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26 June 2012
Unless reform is introduced immediately the money available by 2020 to fund council services like road maintenance, libraries and leisure centres will have shrunk by 90 per cent in cash terms, a detailed financial projection by the Local Government Association reveals.
This is because the rapidly rising cost of providing adult social care, combined with the growing cost of delivering councils' other explicit statutory responsibilities like social services, waste collection and concessionary travel, will soak up almost all of council spending.
The report, based on conservative estimates, shows that unless urgent reform is introduced, a £16.5 billion funding shortfall will exist between the amount of money available to councils to provide services and the predicted cost of maintaining them at current levels. The 28 per cent cut in the amount of money councils receive from central government between 2010/11 and 2014/15 has contributed considerably to this situation.
The LGA, which represents 373 councils in England and Wales, warns that in order to manage a £16.5 billion shortfall councils may have to significantly reduce, and possibly cut, entire service areas. It is calling on the Government to ensure local authorities are not placed in that position by introducing long overdue reform of how adult social care is paid for and giving councils access to the resources needed to deliver the services demanded of them by local residents.
It is also suggested that a fundamental change may be required in the statutory demands placed on councils, as well as a shift in residents' expectations of what services a council will provide.
The key findings of the report reveal:
•The rising cost of providing social care and waste services means that the money available to deliver all other services falls from £24.5 billion in 2010/11 to £8.4 billion in 2019/20.
•The gap between the money available for providing services and the predicted cost of maintaining them at current levels starts at £1.4 billion in 2012/13 and widens every year to reach £16.5 billion in 2019/20.
•Spending on care will pass 45 per cent of council budgets by 2019/20.
•Improved efficiency will not be enough to cover the huge funding gap. In 2010/11 the cost of providing central services, which includes building costs, administration and IT, was around £3 billion. The cuts required to council services excluding care and waste management are more than five times that figure.
The report comes out at the same time as the results of a new YouGov survey into the use of local government services which reveals that libraries and leisure facilities are the most popular services councils provide, with 39 per cent of respondents saying they had used or experienced a library in the last year or so, and 27 per cent a council-run leisure facility. In contrast, just 11 per cent of residents had any experience of elderly care provided by social services.*
The LGA is also calling on the government to examine the possibility of applying an integrated Community Budgets model to more local services. The Community Budgets pilots have demonstrated how a council-led approach to troubled families, which consolidates services from across the public sector, can dramatically lower costs and improve results.
The report's projections are based on an extremely conservative estimate of likely cost pressures and an optimistic assessment of local government income. They also work on the unlikely premise that councils will be able to replicate efficiency savings of a similar size to those that have already been delivered through steps like the sector-wide workforce restructuring that led to 200,000 posts being cut. In reality, savings of this kind will be increasingly difficult to find.
Sir Merrick Cockell, LGA chairman, said:
"By the end of the decade councils may be forced to wind down some of the most popular services they provide unless urgent action is taken to address the crisis in adult social care funding.
"Efficiency savings won't go close to solving this problem. We need an immediate injection of money into the adult care system to meet rising demand in the short term, alongside a major revision of the way it is paid for and delivered in future. Local government is best placed to ensure care is provided in a way which offers dignity to the individual and value for money for the taxpayer. It has to be in a position to do that while also delivering the other services local people expect.
"The growing demand for aged care and the considerable reduction to the amount of funding councils receive from government puts us in this position but the issue goes beyond our aging population and the austerity agenda and hits right at the heart of the future of public services. In Community Budgets we have already seen how a locally coordinated, cross sector approach to troubled families has reduced costs and successfully tackled issues like truancy and anti-social behaviour. It's time to explore how that approach might be replicated elsewhere.
"The lines on the charts in this report are the converging train tracks that will carry the most immediate and popular public services into history unless the passengers – government, councils and the voters – draw a new map for organising and funding local public service, and draw it now."
As well as an immediate injection of money from the Exchequer to meet rising demand for adult social care in the short term, the LGA believes that a complete overhaul of the system is required. This would involve a number of components:
• Fairer funding: a fairer funding system with clarity about what the public and the state is expected to contribute towards care costs
• Simplification: a simpler legal framework for care and support to make the system easier to understand and navigate
• Integration: progress on making the right links with health, public health and housing to improve services for the individual and efficiency for the tax payer
• Increased funding: adequate resource for the system and recognition that structural reform and increased funding must go hand in hand