“One in ten councils faces running out of money in the next three years after exhausting its reserves to pay the dramatically rising cost of social care, the government’s financial watchdog has concluded.
The National Audit Office (NAO) warned that many councils were on the verge of insolvency having had their central government funding cut by almost 50 per cent in eight years. It found that authorities’ financial positions had “worsened markedly” since they were last audited in 2014, with two thirds of councils with social care responsibilities dipping into their reserves last year. The report also revealed that government cuts had led councils to:
• Reduce the number of households having their bins collected each week by 33 per cent since 2011;
• Cut the number of food hygiene checks on cafés and restaurants by 40.9 per cent;
• Make savings of £1.6 billion by closing Sure Start centres and services for young people.
In addition, bus route subsidies have been cut by 48 per cent, 10 per cent of libraries have been shut and 67 per cent fewer health and safety enforcement notices are being handed out.
The NAO found that despite these cuts, councils were still unable to balance their books because of the increased demand for social care combined with cost pressures such as the new national minimum wage. It said that the estimated number of people aged over 65 in need of care had increased by 14.3 per cent. Social care accounts for 54.4 per cent of local authorities’ total service spending, up from 45.3 per cent in 2010-11.
As a result, 66 per cent of local authorities with social care responsibilities drew on their reserves last year. The NAO said that at the current rate of deficit 10 per cent of councils would have exhausted their reserves by 2020.
Last month Northamptonshire county council had to impose strict in-year spending controls after effectively going bankrupt. The Timesrevealed that Surrey, Britain’s richest county, is facing a £100 million cash crisis. Councils are not legally allowed to run up deficits and so they would be forced to cut services to ensure they remained solvent. Many of the councils affected are in solid Conservative areas. Surrey, for example, is a county represented at Westminster by seven government ministers.
Amyas Morse, head of the NAO, said that while the government had given local councils several “short-term cash injections” this funding had only been available for adult social care and uncertainty remained over the long-term financial plan for the sector.
Meg Hillier, chairwoman of the Commons public accounts committee, said funding cuts had led to “stark choices” about which services local authorities continue to provide. “Many councils are raiding their rainy day funds to pay for social care, and we have seen Northamptonshire reach the brink of financial failure,” she said.
A government spokesman said councils needs and resources were being reviewed and a real-terms increase had been provided over the next two years.”
Source: Times (pay wall)