MPs press Gove on how DLUHC will help financially troubled councils

The chair of the Levelling Up, Housing and Communities Committee, Clive Betts, has said it is now time for Michael Gove to set out the view of the Department for Levelling Up, Housing and Communities (DLUHC) on the financial challenges facing local government.

Following up a committee hearing which saw MPs question the Secretary of State last week (6 December), Betts asked Gove for more information on a watchlist of councils in financial trouble that the minister said his department keeps – and whether the department believes the problems are "systemic".

During the question session, Gove declined to disclose the number of councils on the list and also refused to name any of the listed councils.

In a letter sent yesterday (14 December), Betts asked Gove to provide an overview of the type of financial challenges the councils involved are facing.

"In particular it would be helpful to have an understanding of whether these councils are facing particular one-off issues, or general systemic challenges", he wrote.

Betts also asked for information on the support the department is providing for financially troubled councils.

He wrote: "We understand that you were unwilling to comment directly on the future financial implications for local authorities of the announcements made at the Autumn Statement, specifically that the Office for Budget Responsibility are forecasting annual cuts in unprotected spending from 2025-26 of 2.3% in real terms.

"While you said that you 'don't want to, and shouldn't, pre-empt any spending review'" due in 2025, local authorities will need to confront those implications now when setting their medium-term financial plans.

He continued: "You recommended during the session that councils should plan for a range of outcomes: what advice and support is your Department providing to councils to help them plan for funding cuts on the scale the OBR has forecast?"

The committee session last week came a day after the Local Government Association (LGA) and the County Councils Network separately called for more financial support for councils following the Autumn Statement.

The two councils warned that more councils could be set to issue section 114 notices due to a lack of financial support from the central government, with the LGA stating that a survey suggested one in five councils could issue a section 114 notice in the coming year.

During the session, Gove said the one in five figure - around 60 councils - was an "overestimate".

He later said he did not want to deny that there were real difficulties and challenges in the sector and accepted that the situation was "tight".

Bett's letter includes a number of follow-up questions and requests, including a request for a range of estimates of the impact of Local Housing Allowance being frozen again in 2025 as opposed to what might happen if it increased in line with inflation.

The letter also called for information on the number of unaccompanied asylum-seeking children entering the care system and what role this has played in increased demand for children's services.

He has also asked for further detail on work the department and the Department for Education are doing on children's services in Bradford, which are facing financial issues.

On planning reform, Betts asked for clarification on how urban uplift – a policy that will require some local authorities to plan for more houses – is calculated, in particular confirming if it has changed from 35% to 20%.

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."

Adam Carey