Communities secretary James Brokenshire has rejected claims by the Public Accounts Committee (PAC) that his department has a “shaky grasp” of the financial issues facing councils.
Earlier this month, the committee voiced concerns that the department was unable to provide it with a definition of financial sustainability.
But speaking ahead of his debut appearance before the communities select committee this week, Brokenshire said his officials are fully on top of the situation.
“We are monitoring the situation very carefully,” he said. “In the work we are doing alongside the Local Government Association, we monitor local government very carefully and very closely on their performance to ensure and provide assurance to us whether there are issues that are emerging.
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“Obviously, that varies over time with different local authorities but I am very conscious of the pressures that local authorities are under.”
However, the new minister failed to offer a direct answer when challenged by committee chairman Clive Betts on the need, outlined by the PAC report, to make the assessment of local government finances more transparent.
Brokenshire said: “The point is that every council is different. We have a range of different councils both in size and in terms of responsibilities.”
The committee also asked the new minister about the chances of another local authority following Northamptonshire County Council and issuing a section 114 notice.
“As the inspector originally said, this wasn’t about government funding but poor financial management at the council,” said Brokenshire.
“We are confident that no other authorities are in the same situation as Northamptonshire with very low reserves, audit concerns, overspending on key services and governance issues.
“No authorities raised concerns during the settlement consultation and all local authorities have set a balanced budget for 2018–19.”
Brokenshire was also challenged by committee member, Labour MP Helen Hayes, on whether the government should turn its £1bn of extra housing revenue account flexibilities into a full lifting of the current cap.
The minister said that the best way of moving in that direction would be for councils to demonstrate the success of the £1bn extra borrowing room.
He said: “We will continue to keep this under review. It is about seeing the delivery against the flexibility that has been given over HRA borrowing.
“I want to see councils demonstrate what can be done through that so we can consider next steps and what further opportunities there may be.”
However, he cautioned that the government needed to consider the HRA cap in relation to the affect it has on the overall level of government debt.
During the session, Brokenshire also announced his intention to streamline the way central government consults with local government about the implications of Brexit.
He announced the creation of a local government delivery group, involving local government and Whitehall departments for which councils are the primary delivery partner.
He said the group would “…seek to bring this together in one place and ensure that we are listening and reflecting as we look to the implementation of our leaving the EU and the key role that local government plays”.
Brokenshire announced his intention that the group should meet before Parliament breaks for the summer recess “to set out the intent to get this moving rapidly”.
