Local authorities are hamstrung by the huge financial burden of providing “bare minimum” social care services to a small number of highly vulnerable residents. It’s got “democratic consequences”, says Walker.
A majority (53%) of people have little or no faith in local government, recent LGIU polling shows – an eight point year-on-year increase. Half (48%) said that services have declined in the last five years, compared to just 13% who said they have gotten better.
In England, county councils, unitary authorities and metropolitan boroughs are responsible for social care. The government has this week announced an overhaul of the structure of local authorities – but the problem runs deep, and the proposed abolition of district councils won’t fix it.
For local authorities, demand is “completely exceeding supply”, says Sir Stephen Houghton, a councillor in Barnsley and chair of the Special Interest Group of Municipal Authorities (SIGOMA) – “but the funding has not followed”.
“So inevitably, councils have to find that funding from somewhere else. So less grass cut, less streets cleaned, less roads repaired. People are seeing a deterioration in those visible services – it’s leading to huge dissatisfaction.”
Eight English councils have declared themselves bankrupt since 2018 – and according to a recent Local Government Association (LGA) survey, one in four English councils could face this fate in the next two years unless they are bailed out by the government.
It’s a big, big problem – and one the national government knows it has to tackle. In late November, Labour published a policy statement outlining its plans for local government funding in England.
It pledged to rebalance funding to “where it is most needed”, targeting a one-off £600m “recovery grant” to places with the greatest deprivation. This follows a £1.6bn funding injection in the recent budget.
The new money has been welcomed by the sector, with the LGA describing it as a “good start”. But it won’t “meet all of the funding pressure”, they add. So just how big is the problem?
Funding falls and demand rises
The issue is twofold, explains Houghton. Government funding has fallen, while social care demand has increased.
“There was a big shift in 2010,” Houghton explains. “Prior to that, money was allocated on two basic principles. One was need. The other was how much council tax you could generate. If you were in a high needs area with a low council tax base, you’d get the grants to cover the gap.”
But the Conservatives slashed direct grants in favour of a funding model weighted more heavily toward council tax.
In the decade that followed, councils’ overall core funding per person fell by 26% in real terms, on average, with higher council tax revenues only partially offsetting a 46% fall in funding from central government.
The reliance on council tax meant that poorer areas – which generate less council tax revenue – lost out. In the most deprived tenth of councils, funding per person fell by 35%, compared with 15% in the least deprived areas.
“Inevitably, areas with the highest levels of deprivation can’t raise much money through council tax, they’re reliant on grants,” Houghton said.
“Over the last 14 years there has been a fundamental breakdown in the relationship between funding levels and need.”
Faced with this brutal funding cut, councils responded by prioritising statutory services – that is, services they are legally obliged to provide.
Spending per person on children’s social care rose by 11% in real terms in the decade from 2010, while per-person spending on culture and leisure, housing, planning and development, and transport fell by over 40%.
But these cuts were always going to be a “temporary fix”, explains Gary Haley, a councillor with the children’s social care brief in Gateshead.
“Avoidance of investing in prevention just is a false economy, because it costs way more to treat the symptoms than it does to prevent them occurring in the first place,” he said.
By cutting all of the preventative services – youth clubs, Sure Start centres, libraries, non-statutory exploitation teams – councils increased demand on the very services they were attempting to save.
“The increase in the number of children living in poverty has been dramatic,” Haley said. “Which means often their needs are much more complex when they present to children’s social services and they end up in very high cost placements.”
In Gateshead, Haley says, the number of children in high-cost placements of more than £5,000 a week soared from about 17 in 2010 to 51 last year.
“It’s a huge issue not just for funding and authority budgets, but for the children and their families as well, which is far more important, frankly,” he added.
By limiting access to services for multiple years, Covid made matters much worse. According to the Institute for Fiscal Studies, the number of children in secure units and children’s homes increased by more than 30% between early 2020 and early 2023.
Demand for adult social care has also increased dramatically. In 2022/23, two million adults requested support from their council – an increase of 11% since 2015/16. This is partly attributable to an ageing population, and to a greater incidence of disability among the working population.
In both instances, demand outstrips public provision, so councils have to bid for places with private providers.
“Private providers take advantage of this need,” said Houghton. “Councils have to place children in out-of-borough social care with profit-making providers.”
“These are kids with very complex needs very often. In some cases, one child could cost you a million pounds a year and beyond. You don’t need many of those coming through to blow a hole in your budget. But the outcomes for them still aren’t necessarily great.”
The cost per placement in children’s homes increased by 20% between 2019–20 and 2022–23, while the cost of care home placements for adults aged 65 or over increased by 35% between 2019–20 and 2023–24.
At the same time, councils are trying to do more with less. In 2014, the Conservative government reformed the special educational needs and disabilities (SEND) policy, so that parents could apply directly to councils for support. Demand has soared: the number of children and young people with EHCPs has risen from 240,000 in 2015 to 517,000 last year.
But again, the funding did not follow, leaving local authorities struggling to meet their legal obligations.
“The SEND picture changed overnight. But there was no additional funding to help us deal with that,” Haley said.
What’s the solution to the social care funding problem?
There is no single solution to all of these issues. The LGA has called for a “fundamental reform of the SEND system, focussing on improving inclusion in mainstream settings and writing off councils’ high needs deficits”. And the private care home model – whereby English councils must bid for private care home placements – ought to be urgently reformed. Meanwhile, outside of social care, the temporary accommodation crisis is draining London council budgets of money.
But fundamentally, local government – particularly local government in deprived areas – needs more money for adult and children’s care.
“Money needs to go where it’s needed,” Houghton said. “We must return to a needs-based system based on deprivation.”
Walker echoes this sentiment: “It’s not that simple as just shovelling money towards local authorities – but we do need that.”
The government’s policy statement suggests it is going in that direction, explicitly targeting “deprivation”. But they need to act fast. As social care eats into an ever-larger proportion of a council’s budget, it presents a democratic problem.
“There is not very much clear understanding of what councils do and are expected to do, and the pressures that they are under,” Walker says.
“Lots of people who are council taxpayers or residents who don’t really see the bulk of services that councils provide, that social care spend supporting vulnerable people and children… they might just see their council tax going up. That has political consequences.”
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