CCN Conference: County Councils Network warn their authorities could miss out on hundreds of millions at the local government finance settlement, as CCN calls for ‘rethink’ on social care funding

Today, the Chairman of the County Councils Network (CCN) has called on the government to ‘rethink’ its approach to distributing council funding next year, warning county authorities are set to lose out on hundreds of millions in funding for vital care services.

Addressing the CCN’s Annual Conference, Cllr Tim Oliver will warn that if councils are expected to pick up the bill for the increase in the national living wage (NLW) and care providers costs from the employers’ national insurance (NI), the £1.3bn will do ‘very little’ to bridge the funding gap facing its members next year.

But for counties, he said the situation could potentially get worse come the local government finance settlement because of the way the government intends to distribute the resources.

In the last two local government settlements, the government have distributed the vast majority of new grant funding via the social care grant, recognising the most severe spending pressures facing councils are in adults and children’s social care.

However, despite this, the government announced at the Budget that only £600m of the new £1.3bn in funding will be allocated this way, with £700m set aside for a ‘targeted deprivation-based approach’.

You can read Cllr Tim Oliver’s full speech here.

New analysis for CCN suggests the decision by the government to dedicate more than half of the £1.3bn of new funding could mean social care authorities in county and rural areas receive hundreds of millions less funding compared to previous approaches to distributing new resources for councils.

Modelling by Pixel Financial Management for CCN shows that if the government distributes £600m via the social care grant and £700m using a formula that is based on the Index of Multiple Deprivation, CCN member councils’ allocation would reduce by a third – almost £190m – compared to distributing the entire £1.3bn via the social care grant.

With adults and children’s services facing mounting costs due to the living wage and national insurance rise announcements, CCN is calling for a rethink on the approach. They say the government should increase the amount dedicated to the social care grant next year within the £1.3bn, while ‘diverting additional funding from the NHS to social care next year’ to help pay for the NLW increase and NI rise.

CCN also says the government must not seek to change or redistribute any existing resources within the local government settlement.

Explaining why, Cllr Tim Oliver told the audience that ‘while deprivation is an important indicator of need, it is not the main driver of councils’ unstainable rise in costs, nor the key measure of who is under the most financial distress’.

With previous analysis by the network showing that 83% of the increase in councils costs next year  due to pressures in adult, children’s and home to school transport, he told the delegates ‘whether it’s the acute rise in children’s placement fees, care for working age adults, or escalating spend on SEND home to school transport, it is demand and market failure that is pushing councils of all shapes, sizes and political control to the brink’.

CCN say that using the social grant would be a fairer way to fund councils and would not disadvantage other parts of the sector. The analysis shows that dedicating more funding through the social care grant would still result in urban metropolitan boroughs receiving more resources per head next year than CCN member councils. This is because county and rural authorities already receive less of this funding, with metropolitan boroughs receiving 46% more per head from this allocation method.

With the government recently announcing its intention to undertake a full review of the distribution of council funding as part of the Spending Review, he also warned Ministers ‘not succumb to pressure to cherry pick certain changes that benefit parts of the sector’.

He said that while CCN supported reform, a ‘narrow focus’ on revenue raising abilities and council equalisation would have a ‘financially devastating’ impact on CCN member councils.

In undertaking reform, he called for the government to ‘fully engage’ with the sector on any changes and ensure the review was a ‘genuine fair funding review’ that looked at both needs and resources.

CCN say this will mean implementing the previous government’s independently developed adult, children’s and public health formulas, alongside revisiting previous government plans for other formulas so they give equal weight to both urban and rural deprivation.

Critically, they say this must implement a partial council tax equalisation, alongside a commitment that no authority will lose an unsustainable level of resources, with dedicated additional funding to support transition to the new allocations as part of a three-year multi-year settlement.