Briefings and responses

Overall, we have significant concerns with the proposed changes to the Prudential Code and these are outlined in our response to the consultation on that. We are equally concerned at how those changes interact with and impact on the Treasury Management Code. In particular we are concerned that activity that is currently seen as good practice in Treasury Management will be restricted to the detriment of councils’ finances.

The local government finance settlement is the annual determination of funding to local government from central government. This briefing covers the provisional settlement for 2022/23. We expect the final 2022/23 settlement to be laid before the House of Commons, for its approval, in late January or early February 2022.

Prior to the Spending Review, the LGA estimated that councils faced cost pressures of £2.6 billion in each year up to 2024/25, to keep services at their 2019/20 levels of access and quality – without addressing any pre-existing pressures.

On the face if it this seems like a straightforward proposal with the aim to ensure that the existing Minimum Revenue Provision (MRP) guidance is followed, which is what already happens for the vast majority of local authority debt. However, the results of the proposed changes will be more far reaching than that and there will be significant financial consequences for some councils which will need to be addressed.

The LGA has long highlighted that council tax rises – particularly the adult social care precept – have never been the solution to the long-term pressures faced by councils, particularly in social care which is facing severe financial and capacity challenges. Increasing council tax raises different amounts of money in different parts of the country, unrelated to need.

Emergency proposals for the update of the 2021/22 Code of Practice on Local Authority Accounting in the United Kingdom: Exceptional consultation on time-limited changes to the Code to help alleviate current delays to the publication of audited financial statements

The LGA supports the introduction of an online sales tax, particularly as it would help to spread the range of the taxbase for business taxes. However; this should not be at the expense of business rates income.

The current issues with local audit are complex and have a number of causes including a limited number of firms within the market and a shortage of suitably qualified auditors working for those firms. This situation has been made worse by tighter and stricter regulation of auditors following audit scandals in the private sector and more recently by the difficulty of auditing under COVID restrictions.

In our response to the original consultation we raised serious concerns that the proposals could have unintended consequences, for example affecting councils’ ability to invest in infrastructure and housing via wholly owned companies and have serious impacts on some councils’ revenue budgets.