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Councils ‘face £16.5b shortfall’ by 2020

Councils ‘face £16.5b shortfall’ by 2020

🕔26.Jun 2012
Birmingham City Council House is in Victoria S...

Local government is facing its greatest crisis under the twin cosh of savage spending cuts and the soaring cost of providing adult social care, a hard-hitting report has claimed.

Unless reform is introduced immediately the money available by 2020 to fund services like road maintenance, libraries and leisure centres will have shrunk by 90 per cent in cash terms, according to a detailed financial projection by the Local Government Association.

The growing crisis is fuelled by the rapidly rising cost of providing adult social care, combined with the increased cost of delivering councils’ other explicit statutory responsibilities likesocial services, waste collection and concessionary travel, which will soak up almost all of council spending. The LGA is warning that some traditional local council services, such as community libraries, leisure and culture, may disappear completely from the public sector and be ‘consigned to history’.

LGA chairman Sir Merrick Cockell 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.”

Birmingham City Council, the country’s largest local authority, already faces cutting up to £400 million from its budget between 2010 and 2015. A move to save money by restricting social care packages to all but the most vulnerable of adults was thrown out by the High court in a judicial review.

It is thought likely that the Chancellor, in his Public Spending Review later in the year, will outline another round of ‘austerity’ cuts for councils which would further reduce the amount of money available for non-statutory services like culture, leisure, transport and economic development. Government pressure on councils to find further savings would dwarf the alleged £20 million ‘black hole’ in Birmingham’s finances, which new Labour city council leader Sir Albert Bore claims to have inherited from the outgoing Tory-Liberal Democrat administration.

The LGA report shows that unless urgent reform is introduced, a £16.5 billion funding shortfall will exist between the amount of money available to councils across the country to provide services and the predicted cost of maintaining them at current levels. The organisation is calling on the Government to introduce 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 LGA wants the Government to examine the possibility of applying an integrated Community Budgets model to more local services. The Community Budgets pilots, being trialled in Birmingham, 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.

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