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

To ask Her Majesty's Government what controls are placed on the use of additional capital funding given to local authorities for special programmes for meeting the needs of (1) ethnic minority groups, and (2) social deprivation, after the programmes have closed; and in particular, whether any remaining unspent funds are expected to be transferred to their general budgets, or remain ring-fenced for alleviating the specified needs.

The primary power used by Government to make grant payments to local authorities in England is Section 31 of the Local Government Act 2003 ('Section 31'). This power can also be used to make payments to authorities in Wales.

For Section 31 grants, Government has a long-standing policy to provide funding to local authorities on a non-ringfenced basis. Once the funding is issued local authorities have the flexibility to manage funding according to local priorities and deliver efficiencies, rather than central government trying to control every spending decision. Therefore, where a specific grant is provided to local government this should be non-ringfenced unless exceptional circumstances apply.

The conditions imposed on a particular grant will vary according to the needs of the particular policy. There isn't a single approach for all grants in a particular policy area. As part of this, departments will decide how they want to deal with underspend as a condition of the grant.

For Section 31 grants with a capital element, conditions must be imposed which require the capital element to be used only for capital purposes, enable the capital element to be 'clawed back' if this condition is not complied with, and require a declaration to be made by the recipient that the conditions of the grant have been complied with. These conditions are required to meet accounting rules and audit obligations.