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A sinkhole opens beneath council budgets

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LGC commentary on a grave warning from the National Audit Office


Giant sinkholes occasionally make headlines when lurking excavations suddenly give way and swallow suburban houses, parked caravans, prized rhododendrons or other objects beloved of local newspapers.

There is a large sinkhole under top-tier councils and it’s called adult social care – and a slightly smaller one called children’s social services.

Left unattended, the spiralling costs could devour resources now spent on highways, what remains of education, libraries, planning, trading standards and other services.

That is the conclusion of the National Audit Office’s report released this morning on the financial sustainability of local authorities, which by the standards of the NAO’s habitually restrained language sought to raise the alarm.

It said just over a fifth of top tier councils would exhaust their reserves within five years if they continued to spend at their present rate, and that it knew – though would not name -–the councils in a similar position to Northamptonshire CC, which tumbled into financial oblivion, when it issued a section 114 notice in January partly due to escalating social care costs.

Social care was firmly in the NAO’s sights as the cause – since demand is rising inexorably with an ageing population and so are costs.

NAO head Sir Amyas Morse even said the government “risks sleep walking into a centralised local authority financial system where the scope for local discretion is being slowly eroded”, as social care and other statutory services consumed such a vast proportion of council resources that little was left for anything else.

The implication for local politics is obvious – if most of the budget goes on social care why bother to elect councillors who can implement little discretionary spending?

Worse still for local politicians, as a proportion of the population hardly anyone uses social care.

Even if you add in the families and friends of care recipients, nothing like as many people notice it as see potholes, neglected parks, decrepit housing or loose paving lying in wait to trip them.

There would be no future in councils doing little but sign social care contracts while the locality collapses around them.

The NAO said that from 2010-11 to 2016-17, the number of older people needing care increased by 14.3% and looked-after children by 10.9%.

Adults’ and children’s social care together take 54.4% of local authorities’ total service spend, up from 45.3% in 2010-11.

While the NAO found districts – free of social care responsibilities – had done relatively better, their taxpayers still contribute to upper tier councils’ care costs.

One of three things can happen. The first is nothing, while social care steadily consumes top tier councils’ declining budgets.

The second is that the government responds to councils’ insistent pleas and offers lots more cash for the needs of older people (who from politicians’ viewpoint have an irritating propensity to vote).

The third is that local government somehow gets shot of social care to the NHS or a new ‘National Care Service’, though health and care integration is more talked about than achieved.

Who would bet against Whitehall leaving the giant sinkhole unattended?

Mark Smulian, reporter, LGC





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