Many local councils running out of cash as social care demands surge

One in 10 local councils could run out of cash in the next three years as they cope with increased demand for social care and government funding cuts of 50% since 2011.

According to a report from the National Audit Office, the financial health of local authorities across England is getting significantly worse.

Alongside the government's austerity policy to eliminated the national deficit on its budget, which has seen central funding to councils cut by nearly 50% since 2010-111, councils have needed to rely on funding projects with their savings and are overspending on services. In 2016-17 the amount of overspending on service budget by local authorities rose to £901m, with total overspending on services by social care authorities amounting to £1.023bn.

The increases in demand for social care and tighter budgets are forcing local authorities to cut other spending in order to cope with their social care responsibilities. Currently, social care accounts for 54.4% of the service spend by local governments, this has increased from 45.3% in 2010-11, in which time the estimated number of those aged 65 and over in need of care increased by 14.3% and the number of children being looked-after grew by 10.9%.

Councils still made overall cuts to spending on all service areas. Spending on social care fell 3.0% from 2010-11, which compared to a 52.8% reduction in spending on planning and development, a 45.5% cut on housing services, 37.1% for highways and transport, and 34.9% on cultural and related services.

Examples at street level are a total reduction in the number of food hygiene checks on cafés and restaurants by 41%, a £1.6bn cut in investment in the Sure Start scheme for young people, a one-third cut in households receiving weekly bin collections and a 10% reduction in the number of libraries.

Amyas Morse, head of the National Audit Office said on Wednesday that local authority funding is now characterised by one off, short-term fixes that come with conditions.

“This restricts the capacity of local authorities and yet the weight of responsibility to respond to increased demand and maintain services remains very much on their shoulders. The Government risks sleep-walking into a centralised local authority financial system where the scope for local discretion is being slowly eroded.”

The report showed that if local authorities with social care responsibilities keep using their savings at current rates, one in ten could have exhausted them within three years.