Question to the Department for Levelling Up, Housing & Communities:

To ask the Secretary of State for Levelling Up, Housing and Communities, whether it is the Government's policy that a local authority in England should be able to set up a company in which it holds 100 per cent of the shares for the specific purpose of buying council owned assets with money provided on loan from government and private sources; and if he will make a statement.

Local authorities are responsible for their own capital strategies and remain accountable to their electorate for their decisions. They may invest and lend to companies to deliver capital projects within their local objectives, but must appropriately comply with the Prudential Framework to make sure that such decisions are prudent, affordable and comply with the Best Value duty. Local authorities should not use companies to circumvent the requirements of the capital framework.

On 28 July we announced that we are strengthening the capital system to support effective, sound capital decisions that facilitate local objectives and government priorities and makes the best use of taxpayer's money. Our approach includes local authority companies and complex capital transactions. One of the ways in which we will be addressing local authority company concerns is through a review on governance and skills, which seeks to identify and address governance issues in local authority borrowing and investing, including where companies are used. Furthermore, we maintain close engagement with the Chartered Institute of Public Finance and Accountancy (CIPFA) and they are producing best practice guidance for local authorities on council-owned companies which will focus on strengthening risk management and internal monitoring and assurance processes. The guidance will be available early 2022.