Policy paper

Integrated Settlement: policy document

Published 11 June 2025

Applies to England

Introduction

1. The English Devolution White Paper set out the government’s plans to provide Integrated Settlements for Established Mayoral Strategic Authorities (MSAs) to fund local priorities.

2. This document sets out the principles of the Integrated Settlements and how they will be implemented. It also outlines the process for agreeing and monitoring outcomes associated with the Integrated Settlements and the accountability arrangements. Central government and the MSAs will review Integrated Settlement policy ahead of each Spending Review (SR) to ensure it remains fit for purpose.

3. This document covers funding which flows from central government departments to the MSAs via the Integrated Settlements.^{[footnote 1]} It is not intended to apply to funding which flows from central government to the MSAs via other mechanisms (for example, Police and Crime Commissioner functions, waste functions or funds outside the scope of the Integrated Settlement), or to locally-raised funds.

1. Eligibility

4. As set out in the English Devolution White Paper, Mayoral Strategic Authorities that meet specified eligibility criteria may be designated as Established Mayoral Strategic Authorities, unlocking further devolution including an Integrated Settlement.

5. These criteria are that:

a. the Mayoral Strategic Authority (or predecessor Mayoral Strategic Authorities) have been in existence, with a directly elected Mayor in place, for at least 18 months at the point of submitting a request to move up to the Established Mayoral tier and access the Integrated Settlement

b. the Strategic Authority has a published Local Assurance Framework in place

c. in the previous 18 months the Strategic Authority has not been the subject of a Best Value Notice, a Ministry of Housing, Communities and Local Government (MHCLG) commissioned independent review, or a statutory inspection or intervention

d. the Strategic Authority is not subject to any ongoing (or implementing) recommendations from an externally mandated independent review

e. there are no material accounting concerns covering the current or previous financial year which relate to the Strategic Authority’s ability to manage public money

6. Mayors of Strategic Authorities which meet these criteria will be able to write to MHCLG to apply to be an Established Mayoral institution. The government will then further consider the devolved authority’s track record of managing major programmes.

7. Once designated as Established, MSAs will automatically be conferred with the relevant powers and functions available at that level of the framework by right. In line with the framework, Established Mayoral Strategic Authorities will be eligible to receive an Integrated Settlement, which will commence at the following Spending Review provided a sufficient preparation period has passed. Authorities that have been confirmed as eligible are published on GOV.UK.

2. Scope

8. The English Devolution White Paper set out key areas of competence where Strategic Authorities should have a mandate to act strategically to drive growth as well as support the shaping of public services, where strategic level coordination adds value. Integrated Settlements will include central government funding falling under thematic policy areas (‘themes’). These are:

a. Economic development and regeneration
b. Transport and local infrastructure
c. Adult skills^{[footnote 2]}
d. Employment support ^{[footnote 2]}
e. Housing and strategic planning
f. Environment and climate change
g. Health, wellbeing and public service reform

9. MSAs have specific functional responsibilities under each of these themes. The current list of functional responsibilities is published on GOV.UK. Where central government funds are in scope of the MSAs’ functional responsibilities, they will by default be included in the Integrated Settlement ^{[footnote 3]}. Further detail about how this process will operate is set out in paragraphs 13 and 18. MSAs may have themes and functional responsibilities specific to their region.

10. As set out in the English Devolution White Paper, there is a presumption that funding for new programmes or activity where these are appropriate for local delivery will flow through Integrated Settlements for Established Mayoral Authorities.

11. Newly devolved programmes or activity may begin with a transition period that allows MSAs to demonstrate readiness and build capacity locally. For the Settlements beginning in 2026/27 this includes the devolution of retrofit funding over the course of this Parliament, subject to a strong track record of retrofit delivery and successful transition period.

12. The Integrated Settlements will not include any funding lines which:

a. directly underpin local authority statutory and/or core responsibilities

b. deliver transport schemes that are nationally significant infrastructure projects because they cross multiple boundaries beyond those of the constituent and non-constituent authorities of the MSA, or cost over £1 billion. There may nonetheless be consideration on a case-by-case basis as to whether to deliver such schemes through the Integrated Settlement framework.

13. The process for determining whether specific funds should be included in the Integrated Settlements is set out below.

a. Central government will use the definitions for functional responsibilities to identify whether a new funding line (whether it is announced at an SR, or between SRs) should be included in the Integrated Settlements. If the MSAs have concerns, these should be resolved through the Integrated Settlement Programme Board (‘Programme Board’) following the announcement of the fund.

b. Central government will confirm as part of the SR process the scope and quantum of the settlements as calculated via formulae linked to the functional responsibilities below. For funding announcements made outside of an SR period, central government will notify the MSAs of the consequences for the Integrated Settlements in a timely manner.

c. Should the MSAs judge that the approach taken conflicts with the principles set out in this document, they will use the escalation mechanisms detailed at Section 8.

d. Ultimately, the MSAs reserve the right to reject the settlement in its entirety. In this eventuality, the MSAs would revert to the funding mechanisms and accountability arrangements in place for each individual funding programme.

3. Determining the quantum at Spending Reviews

14. Integrated Settlements represent a change to the wiring and flexibility of funding from central government rather than necessarily to the quantum that the MSAs would have received in the absence of Integrated Settlements at an SR. The Integrated Settlements’ quantum will be determined by a formulaic process and the formulae will take this principle into account. The formulae will provide the MSAs with a share of funds in the Integrated Settlement and seek to deliver the principle that they are no worse off than had the Integrated Settlement not been in place. The Integrated Settlements’ quantum will be set from each SR following confirmation of funds in scope.^{[footnote 4]}

15. As part of agreement of departments’ funding lines through the SR process, there will be a joint process between relevant departments, MHCLG and HMT to identify the departmental funds in scope for the Integrated Settlement, based on the agreed functional responsibilities of the MSAs and reflecting the presumption that relevant funding flows through the Integrated Settlements for Established Mayoral Strategic Authorities. In agreement with the relevant government departments for each theme, central government will then apply the relevant formula(e) to determine the quantum of funding that is to be included in the Integrated Settlements, and this will be included in settlement letters to departments. Central government will set out publicly, following the SR, details of how the settlement has been calculated, the total quantum in each theme, the funding profile over financial years, and the resource (RDEL) and capital (CDEL) split.

16. Following the process to determine the Integrated Settlements’ quantum, at the start of each financial year the relevant departments (such as the departments that own the funding lines being transferred to the Integrated Settlements and devolved) will carry out a budget cover transfer (BCT) to MHCLG for the Integrated Settlements’ quantum that has been captured in their budgets, as agreed through the SR. This BCT would be authorised via the Main Estimates process and would mean that the Integrated Settlement funding would flow through MHCLG’s Main Estimate.

17. MHCLG will then formally allocate the aggregated Integrated Settlements to MSAs through a Section 31 grant. In exceptional circumstances, this grant will come with specific conditions.

18. Where there are new relevant funds that are made available during the SR period, HMT, MHCLG and the relevant government department will determine whether new funds are in scope of the Integrated Settlements based on the functional responsibilities set out on GOV.UK. This includes new budgets or programmes announced during the SR period, as well as any increases to competitive pots from which the MSAs have been excluded. Central government will then apply the relevant formulae to these funds to determine the MSAs’ allocative share, where appropriate. The MSAs can proactively identify programmes they believe to be within scope of the Integrated Settlements for discussion at the Programme Board, set out in paragraph 13a.

19. The MSAs and their constituent local authorities will not be permitted to bid into competitive programmes for which the MSAs have already received an allocation through the Integrated Settlements. The MSAs and their constituent local authorities will retain the right to bid into new competitive programmes which are not included in the Integrated Settlement.

4. Determining the formulae

20. The quantum for the MSAs’ Integrated Settlements will be set using formulae applied to relevant departmental budgets. The formulae will be used to determine the MSAs’ allocative share of relevant funds.

21. The core principles that will underpin the approach are outlined below.

a. The formulae will be based on objective criteria to ensure the MSAs receive their share of funding to enable them to deliver on their functional responsibilities and meet the outcomes set out in the outcomes framework.

b. The formulae will seek to deliver the principle that the MSAs are no worse off in terms of quantum of funding received than they would have been had the Integrated Settlements not been in place.

c. The formulae and any changes to the formulae will be public.

d. HMT will agree the formulae and any subsequent revisions with relevant departments to ensure there is an agreed and consistent approach. Central government will engage MSAs in a timely manner on relevant formula revisions.

e. For non-competitive funding programmes, where there is an existing formula or similar allocative process to determine the geographic distribution of funds associated with one or more functional responsibilities, this formula or process will be used.

f. The formulae will be linked to the functional responsibilities, or groups thereof, or themes. The highest possible level of aggregation will be used, within the constraints of central government and local policy objectives in different policy areas.

22. The aim is to streamline and simplify the formulae over time. The formulae will be reviewed as part of the holistic review of the Integrated Settlement policy set out in paragraph 2. Where appropriate, central government will look to ensure that the formulae reflect national policy priorities and the specific needs of the MSAs.

How allocations will be decided and implemented

Where there are existing formulae

23. Where non-competitive funds fall under the MSAs’ functional responsibilities and are in scope of the Integrated Settlement, the MSAs’ share of these funds will be determined by the existing national funding formulae for these funds. The MSAs will therefore receive into the relevant Integrated Settlement theme what they would have received through the national allocation process had there been no Integrated Settlement in place. This meets the principles set out in paragraph 21.

24. This will continue to be the case where revisions and updates to these national formulae are made – see further detail on how this will work in paragraphs 29 to 30.

Changes to existing formula

25. The formulae may change over time for several reasons. This section sets out some broad processes and more specific use cases for when formulae may change and how central government and the MSAs will respond to this. This is not an exhaustive list and other use cases will be considered as they arise. Central government will engage MSAs on potential formulae changes as detailed in relevant subsections below. Where new use cases arise for formulae changes, these will be discussed at the Programme Board before final decisions are made.

26. The underlying principle guiding the approach to any formulae changes is timely and meaningful engagement.

Streamlining formulae

27. The aim is to streamline and simplify the formulae over time. This could take the form of streamlining formulae under the MSAs’ functional responsibilities in future, to establish formulae that could be considered a starting point for new funding lines in scope of the MSAs’ functional responsibilities.

28. As part of the process for reviewing the policy ahead of each SR, HMT and MHCLG will work with relevant departments and the MSAs to consider where formulae could be streamlined, simplified, and/or consolidated, for example by testing whether we could reduce the number of formulae per theme while maintaining the principles set out in this document. Opportunities to streamline formulae may lead to deviations from the practice of using existing formulae. Central government and the MSAs will work together to streamline the formulae where opportunities are identified using the core principles outlined within this document.

Revising existing national formulae

29. Departments may periodically revise national funding allocation processes/formulae. Where the existing national formulae are currently used to inform the Integrated Settlement quantum, the formulae used for the Integrated Settlement will also be revised to reflect the new national funding mechanism. The MSAs will therefore receive the same quantum as per the revised national formulae as they would have done if they did not have an Integrated Settlement. The new formulae will also be published on the GOV.UK page for the relevant fund, where appropriate.

30. When national formulae are revised, MSAs will be notified in a timely manner.

Developing new formulae

31. For funds that are competitive but fall in scope of the Integrated Settlements, the MSAs’ respective share will be determined by new formulae. Central government will agree new formulae with the MSAs. If the MSAs wish to dispute the new formulae, this should be on the basis that they do not meet the principles set out in paragraph 21 of this policy document, using the dispute resolution process set out in paragraphs Section 8.

32. In some cases, a whole fund may become non-competitive, and formulae may be used to allocate the fund nationally. In this event, the new national allocative process for the fund will override the formula created to determine the MSAs’ share. As such, the MSAs’ respective share of that fund will be calculated using any new national formulae or process.

Use cases

33. The section below outlines specific use cases for sample funds (‘fund X’) in scope of the Integrated Settlement, to illustrate how the broader processes set out above will work in practice. The use cases set out below will be updated over time to reflect any changes or streamlining of formulae. Paragraph references in the table below are in relation to this document.

	Use case	Approach to determining quantum
1	Existing noncompetitive fund is extended into next SR, formula is unchanged	At the most recent SR, ‘fund X’ was allocated using an existing national formula. If the national formula is unchanged for ‘fund X’ in the next SR, the formula for determining the MSAs’ quantum of that fund will remain unchanged, subject to any wider changes of formulae at future SRs (as set out in paragraphs 25 to 30).
2	Existing noncompetitive fund is extended into next SR, formula is changed	At the most recent SR, ‘fund X’ was allocated via an existing national formula. If the national formula for ‘fund X’ is updated or changed for the next SR, the formula for determining the MSAs’ quantum will be updated to reflect the new formula, as set out above in the section on ‘revising existing national formulae’ (paragraphs 29 to 30).
3	Existing competitive fund is extended into next SR, remains competitive elsewhere	At the most recent SR, ‘fund X’ was allocated via competition. If the national ‘fund X’ remains competitive at the following SR and newly falls into scope of the Integrated Settlement, central government and the MSAs will agree a new formula to determine the MSAs’ share of this fund, based on the process set out above on ‘developing new formulae’ (paragraphs 31 to 32).
4	New competitive fund is created, and falls into scope of the Integrated Settlement	A new competitive ‘fund X’ is created during the SR period (i.e. not at an SR) and falls into scope of the Integrated Settlement. Central government and the MSAs will agree a new formula to determine the MSAs’ share of this fund, based on the process set out above on ‘developing new formulae’ (paragraphs 31 to 32). The MSAs will be notified and meaningfully engaged in a timely manner.
5	New noncompetitive fund is created and falls into scope	A new non-competitive ‘fund X’ is created during the SR period (i.e. not at an SR) and falls into scope of the Integrated Settlement. The national allocation formula for this fund will be used to determine the MSAs’ share of the fund (as set out in paragraphs 23 to 24). The MSAs will be notified and meaningfully engaged in a timely manner.
6	Existing competitive fund is extended into next SR, becomes noncompetitive	At the most recent SR, ‘fund X’ was allocated via competition, so central government devised a new formula for the MSAs allocation. If the national ‘fund X’ becomes non-competitive at the next SR and falls in scope of the Integrated Settlement, the new national allocative process for the fund will override the formula created to determine the MSAs’ share, as part of the processes set out above (paragraphs 31 to 32).

5. Spending controls and flexibilities

34. The Integrated Settlements include a single, systematised approach to spending controls. This will provide an appropriate amount of flexibility for the MSAs to plan and sequence programmes funded through the Integrated Settlements while ensuring that effective risk mitigation tools are available in case of delivery or financial failure.

35. The single spending controls framework must be consistent with provisions from the following, pre-existing, spending and accountability frameworks.

a. The English Devolution Accountability Framework, which requires MSAs to ensure they are delivering value for money

b. Managing Public Money (MPM), which requires departments to exercise their thematic Accounting Officer (AO) duty as per Chapter 7 of MPM through ensuring they are confident that the accountability, monitoring, and evaluation system set up for the Integrated Settlements is sufficiently robust. Further detail on AO responsibilities is set out in Section 10.

36. Whilst the MSAs will be able to use the flexibility between funding themes at their discretion, the MSAs should manage this through a systematic centralised process to ensure that the terms in the Settlement are being adhered to. The use of flexibility should be reported on as part of wider reporting of outcomes.

37. Central government may introduce additional spending controls in the event of delivery issues. See Section 7 for more detail on the processes and structures by which these controls would be enacted.

Business Cases

38. The MSAs will not be required to submit formal business cases to central government for projects that are funded as part of the Integrated Settlement, nor will delegated expenditure limits apply to funding through the Integrated Settlement, except those set out in paragraph 40. Where relevant, business cases should be compliant with the Green Book. MSAs will ensure that these receive robust scrutiny, ahead of investment or commercial decisions being made.

39. The MSAs will ensure that robust and appropriate systems are in place to ensure the value for money of all Integrated Settlement expenditure. The outcomes framework and associated accountability and controls arrangements will be the mechanism through which central government retains oversight of the Integrated Settlement.

40. Central government and the MSAs may deliver very large transport investment programmes through the Integrated Settlement structure. These will require additional oversight, as follows.

a. Any scheme with a capital value of under £50m over its lifetime, which does not otherwise meet the criteria in (b) or (c), will not be subject to any further spending controls.

b. For any scheme with a capital value of more than £50m over its lifetime and which is not captured by the criteria in (c), the MSA will publish the business case which underpinned the decision to invest to support local transparency and accountability

c. Where schemes cost over £200m over the life of the scheme, or require integration into the national transport network because otherwise they risk causing significant disruption, the scheme can only proceed with the agreement of the Department for Transport through its representative on the Programme Board. This will normally be through agreement of a business case.

41. The business case approval process will apply to transport schemes that meet the conditions above which are partly or wholly funded through the Integrated Settlement, even if the portion funded from the Integrated Settlement is lower than the thresholds set out above. For example, if an MSA contributes £100m of Integrated Settlement funds to a transport scheme with a capital value of £250m, this transport scheme will fall in scope of the business case process. If there is a material change to the time, cost or scope of the project, MSAs will need to send an updated Business Case to the Department for Transport.^{[footnote 5]}

42. For any scheme that falls within the functional responsibilities with a capital or resource value of more than £200m over its lifetime which is partly or wholly funded through the Integrated Settlement, and which is not captured by the transport business case approval process, the MSA will publish the business case which underpinned the decision to invest to support local transparency and accountability.

Moving funding within each theme

43. The MSAs will have full flexibility within the themes of the Integrated Settlements to design and implement policy to meet the mutually agreed outcomes. Central government will transfer the annual amount agreed for the Integrated Settlements at the SR each year as part of a section 31 grant, as per paragraph 17. The MSAs will be able to allocate funding within each theme at their own discretion and will be empowered to use funding under these devolved functions to invest in any lawful way associated with achievement of the outcomes agreed with central government. This includes the necessary and proportionate resourcing of regional and local capacity, as per the flexibilities set out in paragraph 49.

44. The MSAs will need to make a formal notification in writing to central government to confirm any reallocation of funding in line with their agreed limits for each flexibility set out below.

Moving funding between the themes

45. The MSAs will be able to move funding between themes. The quantum they will be able to move will be capped at 10% of the annual quantum for the theme they are moving the money out of, apart from the economic development and regeneration theme where there is no cap on moving funding into other themes. This flexibility will allow the MSAs to spend these funds to support the delivery of the Integrated Settlements outcomes at their discretion. As per paragraph 37, central government reserves the right to reduce the level of flexibility if there is underperformance against the outcomes agreed in the outcomes framework. The MSAs will be responsible for ensuring that they do not exceed the 10% cap. This flexibility will allow the MSAs to use their local expertise to best meet their outcomes.

Moving funding between years

46. The MSAs will have full flexibility to move funding received through an annual grant to future years, provided that the MSAs are on track to meet the outcomes set out in the outcomes framework. The Integrated Settlement grant will be paid out annually to a set profile and MSAs will not be able to request that funding be brought forward into earlier years of the SR period.

47. The MSA finance functions will be responsible for managing overspends and other movement of funds between years through local reserves in line with the Local Government accounting framework.

48. The MSAs will notify central government before making financial commitments funded by the Integrated Settlements beyond the SR period and inform the Programme Board of the nature of the commitment.

Moving funding between RDEL and CDEL and vice versa

49. The MSAs will be able to move up to 10% of CDEL funding within each theme to RDEL, and 100% of RDEL funding within each theme to CDEL. For the buildings’ retrofit schemes, no RDEL funding will be devolved and controls on admin and ancillary spend will mirror those of the capital grant schemes from which funding is being devolved. This will work as follows.

a. The MSAs will receive funding for each theme on an annual basis

b. The split of RDEL and CDEL per theme will be determined as part of the SR process (and updated if and when additional funds in scope of the Integrated Settlements are announced) and the MSAs will receive their annual allocations on this basis.

c. The MSAs will be able to move money between themes in-year. Where money is moved in this manner, it will retain its original classification (either as CDEL or RDEL).

d. The MSAs will then be able to move funds between CDEL and RDEL within themes. Specifically, the MSAs will be permitted to move funds from CDEL to RDEL, with the total moved capped at 10% of the theme’s quantum of CDEL. The 10% cap will be applied to the theme’s quantum after accounting for funding flexed to or from other areas. For example, having moved 5% of transport CDEL to skills CDEL, the MSAs could then move 10% of the (now higher) skills CDEL budget to skills RDEL, but not to another theme. The MSAs could move 100% of RDEL to skills CDEL.

50. To manage the impact on the public accounts, central government will profile the flexible amount of funding as RDEL. MSAs must also ensure that their local Integrated Settlement spending controls are consistent with provisions set out in relevant existing frameworks, which include the English Devolution Accountability Framework and the Local Government Accountability Framework.

51. Within 6-monthly reports, the MSAs will notify the Programme Board in writing of any movement of funding between i) the themes, ii) financial years, iii) RDEL and CDEL, confirming the functional themes involved and that these movements have not exceeded the caps set out above.

52. The percentage of flexibility between themes will be reviewed ahead of each SR, with a view to increasing flexibility in line with evidence of successful delivery, as part of the wider review of Integrated Settlement policy.

Savings exercises and spending pressures

53. To ensure that MSAs are able to enter into contractual arrangements over the course of the SR period, funds that form part of the Integrated Settlement will not be subject to central or departmental savings exercises over the course of the SR period.

54. MSAs will be required to manage fluctuating spending pressures at their own risk through local reserves and financial management.

Contingent liabilities

55. MSAs will be required to manage financial risk and contingent liabilities at their own risk, through appropriate local spending controls and local authority guidance.

Delivery concerns

56. In addition to these spending controls, and where there are concerns around delivery of outcomes or there are wider concerns around failure to deliver value for money, the matrix of assessment and mitigation (Annex A) will be followed. Section 7 of this document sets out the processes and structures by which these controls would be enacted.

6. Agreeing outcomes and targets

57. MSAs will be held to account for delivery of the outcomes associated with the functional responsibilities. The outcome targets that the MSAs agree with central government may be different to reflect local priorities. To facilitate this, central government and each MSA will agree an outcomes framework following the SR.

58. The outcomes framework will provide a structured approach to defining, measuring, and reporting on the MSA’s performance on Integrated Settlement delivery during the SR period. The outcomes framework will identify the desired outcomes for assessing the MSAs’ performance across the functional responsibilities devolved through the settlement, as well as the indicators and targets that will be used to track progress towards those outcomes in the SR period.

59. The primary objective of the outcomes framework is to set outcome based targets for local and central government scrutiny, to:

a. provide a single, streamlined approach to accountability and reporting with central government

b. align local priorities and national priorities

c. monitor activity which can be genuinely influenced within the Integrated Settlements’ themes whilst moving away from existing programme and project specific monitoring of inputs and outputs that central government track

e. facilitate local flexibility within themes and across themes in moving away from inputs and outputs

f. provide sufficient evidence to inform delivery performance within the SR period

60. The Integrated Settlement outcomes framework represents a new form of accountability that balances oversight, transparency, and the flexibility for MSAs to innovate and deliver locally. Publication of outcomes frameworks will enhance transparency and enable central government and the public to hold each devolved institution to account for achieving agreed outcomes. Monitoring of the outcomes framework is intended to enable joined-up oversight across central government departments for assurance, to identify risks of delivery failure, and to inform possible actions set out in the ‘matrix of mitigation’ at Annex A.

61. The scope of the outcomes framework spans the Integrated Settlements’ thematic policy areas as set out at paragraph 8.

62. Alongside the outcomes framework, MHCLG is responsible for the core Local Government Accountability Framework including ensuring that it is working and contains the right checks and balances. This includes the English Devolution Accountability Framework as an element.

Definitions

63. The key terms used in the outcomes framework are defined as follows.

a. Outcome: Outcomes describe what results are achieved in the medium to long-term as a result of Integrated Settlement expenditure and other MSA activity. Outcomes measure the effectiveness of a local policy intervention. For example, outcomes could include increased use of active modes of travel.

b. Output: Outputs describe what is directly or tangibly produced as a result of Integrated Settlement expenditure on local activities. For example, outputs could include the completion of new cycle lanes and footpaths. Outputs, unlike outcomes, do not describe how effective or successful these new local products and services are.

c. Indicator: A quantitative or qualitative data measure of progress against proposed outcomes (or outputs, when necessary). For example, outcomes can be measured directly (e.g. after opening new active travel routes, the proportion of trips made cycling or walking) or indirectly (where causality is difficult to determine, e.g. an increase in local wellbeing); the outcomes framework will predominantly focus on directly measurable outcomes. Where required, baselines will be used to measure change against proposed outcomes or outputs within a defined timeframe. Where an existing baseline indicator for the combined authority areas does not exist, the baseline will be mutually agreed with its value collected before delivery or its predicted value in a ‘baseline counterfactual scenario’ (as appropriate). Baselines will be used to measure change against proposed outcomes or outputs within a defined timeframe.

d. Target: An agreed quantity or quality of an outcome (or output) indicator that should be achieved within a defined timeframe. For example, a target could include increasing the proportion of the local population that use active modes of transport to a specified level.

64. The outcomes framework will include:

a. outcomes directly relating to the policy themes and functional responsibilities

b. underlying outcome indicators to measure change (either quantitatively or qualitatively) against stated outcomes. These will include a baseline where appropriate to help measure progress

c. targets set against outcome indicators, agreed between central government and each MSA to be delivered during an SR period. Progress against these targets will be measured at regular intervals against forecast trajectories mutually agreed between central government and the MSAs and reported as part of governance arrangements in Section 7

d. progress against outcomes can be difficult to assess over the shorter-term if there is a long time-lag from local investment to its measurable impact on an outcome, or if there is insufficient data to track delivery. In these cases, outcomes can be supplemented by other means. For instance, with shorter-term outputs (with corresponding output indicators and output targets) indicative of progress on outcomes, or ‘baskets’ of qualitative and/or quantitative indicators that show the overall delivery picture. In a similar fashion to outcome targets, progress against output targets will be measured at agreed intervals against forecast trajectories. Progress against quantitative output targets may be supplemented by qualitative data from, for example, local case studies or resident interviews. This will help to assure central government of MSA delivery of longer-term outcomes during the SR period.

e. The following diagram illustrates how outcomes, outputs, indicators, and targets fit together in the Integrated Settlement outcomes framework:

Alt text:

The diagram compares 2 approaches for measuring progress in an outcomes framework.

Case A: Where progress is measured directly against outcomes

• A single outcome box at the top connects downward to two outcome indicator boxes, each linking to an outcome target.
• Demonstrates direct measurement of progress through outcome indicators and targets.

Case B: Where progress is measured against outcomes via outputs (for example, due to a long time lag from intervention to a measurable effect on outcomes)

• A single outcome box at the top connects to 2 output boxes.
• The first output box connects to 2 output Indicator boxes, the second output box connects to one output indicator box.
• Each output Indicator box connects to an output target.
• Demonstrates using shorter-term outputs indicative of progress on outcomes where necessary.

A footnote explains that where possible indicators, for either outcomes or outputs, should be collated into complementary ‘baskets’ to holistically measure progress with a range of data sources. Exceptions to this may apply where it is not technically possible to do so or places an unwarranted data burden.

Design principles for identifying outcomes, outputs, indicators and targets

65. The outcomes should be:

a. clearly influenceable through the functional responsibilities and fund quantum devolved to MSAs in the Integrated Settlements

b. Broad and strategic to support MSA autonomy to holistically plan and deliver against agreed outcomes across the functional responsibilities of the Integrated Settlement but also specific and measurable to enable robust accountability mechanisms to assure central government of MSA performance

c. Reflective of Local Growth Plans and other local priorities identified by the MSAs and of national priorities held by central government

d. Measurable by one or more quantitative or qualitative data indicators (see indicator principles below)

e. Where necessary, supplemented by clearly linked output(s) and output indicator(s) in order to measure progress on outcomes that have a long time lag between intervention and impact

66. If used to supplement outcomes, the outputs should be:

a. Only used where necessary, so that they do not undermine the enhanced local flexibility for MSAs intended by the Integrated Settlement’s outcome-based approach. It may be necessary to use outputs when there is a long delay from local investment to its measurable effect on an outcome, for example this may be relevant to the delivery of transport infrastructure^{[footnote 6]}

b. explicitly linked to and indicative of progress towards a specific outcome, ideally citing a theoretical rationale and/or empirical evidence to substantiate this link

c. mutually agreed between the individual MSA and central government based on how best to achieve an outcome locally. Exceptions to this principle may be applied where outputs relate to national outputs and/or delivering statutory obligations

d. the minimum needed to assure central government of the MSA’s delivery against a specific outcome during the time period covered by the Integrated Settlement

e. adaptable during the time period covered by the Integrated Settlement if the output(s) initially agreed are not effectively measuring the delivery of the target outcome to which it is linked

f. aligned to the principles set out for outcomes above, except that outputs will be shorter-term in effect.

67. The outcome indicators and output indicators (if used) should be:

a. focussed and specific to measure and understand the progress made in the thematic policy areas

b. robust, stable, and transparent, including being measured by the MSAs at an agreed frequency based on robust and stable data sources where possible (for example, official central or local government statistics), and from data sources accessible by central government and the MSA at the appropriate geographic and temporal level

c. based on existing data measures where possible, or alternatively identified as aspirational data measures to be collected in the future if not currently available. Where such data is not available, the Mayoral Data Council may be used to identify priorities for improving access to datasets

d. proportionate and mindful of minimising the data collection burden on local areas as much as reasonably possible

e. accessible and interpretable by non-specialists to enhance transparency and public scrutiny mechanisms

f. collated into complementary ‘baskets’ to holistically measure progress with a range of qualitative and/or quantitative data sources. Exceptions to this may apply if it is not technically feasible to do so or imposes an unwarranted data burden

g. where feasible and proportionate, able to be disaggregated (but pseudo-anonymised) to enable precise measurement of outcomes for vulnerable social and economic groups, for example to support compliance with the Public Sector Equality Duty

h. analysed at an appropriate spatial scale, but no larger than the MSA geography-level, unless mutually agreed between central government and the MSA for policy-specific reasons

68. The targets (attached to indicators) should be:

a. set against a mutually agreed existing value or a counterfactual baseline

b. achievable and measurable in the SR time period, although further long-term targets for outcomes (or long-term outputs) may take longer than the SR period

c. based on quantum allocated to the MSA at the SR

d. underpinned by a reasonable trajectory over the SR time period, not necessarily assuming a linear (or near-linear) delivery profile

69. Where reflecting national outcomes or legal obligations, the targets should be by default proportional to the national outcome held by the relevant central government department. Exceptions may be negotiated and mutually agreed between the MSA and central government.

70. Some funds in scope of the Integrated Settlements have minimum statutory requirements attached to them, such as the Adult Skills Fund. Central government will set out expectations for use of this funding as part of agreeing the final quantum and through the outcomes framework. This will not constitute a formal ringfence within each theme and will be set out as part of the section 31 grant agreement.

71. If an MSA is not making progress towards the realisation of an outcome, evidence will be discussed at the Programme Board. The ‘path to green’ report will be the mechanism to agree if the baselines or forecast trajectories are proving an inaccurate measure and require amending. Following this, the agreed matrix of mitigation, assessment and escalation process will be followed based on the targets set out at the SR.

72. Where a new funding line is devolved to an MSA through the Integrated Settlements during the SR period, or a quantum is changed, the MSAs and central government will agree any necessary changes to the outcomes framework and outcomes targets in line with the principles above.

73. There may be exceptional circumstances when it might be appropriate to renegotiate the Integrated Settlements’ outcome targets, for example where unavoidable and significant external shocks (such as pandemics or excessive inflation) will impact the MSA’s ability to deliver. It is anticipated that these circumstances arising would be very unusual, and central government is under no obligation to change the targets. If the MSAs wish to renegotiate targets, they should bring proposals to the Programme Board for consideration. Central government and the MSAs expect the outcomes framework will be subject to iteration, evolution, and simplification as the settlements progress.

The process for setting the outcomes frameworks

74. Following the SR and prior to the first financial year of the period covered by the Integrated Settlement, central government and each MSA will agree an outcomes framework, in line with the design principles above, including:

a. Outcomes, outputs, and indicators aligned to national missions, other national priorities and local economic concerns.  Agreed indicators will be subject to data feasibility checks conducted by central government and MSA analysts to assess data reliability and collection burden and DfT may consult Active Travel England on outcomes and outputs related to active travel

b. Targets that are clear and transparent, so local and central government, as well as the public, know what the MSAs are accountable for delivering through their Integrated Settlement.

75. In the first quarter of the first financial year of the Integrated Settlement period:

a. Publication of the outcomes frameworks: The Integrated Settlement outcomes framework – with outcomes, outputs, indicators, and targets – will be published by central government and each of the MSAs

b. Publication of MSA local delivery plans: MSAs are encouraged to design public versions of local delivery plans, outlining the MSA’s strategy and interventions to achieve agreed outcomes in order to facilitate transparency and scrutiny by local residents

7. Governance arrangements for monitoring and evaluation

76. The MSAs are responsible for ensuring that delivery via the Integrated Settlements is on track and that plans remain ambitious and provide value for money as set out in the English Devolution Accountability Framework.

77. MSAs’ delivery of the agreed outcomes will be overseen by a Programme Board that will be chaired by MHCLG senior officials and attended by the MSAs, HMT senior officials, and senior officials from central government departments that have devolved funding in the Integrated Settlement. The Programme Board will act as the default point of contact for the MSAs on all delivery questions, concerns, and conversations, with other bilateral conversations with central government departments about detailed policy specific delivery of the Integrated Settlements where needed.

78. The MSAs will send six-monthly monitoring reports to the Programme Board, including:

a. RAG (Red, Amber, Green) rating that provides an assessment of progress towards achieving the targets by the end of the SR 

b. spend profile, including spend to date against the Integrated Settlement themes and any quantum moved between themes

c. forecast underspends at the end of the financial year (capital and revenues totals), for information purposes only

d. risk management (for example fraud risk), if necessary

e. a short narrative update highlighting any key changes (including any quantum moved between themes), progress and highlights

f. Section 73 Officer or equivalent Officer sign-off to confirm investment under the Integrated Settlement has complied with the authority’s legal duties for best value, propriety, regularity, and value for money

79. Central government and the MSAs will keep the approach to monitoring and reporting under review to ensure it meets the following principles.

a. Monitoring reports should help the MSAs and central government better understand how the outcomes could be delivered more effectively.

b. Delivery assessment should be balanced and holistic.

c. The data and reporting requirements for monitoring reports will be proportionate, reflecting the minimum needed to provide central government with assurance of the MSAs’ performance against the outcomes.

80. The following areas of the Integrated Settlement require additional reporting, these requirements will be reviewed ahead of each SR.

a. For buildings retrofit schemes the MSAs will supplement 6-monthly reporting with quarterly updates and additional evaluation data to Department for Energy Security and Net Zero.

b. For transport schemes subject to business case approval by the Department for Transport (see paragraphs 40 to 42), MSA reports will include additional information on the progress of scheme development and implementation.

81. Where a RAG is rated amber or red, the MSAs will provide further quantitative and qualitative data to explain the rating and set out the ‘path to green’. Reports must be signed off by the MSA Chief Finance Officer. To support with mitigating any delivery issues, central government will employ a matrix of mitigations, set out in Annex A. This matrix will be considered by the Programme Board and outlines the options for mitigating different levels of delivery issues. If the Programme Board considers that the ‘path to green’ set out in monitoring reports is inadequate, they may consider appropriate mitigations or interventions, drawing on the matrix in Annex A. Mitigations in relation to specific themes will be signed off by the thematic Accounting Officer(s) (see Section 10) and MHCLG AO, and coordinated via the Programme Board. If applying a ‘major’ mitigation as set out in the matrix, central government will then give notice via a published letter to the MSA that they will intervene, setting out the measures being employed and why. The MSA will then be given a period to submit a formal response on proposed mitigations. If this response is deemed unsatisfactory by central government, the Programme Board will be empowered to set up task and finish groups to oversee interventions and progress.

82. Conversely, if the MSAs are overperforming on their outcomes targets, central government will not introduce additional targets for the remaining funding or seek to claw it back.

83. Central government will evaluate the impact of the Integrated Settlements. This will include various activities to understand whether the Integrated Settlements are achieving their aims, including an evaluation of the Integrated Settlement as a funding model, led by MHCLG. While MSAs are responsible for local outcome delivery and value for money, central government departments may conduct evaluations of activity within thematic policy areas at a national level or evaluations of national programmes, where relevant funding flows through an Integrated Settlement. Government departments and MSAs should work together to determine the best approach to including these areas in such evaluations, reflecting local flexibility over delivery and with the aim of improving collective understanding of what works through a partnership approach. MHCLG will develop a strategy for evaluating English devolution in consultation with government departments and MSAs to provide more detail on their respective roles in evaluating the Integrated Settlement.

8. Risk management and dispute resolution

84. If an MSA is not making progress towards the realisation of an outcome or where there are wider concerns around failure to deliver value for money, evidence will be discussed at the Programme Board. By exception, MHCLG can convene supplementary boards to consider such evidence outside the 6 monthly reporting cycle. Following this, the agreed matrix of mitigation, assessment and escalation process will be followed based on the targets set out at the SR (Annex A). Changes to the section 31 grant funding agreement may occur if central government judges there is a significant decline in delivery of outcomes from the MSAs. Similarly, the grant funding agreement may change if there are changes to departmental funding lines, or other departmental changes in policy or legislation (e.g., on statutory entitlements) that impact the Integrated Settlement.

85. The Programme Board will also discuss disputes or concerns regarding propriety in relation to the Integrated Settlements. As systems AO, MHCLG will have clear responsibilities in such cases to follow the standards set out in the Local Government Accountability Framework (LGAF) and the English Devolution Accountability Framework (EDAF) and will follow the matrix of mitigations and interventions where needed.

86. In the first instance, the MSAs and central government should seek to resolve any disputes between officers and officials, coordinated by MHCLG at a working level. If this is not possible, disputes will be formally discussed and agreed at the Programme Board. Where this appears likely to happen, the Programme Board secretariat should be consulted at an early stage to prepare papers for the meeting.

87. When the secretariat is formally notified of a disagreement, and the next scheduled meeting is longer than one month from referral, the Programme Board secretariat will organise a meeting within two weeks.

88. Through this process, the Programme Board will seek agreement on the facts, provide an opportunity for the parties to set out their positions and facilitate discussion of shared interests, options for resolving the disagreement and criteria for an agreed outcome.

89. Should the disagreement continue past consideration at the Programme Board, the Board Secretariat will organise political engagement between central government and the MSAs.

90. If the dispute is not resolvable through this engagement, the MSAs should officially communicate their disagreement through a published letter to the Secretary of State for Housing, Communities and Local Government. The Secretary of State must then respond through a published letter to the Chair of the Combined Authority (the Mayor) and the Housing, Communities and Local Government Select Committee, outlining the reasons for the decision.

91. Where there are disputes on agreeing the formulae methodology and the outcomes framework ahead of the Programme Board, they will be addressed via a ‘shadow’ Programme Board in the first instance. In exceptional circumstances, MHCLG will establish a task and finish group between relevant central government thematic AOs, HMT, and the MSAs to agree on a resolution. As the final step, an MSA should officially communicate their disagreement through a published letter to the Secretary of State for Housing, Communities and Local Government. The Secretary of State must then respond through a published letter to the Chair of the Combined Authority (the Mayor) and the Housing, Communities and Local Government Select Committee, outlining the reasons for the decision.

9. Central government direction under exceptional circumstances

92. In exceptional circumstances, for example during national emergencies or where MSAs’ activities significantly undermine national government’s ability to deliver its priorities in areas outside of the MSAs’ functional responsibilities, central government may direct the MSAs to use, or not use, funding from within the Integrated Settlements in a specific way.

93. The circumstances in which such a direction may be used are:

a. where the MSAs’ approach to delivery of the Integrated Settlements, either in whole or in part, is demonstrably undermining national government’s ability to deliver its priorities in areas outside of the MSAs’ functional responsibilities

b. where all mechanisms for discussion and dispute resolution set out in this document have been exhausted

94. Any direction must be published as a letter to the Chair of the Combined Authority^{[footnote 7]} (the Mayor) and the Housing, Communities and Local Government Select Committee. The MSAs will be given a period to submit a formal response with proposed mitigations and interventions.

95. If central government deem this response to be unsatisfactory, it will employ the matrix of mitigation, set out in Annex A. 

10. Accountability arrangements

96. The Integrated Settlements will be supported by the establishment of a streamlined, overarching, single assurance framework coordinated by MHCLG rather than multiple frameworks administered by different departments. This will build on, and will be incorporated into future editions of, the English Devolution Accountability Framework (EDAF).

97. The accountability arrangements outlined in this document will supersede the existing arrangements for the devolved funding covered by the Integrated Settlement.

98. The MSAs will be held to account for delivery under the Integrated Settlements through the outcomes framework agreed with all relevant departments, HMT, and the MSAs.

99. As the Integrated Settlements include devolved funding from departments across central government, there will be three core roles to administer the Integrated Settlement: the systems Accounting Officer (the MHCLG AO), the MSA CEO, and the thematic AOs (from contributing departments).

The role of MHCLG Permanent Secretary as “systems” AO

100. To provide a single point of contact, MHCLG’s AO will act as the ‘systems’ AO for the Integrated Settlement. MHCLG’s AO will be responsible for ensuring institutional propriety, upholding governance structures, approving a local assurance framework, and overseeing the approach to securing value for money. MHCLG’s AO will assume responsibility for the core accountability process to Parliament, including setting out the spending controls listed in Section 5.

101. MHCLG will also sign off on the outcomes, indicators and mitigations for the economic development and regeneration, and housing and strategic planning themes.

The role of MSA Chief Executive

102. Within the MSAs, core accountability processes will be carried out by the Chief Executive, who will be responsible for agreeing outcomes with central government, local outcome delivery and value for money, as well as upkeep of their local assurance framework, internal processes, and capability resourcing.

The role of central government department Permanent Secretaries, as “thematic” AOs

103. Other government departments who have functions covered by the Integrated Settlements will sign off on the outcomes and targets which are relevant to their functions and will receive monitoring and evaluation information on these via the Programme Board. Other government department leads will sign off mitigations in their function, as per the matrix of mitigation set out in Annex A. This will be managed via the Programme Board and will require coordination with MHCLG AO as the ‘systems’ AO. In some circumstances, a department would lead a specific action working directly with the MSAs.

104. Where multiple central government departments have functions covered within the same theme or where an outcome relates to multiple departmental functions, MHCLG will coordinate agreement of each thematic AO’s responsibilities.

Parliamentary and select committee scrutiny

105. Although the MSAs should consider their primary accountability to be to their local residents, central government has a responsibility to ensure that devolved funding supports the delivery of the outcomes framework and that the MSAs have the structures in place to deliver value for money as set out in paragraph 102. Therefore, the Integrated Settlements will be subject to Parliamentary scrutiny as follows.

a. MHCLG AO will be responsible to Parliament for reporting on the delivery of the Integrated Settlements. Where necessary, the Public Accounts Committee will scrutinise MHCLG’s AO for upholding the governance structures and securing value for money. Central government will recommend that the relevant select committee invites the MSAs’ Chief Executives for evidence on local delivery.

b. MHCLG will recommend that Ministers and mayors as appropriate both be invited to select committees, when relevant, with an increased focus on the role of local leaders in delivering the Integrated Settlements.

Local scrutiny

106. Combined Authorities have committed to raising the profile and resources available to the Overview and Scrutiny committee and implementing the Scrutiny Protocol (as per the EDAF).

107. In combined authority areas, the Mayor and relevant other Members or Portfolio Holders of the Combined Authority should be prepared to speak to the Integrated Settlements at the Overview and Scrutiny committee.

108. Per the EDAF, the London Assembly scrutinises the exercise of the Mayor of London’s functions and conducts investigations into London issues through a series of themed committees. The Mayor of London and (and any officers exercising relevant delegated functions on the Mayor’s behalf) should be prepared to speak to the Integrated Settlement at the Assembly.

109. The English Devolution White Paper set out the government’s plans to go further to ensure residents can be confident that their MSA is well-governed and making best use of every pound, including exploring a review of the Scrutiny Protocol and of a Local Public Accounts Committee model. Per paragraph 108, the London Assembly will continue to act as the body responsible for scrutinising the Mayor of London.

Local management and governance assurance

110. The MSAs are expected to put in place the necessary governance and assurance arrangements and to ensure that all legal and other statutory obligations, consents and consumer protection standards will be adhered to, which may include, but is not limited to, state aid and subsidy control, equalities duties, procurement, health and safety and fraud.

111. Ahead of an MSA’s first Integrated Settlement, MHCLG will request an external confirmation of readiness via a ‘readiness check’ to prepare for and provide assurance of readiness for the settlement. The terms of the check will be agreed between MHCLG, eligible MSAs, and the independent, external appointee. Central government will judge whether the MSAs have acted sufficiently upon any requirements set out for improvement.

112. The scope of the readiness check will include any new organisational function or capability needed to deliver the Integrated Settlement and not wider activity within the MSA. The independent external assessor will be able to make recommendations to support the steps the MSAs are taking to prepare for implementation.

113. The MSAs will be responsible for updating their Local Assurance Framework to reflect implementation of the relevant readiness check recommendations and then enacting this framework and other systems of internal control.

114. The readiness check will cover four themes.

a. Strategy, planning, and governance: strategic and outcomes planning processes, governance structures, and risk and controls framework in the context of the Integrated Settlement.

b. People and capability: existing capacity and capabilities to deliver the Integrated Settlement, including aspects of roles, responsibilities, and collaboration.

c. Financial and performance management: financial planning, budgeting, forecasting, and performance management processes in relation to the Integrated Settlement.

d. Reporting and evaluation: reporting mechanisms, data management practices, and evaluation framework to determine the MSAs’ ability to track progress, demonstrate impact, and meet central government requirements.

115. Ownership of risk will be transferred to the MSAs. The MSAs will be responsible for mitigation of any risks that arise throughout the delivery of the Integrated Settlement.

116. The MSAs will complete their own Fraud Risk Assessment to ensure the safe administration of grants and that appropriate measures are put in place to mitigate against the risk of both fraud and payment error.

117. The MSAs will also be responsible for setting and managing any Novel, Contentious or Repercussive (NCR) spend and business cases, via existing MSA mechanisms (such as Local Assurance Frameworks). As per paragraphs 40-42, there may be specific situations where additional processes are required regarding business cases.

118. The MSAs will also be responsible for overseeing the development and maintenance of their local assurance framework, governance, and financial monitoring report, as well as drafting and delivery of the local outcome delivery plan, and reporting on progress via submissions to the Programme Board. The MSAs will reconcile their delivery plans against the quantum confirmed at the SR and the outcome targets confirmed thereafter, outlining how they will deliver the targets over the SR period.

Audit Arrangements

119. The Integrated Settlements will be subject to formal external audit by the Comptroller and Auditor General to the extent required as part of their audit of MHCLG and other departments. Information access requirements to facilitate this will be set out as part of any grant agreement. MSA expenditure will remain subject to their own existing external audit requirements.

120. The Comptroller and Auditor General will also have the right, should they so choose, to conduct Value for Money examinations on the Integrated Settlements, and the MSAs will be expected to cooperate and provide information necessary to MHCLG or the National Audit Office (NAO) to facilitate this.

121. The MSAs will be responsible for ensuring that their own internal audit functions are sufficient to manage risks to public money.

Annex A: Matrix of mitigation, assessment and escalation

Where there are concerns around delivery of outcomes, or there are wider concerns around failure to deliver value for money, evidence will be discussed at the Programme Board, and where necessary, the below matrix of assessment and mitigation will be followed. Mitigations in relation to specific themes will be determined and signed off by the thematic AO and coordinated with MHCLG. This matrix will be kept under review to ensure it remains proportionate and fit for purpose. This matrix should also be seen in the wider context of Integrated Settlement policy, the principles for governance of the settlement set out in this document, the intention of the Integrated Settlement to devolve greater local responsibility and accountability, and the MSAs’ primary accountability to local residents. 

To note: the inspection and intervention processes outlined in the English Devolution Accountability Framework set outs the process where there are very serious concerns of bad governance, poor value for money or inadequate services for residents. This draft matrix solely looks at mitigations to be made in case of failure to deliver progress on the outcomes or value for money for the Integrated Settlement.

Table A.1: Matrix of mitigation

Institutional propriety: Where the Secretary of State has concerns that an authority is failing to carry out its functions in compliance with its best value duty, the Local Government Act 1999 provides significant powers for the Secretary of State to inspect and, subject to there being sufficient evidence, to intervene in that authority.

Evidence and indicators	Minor	Moderate	Major
Indicators	Slippage in a small number of indicators. Limited impacts in overall delivery of outcomes.	Slippage in numerous indicators. Significant predicted impact on meeting outcomes.	Slippage in most indicators. Major impact on delivery of outcomes.
Outcome delivery	Limited progress shown against a small number of outcomes. Overall progress against outcomes is satisfactory.	Limited progress shown against some outcomes.	Progress not shown against most outcomes.
Insufficient reporting requirements	Some gaps in reporting data. Low data quality.	Significant lack of relevant data provided to prove progress against targets.	Reporting requirements not met – no data provided as evidence of progress.
Maintenance of local outcome delivery plan	Sections of the local outcome delivery plan out of date when reviewed.	Significant portion of the local outcome delivery plan out of date when reviewed.	Out of date local outcome delivery plan that does not show current state of play or projects.
External reports	3rd line of defence (independent audit) raises some issues with delivery with an Amber rating.    No adverse publicity on delivery of the settlement.	3rd line of defence (independent audit) raises significant issues with delivery with an Amber/Red rating. Concerns raised by some constituent councils. Public criticism over spend or delivery of the settlement.	3rd line of defence (independent audit) raises major issues with delivery with a red rating.   Majority of constituent councils have issues with how the fund is delivered. Serious allegations over spending. Parliamentary questions raised.
Proposed mitigations	Minor	Moderate	Major
	- Escalation of Monitoring &Evaluation (M&E) processes, to be negotiated on a case-by-case basis. - Re-evaluation of outcome indicator and/or output indicators target. - The MSA will be required to write to the MHCLG SRO or the thematic AO (for the theme where there is a delivery concern) setting out why delivery has fallen, and steps being taken to remedy it.	- Escalation of M&E processes, to be negotiated on a case-by-case basis - Re-evaluation of outcome indicators and/or output indicators targets. - Re-drafting of delivery plans in the theme/s where there are delivery concerns and alignment with outcomes framework - The MSA will be required to write to the Permanent Secretary of MHCLG and the Permanent Secretary of the relevant thematic department setting out why there are delivery issues, and immediate steps being taken to remedy the situation. - The thematic AO may require the MSA CEO to meet the thematic lead department ministers or Permanent Secretary to explain how they will improve delivery in that area.	- Reintroduction of delegated authority limits, and/or ringfences, in the theme/s where there are delivery concerns. - MHCLG publicly announces that the AO does not think an investment decision will deliver VfM. - MSA CEO explains reasons for delivery failure and provides materials on plan to mitigate, including how they will factor in any mitigations. - Suspending settlement - Clawback funding. - Withdrawing funding lines from settlement. - Deep dive on M&E to determine if VfM/institutional failure  - if so, MHCLG can investigate using the Best Value Duty. - Request for independent review from the NAO.

1. The Integrated Settlement is an agreement between government, the MSA and its constituent local authorities. However, the MSA Board may decide, at its discretion, to use the Integrated Settlement in non-constituent local authority areas if it considers, based on evidence, that doing so would be beneficial to the MSA area. ↩

2. Central government will work with the MSAs to explore a combined ‘Adult Skills and Employment Support’ theme and will confirm arrangements as part of the publication of the functional responsibilities. ↩ ↩²

3. Funds that are demonstrably targeted to specific named places within MSAs will fall outside the default presumption that funds flow via the Integrated Settlement. ↩

4. Bespoke arrangements may be required where devolution of funding is subject to a transition period to enable MSAs to demonstrate readiness and build capacity locally, and where in-flight funding will transition to becoming part of an area’s Integrated Settlement. This should be agreed between central government and relevant MSAs and should follow the principle set out in paragraph 14 that MSAs are no worse off than had the Integrated Settlement not been in place. ↩

5. Paragraphs 40 to 41 do not apply in respect of the Greater London Authority as transport funds are administered and delivered outside of the GLA’s Integrated Settlement. ↩

6.  In the specific case of the first round of City Region Sustainable Transport Settlements, MSAs will still be accountable for the delivery of the CRSTS1 delivery plans as agreed between the Department for Transport and the MCA via Integrated Settlement accountability arrangements. ↩

7. In the GLA this would go to the Mayor as the Executive of the Greater London Authority. ↩