Counties spend two thirds of their budgets on care services as new report warns over the financial sustainability of councils

The County Councils Network has responded to today’s National Audit Office (NAO) report, calling on the government to take action as figures show two thirds of county authority budgets are spent on care services alone.

Responding to the NAO report, Cllr Paul Carter, chairman of the County Councils Network and leader of Kent County Council, said:

 “Today’s National Audit Office (NAO) report highlights the extraordinary savings that local government has had to make over the last eight years, and clearly articulates the stark fact that councils cannot be expected to continue to deliver more for less. There is clear evidence that county councils have faced the greatest challenge; they are the lowest funded social care authorities and they collectively face a £2.54bn funding black hole due to demand-led pressures by 2021. As the report shows, this stems from social care demand, which is felt the greatest in rural areas; home to the largest elderly populations.

 “These particular challenges have meant counties have had to draw down reserves at a faster pace to safeguard frontline services. We have done what Ministers have asked in using our reserves, but this is a slippery slope to insolvency –  the NAO recognises that one in ten authorities could run out of reserves in three years. Last month’s extra £166m and council tax freedoms were both welcome, but fall well short of closing the funding gap. At the same time, it is unfair to use yearly council tax rises to mask budget cuts and historical underfunding in rural areas.

 “Whilst the NAO recognises that 54% of councils’ budgets are now spent on adults and children’s social care, County Councils Network research shows that two thirds of county council budgets are spent on these care services, with money increasingly re-routed from transport, pothole repairs, and library services; impacting on our ability to invest in growing our economies and to deliver public amenities.

 “Government must take action and provide extra resource to councils to meet the rising costs in adults and children’s social care, coupled with sustainable solutions in the social care green paper. In the longer term, ministers should devise a new funding formula for councils that funds local authorities based on what they need to deliver services, and ensure that 75% business rate retention and the Comprehensive Spending Review ensure there is resource to meet the demand-led pressures councils face.

 “Failure to recognise the growing plight of many councils, as outlined in today’s report, could mean that Northamptonshire will not be the last local authority to face financial crisis.”

Cllr Carter’s comments were featured in the Guardian, which you can read here and he was interviewed on ITV, which you can read here.

CCN research shows that 65% of county authority budgets are spent on children’s and social care in 2018/19 – up from 56% in 2013/14 due to counties seeing the largest growth in elderly populations compared to other councils, and ‘unprecedented’ demand on children’s social care services. Between 2013 and 2016, the number of over 65s in the 37 counties in England grew by three million people, or 10% – higher than anywhere else.

As a result, counties have increasingly had to re-route funding from pothole repairs, highways investment, street lighting, library services, and bus route subsidies towards care. The figures show that spending on culture by counties has halved in the last four years, whilst highways expenditure has dipped by one fifth.

In contrast, the other upper-tier councils (London councils, metropolitan boroughs, and unitary authorities) spent 54% of their budgets on care services in 2016/17, rising to 56% in 2017/18.

With demand-led pressures on care services set to increase by 2021, with over 65s growth of 7.5% projected over the next three years, CCN is calling for the government to provide extra resource for councils in its Spring Statement.

Over the next two years, counties will receive just £161 of core funding per head by the end of the decade compared to an England average of £266 and £459 in London, and their funding from government will almost half over that period.

CCN argues the government’s fairer funding review, due to be implemented in 2020 will be crucial in placing counties on a sustainable financial footing going forward, but it must fund councils based on their current and future demand for local services.

Councils spending on service as a percentage of their total expenditure – 2017/18

Councils spending on service as a percentage of their total expenditure – 2013/14