I have observed from the outside the impact that that has had on local government. I ask myself whether we might have reached the same position if the Audit Commission had remained. However, that said, we do need to reintroduce it now and we want to deal with the audit backlog.
In coming into my new role in September, I am very keen to get this in place, to get the backlog cleared and to get a new system of audit. We want to simplify financial reporting and make sure that we strengthen the capacity of the system, which has been very much weakened. The Committee will know that we have recently named Bill Butler as our preferred candidate. I understand that the Committee will—
Andrew Cooper: We are looking forward to meeting him next week.
Alison McGovern: Okay. That will be helpful. I am keen that we get the Chair in place and that they are able to start working to get the tools that they need in the box. We have been trying to deal with the backlog, but also to get the system in place so that, in the future, we will have much more assurance.
Q35 Andrew Cooper: What would you like to see the Local Audit Office achieve in its first year?
Alison McGovern: It will be for the leadership of the Local Audit Office to set that up. To you, I do not think it is for Ministers to micromanage, but my priority would be to see the system stabilised, begin to streamline and make it a much better functioning system in support of local authorities. Being a local authority finance officer is not the easiest job at the moment, and I would like to see a strong local audit system that can help support the work that they do, protect against any challenges in the system of the kind that we have seen, and help local government go on its journey towards financial sustainability.
Q36 Andrew Cooper: Something like 91% of local audits were delivered ahead of the February backstop this year. Notably, I think the Tees Valley Combined Authority missed out. Nevertheless, 91% is an improvement on the previous year. How many did you expect to be delivered ahead of next year’s backstop date, which I think is January?
Alison McGovern: I will just hesitate on that one. I will see if there is anything specific that we can give you on that. We want to make significant progress, but I will just hesitate to give you an exact figure at this moment. We are making good progress in line with the plan, and I think that once we have the Chair in place, we will know more.
Q37 Andrew Cooper: You may not be able to answer this question, but I will ask anyway. We have seen significant numbers of disclaimed local audits. This year, 45% were disclaimed. We would like that number to be zero. Do you have an aspirational timeline by which you expect to reach zero, and what are you doing as a Department to make sure that that is the case?
Alison McGovern: You are quite right. I think we would all like it to be zero. We have been quite focused on getting the new Chair in place. Let me see if I can write to you with more detailed information but I am sure that is something that the Committee will discuss with the Chair as well. From the Department’s point of view, we want to do everything that we possibly can to support the new institution to make real progress.
Q38 Andrew Cooper: No doubt you will want to set the objectives. I accept your point that you do not wish to micromanage the work, and I do not think any of us would expect you to do so. But I would have thought that you would have a view on what you want them to achieve and that you would have communicated that to the candidate prior to appointing him.
Alison McGovern: Let me see if I can give you some more detail in writing on the process. I am just hesitating before we have the Chair and the body fully in place. They will want to set their own delivery plan.
Andrew Cooper: Fair enough. We will return to it. Thank you.
Q39 Chair: Thank you, Minister. Issues that this Committee will continue to look at closely are homelessness, temporary accommodation and rough sleeping. Those are issues that have made the news on many occasions. The Government launched their national plan to end homelessness in December. The plan outlined a number of different areas and measures, including a target to halve long-term rough sleeping by the end of this Parliament and invest in additional funding. What milestones on long-term rough sleeping do you have to measure this progress if you are to reach that target?
Alison McGovern:. In thinking through the homelessness strategy overall, when you look at the data you can see that the overall cause of homelessness is not enough homes that people can afford. Therefore, we are building homes, and we want to try to improve people’s incomes. The reason for setting these targets in the strategy was an acknowledgement that we needed to do something to deal with the worst forms of homelessness, even as we invest in social and affordable housing and try to improve the overall drivers of homelessness.
On the rough sleeping target, I remember very clearly from the Covid pandemic the Everyone In plan that got a roof over people’s heads. However, my worry was that we were not tackling the challenges that mean people move in and out of accommodation and end up rough sleeping long term. That has meant looking closely at what is going on for somebody who does not seem to be able to move on with their life. There are some challenging structural causes of that, people not being able to get the access to healthcare that they need and deserve, particularly to addiction and mental health. We are working on those policy areas and funding for places to help support that.
I will ask Catherine to come in, but that process is under way, and we will have more to say on that. We have not set intermediate milestones in addition to the goal that was in the strategy, but I give that context because long-term rough sleeping is a complicated issue. We are working with the Cabinet Office and others on programmes like Changing Futures. Those programmes are designed to support people where they have complex and multiple issues going on in their lives and there is not one policy lever that you can just pull and the problems are sorted. Catherine, is there anything you want to add to that?
Catherine Bennion: The target was deliberately ambitious because we think that is one of the most egregious forms of homelessness and the long-term rough sleeping figures are rising. We have data points as well. We collect monthly data on rough sleeping over the course of a month, and we also have the single-night snapshot. That is the key data that we use.
In terms of delivery milestones, we have launched a long-term rough sleeping programme that is targeting 27 areas, plus London, with the highest concentration of long-term rough sleepers. We have now published guidance on action plans that are due to be submitted to the Department at the end of the year as well, so that will be a key milestone. We are working with some of those local authorities as they develop those plans over the course of the summer and the autumn.
Another milestone is some of the funding that we have worked on with the Department for Health and Social Care, on rough sleeping, alcohol, drug, and treatment funding that we hope will support this cohort as well.
Q40 Chair: Is the funding for the homelessness strategy—the £33.5 billion that has been announced—all new funding or is it from reallocated budgets?
Catherine Bennion: The funding for the homelessness strategy is an SR commitment.
Alison McGovern: When the budget for this was negotiated through the spending review, that figure represents all of the money that was allocated. There are additional resources for particular areas—temporary accommodation, supported housing and other things—but there is a tension here.
I think it is right that we try to take ring fences off for local government and try to give them the maximum possible opportunity to spend resources in the way that they see fit. We have tried to combine existing money and add to it, but inevitably, when you are thinking about a programme like this, where we have clear targets, we need to make sure that we as a Department are accountable for delivering those targets.
There is a bit of a tension there. However, I think that, in working in partnership with local authorities, we can achieve the goals that we are seeking, as well as giving them the freedom on the ground to deliver it in the way they wish.
Q41 Chair: I think some of that freedom on the ground is around how we look at the use—and ending the use—of B&Bs. What progress has been made on that? I know that is a commitment from the Department as well.
Alison McGovern: We have made good progress—forgive me, I am just looking up the actual numbers.
We have made good progress on ending the use of B&B accommodation. I find it incredible that we still have families in B&B accommodation beyond the lawful limit of six weeks. We have seen a 63% decrease on the year in the number of families over the statutory limit of six weeks. Over six weeks, we are now on 1,190 families, and we want that to be zero as soon as humanly possible. We are down 55% overall on the number of families in B&Bs with children year on year. That is really good and strong progress, but I do not want any families to be housed in inappropriate temporary accommodation.
That means meeting our targets on B&Bs, but it also means thinking through the worst forms of temporary accommodation that are not bed and breakfast accommodation. Just because something is not labelled a B&B, does not mean it is okay. So we are working with homelessness organisations, with councils and with experts to identify where we have temporary accommodation being used that might not be a B&B, but is not appropriate, so that we can work on that as well.
There would be no point in hitting the target on B&B accommodation if we missed the point of the thing, which is to make sure that temporary accommodation is only used where necessary, and if a family is in temporary accommodation, it is as good as it possibly can be before they have a permanent roof over their head.
Q42 Chair: We can refer you to our previous report looking at the impact on children of living in temporary accommodation and TA housing conditions, where essentially a number of councils were not carrying out inspections. There were some situations where families, vulnerable women, were placed in accommodation with men who had just been released from prison. These are really, really concerning areas, but yet there is a cost to councils, public money being spent on this inadequate, unsuitable temporary accommodation.
One in 50 Londoners is in TA at the moment. Collectively—you know this, Minister—London councils are spending £5 million a day on unsuitable temporary accommodation. Some of that is because of the TA subsidy and the refusal of the Government to take into account the rates of the local housing allowance. Are you are looking at that with Ministers in the Treasury and DWP and addressing it so that we do not see more people being driven into homelessness and TA?
Alison McGovern: I mentioned at the beginning that we have that overall cause of homelessness, and we know what that is. One side of it is about housing being available. In London that is clearly an extremely acute situation, as is the income that people have to afford it. On the income side, we are working closely with DWP and with Treasury in thinking that through. Like all these areas, DWP and Treasury keep LHA under review.
Family incomes have to be seen in the round; that means what is going on in areas of social security and also in other areas such as earned income and so on. I am working very closely with Minister Timms and colleagues in Treasury to take that view so that we can have a team across the Departments to get all of the evidence about what we need to do.
Q43 Chair: One of the areas you mentioned is the support that people who find themselves homeless and rough sleeping need. Many organisations—including Crisis, for example—have spoken about having a national expansion of Housing First, which we know is a proven, effective programme for helping people who are sleeping rough. Are you and your officials looking at possibly expanding that across the country?
In essence, people feel that homelessness and rough sleeping is confined to urban inner regions, but we see it right across the country, including in some rural areas and coastal communities. It is a big problem right across England.
Alison McGovern: Yes, it is. I am aware of the evidence on Housing First and how important those approaches are. It comes back to the tension that I described earlier, which is that we wanted, as part of the local government funding changes, to take away ring fences and, as much as possible, to have locally led policies that can respond to those areas and the unique context of places themselves.
I might bring Catherine in in a moment in case there is anything more she wants to say on Housing First, but I am acutely aware of how strong the evidence is. I would just say, Chair, that last week we had parliamentary engagement with colleagues who are experts on homelessness. I was very struck by our colleague, the Member for Exeter, and the words that he said about the situation in Exeter on rough sleeping and homelessness. You are absolutely right to say that we can see where it is concentrated, but it is an issue up and down the country. Catherine?
Catherine Bennion: I would point to the supported housing funding that is also part of the homelessness and rough sleeping budget line. There is £159 million in that budget line for supported housing and that was deliberately set up to accommodate that.
Chair: I will segue to my colleague, Andrew.
Q44 Andrew Cooper: Yes, indeed. We are going to come on to supported housing, and thank you for pre-empting that a little bit.
Minister, in the questions we have asked you so far, we have been pointing to the parts of your portfolio that are variously on fire or smouldering. I am sorry to do that again, but the National Housing Federation has pointed to a crisis that is unfolding in supported housing.
I think last year, one in three supported-housing providers had to close schemes because of funding pressures and 60% said that they would be forced to close schemes in future. That creates risks of homelessness, longer stays in hospital, and having people in unsuitable accommodation that does not meet their care needs. Is this a situation that you recognise, and what action are you taking in your Department to deal with it?
Alison McGovern: Thank you for the question, Mr Cooper. It is very much a situation that I recognise. There are complex problems here that have their genesis over many years and the kinds of changes that were made dating back to when I was first elected in 2010. We are still living with some of the consequences of choices that were made then.
That said, supported housing has been a priority. Catherine just mentioned the increased funding being made available for it, and also trying to get a grip on what is going on, making sure that local authorities really understand their need and have a plan to meet that need, as well as the new rules and regulations that we are seeking to introduce.
Catherine, do you want to give an update on the latest of where we are? We have appointed the Chair of the panel and so on.
Catherine Bennion: Yes, we have a supported housing advisory group that works closely with us. We are meeting regularly. We published a consultation response on supported housing regulation in April, and we are working at pace to bring forward further consultation on the regulations themselves because it was important that we struck the right balance between cracking down on poor supply while making sure we are not limiting new supply for the sector.
The only other thing I would add is that there is also a supported and affordable homes programme. We are hoping that will bring forward lots of new supply. There are flexible grant rates in that programme to allow for accommodation that might need more design and flexibility.
Q45 Andrew Cooper: A lot of supported housing has ended up in the third sector as a result of stock transfer in the early 2000s, hasn’t it? I suppose that some RPs may consider that it is not part of their core business, that perhaps some of what supported housing is doing is an adult social care function.
We understand, as we have discussed today, that councils face significant funding pressures. Do you think that the communication is flowing properly between the RPs and councils when supported housing amongst registered providers becomes at risk?
Alison McGovern: In response to that important question, let me just say that what I hear from housing associations and others is that they really care about this, and I think that is a good thing. I have no doubt that not all housing associations are perfect but that has been the overall feedback to me: that they really care about it. I also know that local authorities are very seized of this problem and want to do more, and what we are trying to do is provide the infrastructure for that relationship to work well, as Catherine just described.
Maybe I am being too much of a Pollyanna on this, but certainly housing associations through their national body and others have been keen to talk to me about it. It is not an easy challenge, but I am confident that we have the right elements in place. Is there anything else that you want to add on that?
Catherine Bennion: No.
Q46 Andrew Cooper: Thank you. The Supported Housing (Regulatory Oversight) Act was passed in 2023, and Catherine, you have referred to the consultation. When do you expect that the Act will be fully implemented?
Alison McGovern: That would depend on the next steps in terms of getting the licensing scheme and other things underway. I have absolutely no desire to make this take any longer than necessary, but we need to make sure that we do it in the right way because there is a balance to be struck to make sure that we have still got the supply that we need.
Q47 Andrew Cooper: Could you write to us with an indicative timetable?
Alison McGovern: I will do my best.
Andrew Cooper: Very good. Thank you.
Q48 Chair: Minister, we mentioned at the beginning that your portfolio covers many areas. One area is domestic abuse. We just spoke about homelessness and the issue that many women and children find themselves in. You may be aware of—this has been raised in the Chamber by many colleagues—the situation where many councils in London are placing vulnerable families right across the country.
Some charities have warned that women fleeing domestic abuse are choosing to stay with their abusers instead of losing that vital family support network by being placed many hundreds of miles away from London up in the north. A report from Women’s Aid last year found that a quarter of women supported by No Women Turned Away could not access a refuge space, which is really worrying. Has your Department looked at whether this situation has improved over this last year?
Alison McGovern: You are right in how you describe the situation, Chair. Domestic abuse is the third biggest cause of homelessness, where people are at risk of homelessness, but it is the second biggest if it is a risk of homelessness that materialises. I think that a lot of people would be surprised to know that.
What do we do? Since I was put into post, I have worked closely with the teams in the Home Office and MOJ on their strategy to prevent violence against women and girls. That work has particularly been trying to provide better guidance for councils’ commissioning, so we get better quality support for victims of domestic abuse. We have also increased funding in this area.
One thing that I would say is that I feel it is important—from a cost point of view, but primarily morally—that somebody who is a victim of domestic abuse ought not to be made homeless by it. I have been struck by experts in the field about the importance of sanctuary schemes that can help victims, primarily women, stay in their own homes and be protected in their own homes.
The Committee will know that the Social Housing Bill also has measures in it to enable housing associations to respond through changes to tenancies.
Q49 Chair: When do you expect that to come through and take effect?
Alison McGovern: It will depend on the passage of the Social Housing Bill, but we have absolutely no desire to delay that in any way. While refuges are really important, and it is important that there are spaces where people can be safe, actually, I do not see why, if you are a victim of domestic abuse, you have to be made homeless as well. Is there anything you want to add, Catherine, on the timing in particular?
Catherine Bennion: The timing of the Bill will depend on the passage of the legislation, but we are working on it closely. Again, the Minister has an advisory panel that we work with in the housing sector to make sure we are focusing on this and wider issues as well and driving them forward.
Q50 Chair: I think one of the wider issues is the fact that we are seeing councils failing to deliver on adequate domestic abuse accommodation. I cited the report by Women’s Aid, “Nowhere to Turn 2025”. The figures in the regions are quite shocking: 24% of women supported were subjected to further abuse while waiting for temporary accommodation and 8.8% were forced to sleep rough to escape abuse. This is quite shocking.
We are seeing many vulnerable women and children having to relive this experience while, in essence, they are being turned away from vital support. What enforcement powers, if any, do you have to hold councils to account for their statutory duty to provide accommodation to women and children?
Alison McGovern: Thanks, Chair. You are absolutely right; it is not acceptable. As the Minister for Local Government, if councils are not fulfilling their duties we have all kinds of powers. The first thing is to increase the resources available to try to help support councils to get this right, which is what we have done in partnership with the Home Office and the MOJ.
While providing refuge is really important, we want to do two things at the same time and make sure that local authorities are also in the lead when it comes to changing the overall framework in a way in which victims of domestic abuse—women and girls in particular—are treated here. It is not acceptable to me that you end up not just being a victim of domestic abuse but also that women and children are traumatised by homelessness. That will be our overall strategy.
Q51 Chair: I appreciate that the passage of Bills falls out of your scope, but I think it is important that we push the social housing Bill to make sure that this provision comes in to support many women who, through no fault of their own, find themselves homeless and the perpetrator left to stay in the home.
Alison McGovern: Chair, if I may thank you for that and I would be grateful for the Committee’s clarity with our colleagues in Parliament about how important that is.
Chair: We will do. Thank you.
Q52 Mr Will Forster: Minister, Buckingham Palace, or in fairness any other band H property in Westminster, pays £2,095 a year in council tax. That is roughly what a quite average band D property in my constituency of Woking pays and is over £100 less than a band C property in your constituency of Birkenhead pays. Council tax is unfair. Do you agree and are you going to reform it?
Alison McGovern: Yes, I do agree that it is unfair and you have described a situation that is extremely frustrating. It is a flawed system, and we have introduced some measures. The Chancellor announced the high value council tax surcharge in acknowledgement of how regressive the system is. Council tax is a really important part of local government finance.
When I think about what people need who are dealing with the issues that we face in this country at the moment, they need really good local public services as well. I bear that in mind always, but I cannot disagree with the situation as you describe it, and we need to make progress.
Q53 Mr Will Forster: Great. When are you going to reform it then, if you agree with me?
Alison McGovern: As I said, we have already taken steps to make changes. The high value council tax surcharge is being put in place by the Chancellor on that. You will also be aware of the campaign work of Martin Lewis on the way that council tax is collected, and I think that is an important thing in helping people to deal with the impact that council tax can have on them. I am sure the Committee will be aware of the detail and the changes that we have made.
It also comes back to the funding arrangements that we were talking about earlier, where it was really important, as part of the fair funding review, that we took account of the difference in council tax that we see across the country and rebalance funding towards areas of greater need, to reflect differences in the ability of areas to raise council tax.
I am particularly concerned about the wide variation that we see in local council tax support. I think that is a big challenge. We also have issues with the Valuation Office that we would need to address if we had any future reforms building on what we are doing with high value council tax surcharge. This is an ongoing process, and I want to work towards a fairer system.
Q54 Mr Will Forster: Again, I agree with you. Finally, we are in complete agreement, but the Government’s approach is I think—if I was going to be unfair—tinkering around the edges. You are changing it, but it is not a radical change. We still are stuck with the system that we both agree is unfair. However, you have not outlined a plan to review the system or a plan to comprehensively reform council tax. Is it because it is too politically difficult to do so? Is there a lack of capacity in MHCLG? What is the reason that you are not properly reforming council tax?
Alison McGovern: Our approach needs to put in place elements to make the system more progressive. We need to make the system more effective and then we need to look at where the opportunities for change are. As I mentioned, the Chancellor announced—and we are taking through—the changes with the high value council tax surcharge to make it more progressive.
There are problems with how the system is administered that could be dealt with quickly and needed to be dealt with—for example, making it collected over 12 months as the default, giving people more breathing space so that non‑payment does not trigger enforcement quite so quickly—which was the campaign that Martin Lewis ran successfully Then we need to move on from there to help the Valuation Office improve, which we are doing working very closely with the Treasury.
There is a lot more to do. As I said, I am considering—particularly given the discussion we had earlier about incomes and looking at the whole of families’ income and costs—the evidence that we have on the quite wide variety of council tax support and how that works. I have had evidence from Members of Parliament and others on the way that this can interact with universal credit and the challenges there. It is important to do the things that we can do and build up from there and try to move towards a fairer system.
Q55 Mr Will Forster: You are looking at some options. Do you have a timescale on that, Minister? I am pleased you have mentioned council tax support. I am concerned with that. Despite my authority’s challenges, we have ensured that the most vulnerable people are not required to pay a big council tax.
I know that a few years ago the next-door seat in Surrey Heath required poor people on benefits to pay a chunk of their council tax when they know full well that they should not be charged, they cannot afford it. Are you doing a review of the system to work out the fairness to try to set more guidance?
Alison McGovern: We look all the time at the interactions between what we are doing and the universal credit system. I mentioned before how closely Minister Timms and I are working. I have seen examples of this, but I want to know more about how we can support people—particularly at the lower end of the income distribution—to be supported well and make sure that there are not inadvertent interactions. I will definitely want to say more to the Committee once we have done more of that work, but I think your insights will be very helpful on that.
Q56 Chair: Minister, do you not feel a bit peeved at the fact that it is called a high value council tax, but it is not council tax? It is money being collected by local councils going directly to Treasury. Councils will not see a single penny of that money but yet they are being asked to administer that. The bulk of that—I declare an interest as a London MP—will be collected in London but we still have a situation where councils are crying out for more fiscal devolution, more money to come to them locally. It is not a high value council tax. It is another form of taxation on property owners.
Alison McGovern: At the risk of perhaps sounding too defensive of the Chancellor, when she made her Mais lecture and set out the pathway to fiscal devolution—and I have been knocking around talking about devolution for quite a long time now—I think there were a lot of people in that world who were quite taken aback at how forthright the Chancellor was on fiscal devolution.
I would definitely not describe myself as peeved. I think she has set out an intention, and we are working really closely with Treasury to deliver on that. The first step is the overnight visitor levy, but it needs to sit within a framework of giving local places the policy levers and the real incentives to deliver the growth this country needs.
When it comes to the point that you just made on high value council tax surcharge, I worry about the country’s finances overall. If we can find opportunities to bring in more resources in a way that is fair and progressive, that is a good thing.
Q57 Chair: Some of that money will be coming back to MHCLG to fund those vital services. Going back to my question, that should not have the name “council tax” in it, because to the ordinary voter who is paying their council tax, they know that an element of that council tax goes on local services whereas this high value council tax surcharge will not be coming to their authority.
Alison McGovern: Through the spending review and other interventions, we have tried to make sure that services are—this is not easy. I am not saying the Chancellor could click her fingers and all of our problems would be over, far from it, but we have a new grant for local government as part of the spending review.
The Chancellor has taken action on SEND deficits and also an extra £4 billion through the schools White Paper—I just give that as an example—to deal with some of the worst funding areas for local authorities. The position you describe is one I recognise, which is that people pay their council tax and feel deeply frustrated that because of national policy decisions that have been taken, there is not enough connection between what people pay and the services they get back.
There are two steps if you want to deal with that. You have to deal with the policy failure causing that problem in the first place—on SEND and other issues—and also provide new mechanisms and new incentives for money raised to generate economic and social growth in those places. That is our plan for fiscal devolution, which we will talk more about over the coming months.
Sophie Langdale: I can come in here just to say that we have committed that all high-value council tax will end up going back to local government services.
Q58 Chris Curtis: Thank you, Minister. I think there is a general point that ties the two together, but just on business rates next, we promised in our manifesto to reform or replace the business rate system. Is that still the plan?
Alison McGovern: In MHCLG we deal with the operation of business rates. We work very closely with Treasury, but the fiscal policy elements are only for the Treasury.
Q59 Chris Curtis: Do you think it is still the plan?
Alison McGovern: Business rates play an important role in supporting high streets. Minister Caliskan, who is responsible for high streets, is thinking about this policy. As you will know, we have made changes that support retail, hospitality, and leisure through the business rate system. Our manifesto is about making big changes to support the high street, and we will say more about that through the process of the high street strategy and other things.
Q60 Chris Curtis: Do you think there is concern from local government stakeholders that you have spoken to about the recent changes, the business rates changes?
Alison McGovern: Forgive me, is there concern from stakeholders about—
Chris Curtis: From local government stakeholders that you have spoken to in your role about the recent changes and the impact they will have on local business.
Alison McGovern: Local government?
Chris Curtis: Yes.
Alison McGovern: The feedback that I have had from local government, as I said before, is an overall level of concern about finance generally. Equally, they care about high streets and how successful they are. They want to see the places that they serve grow economically to bring in the income that they need for that growth to perpetuate. I am not quite sure I have quite got the nub of your question there.
Q61 Chris Curtis: The Government announced changes on business rates recently. I was interested in conversations you have had with local government on concerns about the impacts that those changes might be having on the local community. I think you have answered the question.
Alison McGovern: I think they take a balanced view. They need income through council tax, business rates, and government grant, but no local authority is blind to the situation facing high streets at the moment.
Q62 Chris Curtis: I get the point that the Treasury decides the policy generally, but I think some questions about reform of business rates and council tax do firmly sit under your department, most notably in the conversation on devolution, particularly related to the recent comments that we saw with the Mais lecture speech.
If we are moving more towards the world set out in the Mais lecture—of fiscal devolution, of local councils having more control over some of these levers—would you like to see us moving in that direction on business rates and council tax as well?
For example, maybe the Government do not want to do a big revaluation nationally on rates set three years before I was born, but Wales has the power to do its own revaluation. Is that the sort of power that you would support giving to combined authorities in the future?
Alison McGovern: I will take that as a suggestion. As we go through the discussions on this issue, there is a balance, because we have an extraordinarily unbalanced economy in England. There are other issues in Wales and Scotland, but let’s just think about the devolution picture in England. There is a balance, because you do not want to take away the redistributive ability of the system, but at the same time you need a way for local places to have a plan for growth and to feel the benefit of that growth.
All these judgments are a balance. For example, you have to think through the business rates reset in relation to that balance. That is how I think of it. You want to have fiscal devolution that gives a strong framework for growth, at the same time as not removing your ability to step in and support those places that are behind national levels of growth.
Q63 Chris Curtis: I will come on to the reset in one second, sorry. I think you touched on an important point there.
There is a funding pot that local councils have to raise in order to do their stuff, which is a question of redistribution and how we redistribute the rules nationally. However, within that, local councils need to raise so much money in order to provide services. At the moment, we are quite restrictive in the rules that we give them on how they can raise that money, how council taxes are banded, when the valuations came in, and how business rates are done.
As this conversation on fiscal devolution happens, are you interested in allowing them to alter the rules on how they raise some of that money locally so that it is not all decided by us here centrally and we are having to make decisions on how much a pub in John O’Groats should pay, or a warehouse in Milton Keynes, and move some of those powers downwards?
Alison McGovern: I say two things in response to that. First, it partly comes back to the answer that I gave to Mr Forster earlier about the capacity that we have in the system to run it well. I am conscious that there are improvements that we need to make that might enable more flexible decision-making, if that was what Parliament decided it wanted to do. That would be my first caveat.
Overall, we have set a direction from this Government that has been very strong on devolution and making sure that we have the tools in the box for local leaders to grow their place, whether that is taking ringfences off funding or exploring what we can do to give people greater sources of income that are more under their control. That is the overall direction that we are taking.
Q64 Chris Curtis: On that final point—and you touched on the question before—I can see a plan from Government for how we are doing that for combined authorities. Most notably, more fiscal devolution is set out. The point behind all that is to create a growth incentive in a local area, knowing that they will be able to keep some of the revenue of the growth that they create.
I have not yet seen a plan laid out for how we are going to start doing that for local authorities. Obviously, the business rate reset broadly means that you take away everything after a few years. Everything goes away eventually. Now we have also lost the New Homes Bonus within the Fair Funding Settlement.
It is a few years before we do a new Fair Funding Settlement, but when we move towards that, is the Department going to look at how you can set a system up so that there is more of a growth incentive for local councils? If so, it might be good to start that conversation earlier because you want councils to know that the incentive is there for them to start acting accordingly.
Alison McGovern: There is quite a lot in that question. Let me take each bit in part.
The first thing I would say is that on devolution, local government reorganisation sets this out. We are trying to support real economic areas. We are trying to enable decisions to be taken at the travel-to-work area scale. That is an important consideration when you are thinking through how to move forward on devolution and provide these growth incentives.
Secondly, I totally disagree with what you said on New Homes Bonus. I will write further to you, Mr Curtis, on this, but my understanding is that it did not in reality deliver much of a growth incentive. The steps that we have taken through Fair Funding to better account for the council tax base in a way that will help areas feel the benefits of growth, particularly in housing, were important in addressing that. I could send you some more details of our assessment of New Homes Bonus because I do not think it was a particularly good incentive.
Your final point on, “Why do you not set a direction of travel for local government?” is right. That is what we are trying to do through the overall plan for local government, and I am always keen and enthusiastic to set out the overall vision in the contributions that I make. I shall try to do that more in the months to come.
Q65 Chair: Thank you, Minister. I want to ask one final question as I am mindful of time. Under your brief as well are the resettlement programme and various resettlement schemes, including Homes for Ukraine, Hong Kong, and British nationals overseas, and the Afghanistan resettlement. It is good to see the Department not extending its contract with Palantir and having an in-house version in terms of placing families. What are your priorities for the various resettlement programmes in the coming year?
Alison McGovern: Thanks, Chair. This is a very important element of the work that we are doing. When it comes to asylum, that is primarily led by the Home Office. My role is to support Minister Alex Norris in the schemes that you have mentioned, Homes for Ukraine and the Afghan resettlement, and work with the Home Office so that they understand how those schemes can be part of the overall system and, crucially, to make sure that work on resettlement and asylum is connected with the work that local authorities do. We will all be only too aware of the impact on local communities that this can have.
Minister Norris and I have worked very closely together with the local government associations to provide good channels of communication on how the Home Office is managing work in this area. If we are talking about refugees, who in many cases have fled dreadful circumstances in this world, I want to make sure that they feel part of the local community where they are. Local authorities can play an extremely important role in that community cohesion work.
While I look after the resettlement bit, it is a partnership between myself and Alex, and also myself and Minister Caliskan, who leads on community cohesion. We work as one team, trying to make sure that the system is connected and coherent.
Chair: Thank you very much for coming before the Committee this morning, Minister, Sophie, and Catherine.