26 June 2025The Ministry of Housing, Communities and Local Government (MHCLG) have now laid before Parliament a statutory instrument (SI) to uplift the Smaller Authorities threshold from £6.5m to £15m.
This SI is subject to the affirmative procedure, so it will need to be approved by a resolution of both houses of Parliament before being signed by the Minister for this change to come into force. MHCLG hope that this will be by the end of September.
Below is an extract from the Local Audit and Accountability Act 2014 with the changes made by the SI shown in red (if this is approved by Parliament)
6 Meaning of “smaller authority”
(1) For the purposes of section 5, a relevant authority is a “smaller authority” for a financial year if—
(a) where that year is the year in which the authority was established, the qualifying condition is met for that year,
(b) where that year is the year following that in which the authority was established, the qualifying condition is met for that year or the previous year, and
(c) where that year is the second or any subsequent year following that in which the authority was established, the qualifying condition is met for that year or either of the two previous years.
(2) The qualifying condition is met for a relevant authority and a financial year if the higher of the authority’s gross income for the year and its gross expenditure for the year does not exceed £6.5 million.
(2) The qualifying condition is met for a relevant authority and a financial year—
(a) beginning on or before 1st April 2024, if the higher of the authority’s gross income for the year and its gross expenditure for the year does not exceed £6.5 million;
(b) beginning on or after 1st April 2025, if the higher of the authority’s gross income for the year and its gross expenditure for the year does not exceed £15 million.
(3) For the purpose of determining, at a time when a relevant authority’s gross income or expenditure for a financial year cannot be accurately determined, whether subsection (2) applies or will apply to the authority, that subsection is to be read as referring to the authority’s estimated gross income or expenditure (as the case may be).
(4) The Secretary of State may by regulations make provision about the application of this Act (including in its application by virtue of section 5) or any provision made under it in a case where—
(a) an authority is treated as a smaller authority for a financial year, and
(b) the authority was not in fact a smaller authority for that year.
(5) The Secretary of State may by regulations amend this section.
In 2023/2024 there were 12 Smaller Authorities with an income or expenditure over £5m and this increase in the upper threshold should provide welcome headroom to allow them to remain Smaller Authorities and so subject to Limited Assurance Review.
