Question to the Ministry of Housing, Communities and Local Government:

To ask the Secretary of State for Housing, Communities and Local Government, if she will make it her policy to replace the Exceptional Financial Support regime with long term debt-restructuring.

We are under no illusion about the fragile state of the sector and the pressures that some councils are facing, and recognise the potential for continued instability as we work to fix the foundations of local government. That is why we have a framework in place to support councils in the most difficult financial positions. On 20 February 2025 we wrote to thirty councils to confirm in-principle support, primarily in the form of capitalisation, through the Exceptional Financial Support process.

It is the responsibility of councils to manage their budgets, and it is standard for councils to borrow and to hold debt in the normal course of business. There are councils currently under statutory Best Value intervention that hold exceptional levels of debt. As part of the Spending Review, we are working with those councils, particularly in the context of local government re-organisation to understand how these councils’ exceptional debt can be managed.