Select committee to examine effectiveness of council interventions as part of inquiry into local government finance

The Housing, Communities and Local Government (HCLG) Committee plans to evaluate the effectiveness of the Government's intervention programme for councils in financial distress as part of an inquiry into local government finance.

Questions to be asked by the committee include whether the local government finance and funding system is fit for purpose, what are the most significant funding pressures facing councils, and whether the current statutory regime for identifying and responding to financial distress in local authorities is effective.

As part of its consideration of the Government's statutory regime, the committee aims to assess whether Government interventions have helped local authorities stabilise their finances and avoid further financial distress.

It will also look at what a "broader support system for local authorities in financial distress" should look like, and whether there are specific circumstances that have led some councils into financial distress and others to avoid financial distress.

In addition, the committee plans to examine how much control councils have over their costs, including over mandatory services and demand-led services.

This aspect of the inquiry will look at whether local authorities have any flexibility in delivering mandatory services.

Florence Eshalomi MP, Chair of the Housing, Communities and Local Government Committee, said: "The state of many councils' finances in England is at breaking point.

"Demand for council services such as temporary accommodation, social care, and special educational needs and disabilities (SEND) provision has soared, yet their real-terms spending power has been slashed.

"This is having a real impact on the local services being provided to the communities and residents they serve.

"The Government's recent local government policy statement sets a broad direction of travel for the coming years."

She added: "As a Committee, we will want to examine a range of issues on the funding and sustainability of local Government. Funding shortages will inevitably be a central question of our inquiry but we will want to bring forward practical recommendations for Government so they can empower councils to deliver for their communities."

Public evidence sessions are expected to commence in February 2025.

The committee is likely to hear from witnesses, including local authority finance directors, local government elected representatives, and the MHCLG Minister.

Adam Carey