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Local councils will be unable to keep up with demand for services for disabled children and adults unless the Government fixes the £4 billion hole in council funding arrangements, according to a new report from cross-party Levelling Up, Housing and Communities (LUHC) Committee.
The report found that increasing demands on council services such as social care and special educational needs and disabilities (SEND) provision has resulted in rocketing costs but the levels of funding available to councils has failed to keep track.
MPs said that children’s and adults’ social care are frequently cited as key pressures on local authorities’ finances. For children’s social care, rising demand for residential care placements, combined with a poorly functioning market for provision of those placements, has driven significant cost increases.
For adults’ social care, demand has been driven by a changing population with increasingly complex needs — alongside long-term workforce shortages and inflationary pressures — which has contributed to unmanageable bills for some local authorities.
The report added that local authorities are also facing significant financial pressures relating to delivery of services for children and young people with SEND, including provision of home-to-school transport. The Government’s introduction of Education, Health and Care (EHC) plans in 2014 has contributed to increased demand for specialist services, often requiring delivery through placements in special schools located outside of families’ local areas.
The level of funding available to local authorities has not kept pace with demand, and the Government is using temporary measures to enable local authorities to maintain service delivery while building up significant budget deficits.
The committee recommends that the Government carries out full review of the EHC plan system and consider reforms to make SEND provision financially sustainable. It must also provide clarity to local authorities on its treatment of budget deficits relating to SEND, and ensure that funding is sufficient to meet demand.
Clive Betts, Chair of the Levelling Up, Housing and Communities (LUHC) Committee, said: “There is an out-of-control financial crisis in local councils across England. Councils are hit by a double harm of increased demands for services while experiencing a significant hit to their real-terms spending power in recent years. Increasing demands on council services such as social care and special educational needs and disabilities (SEND) provision has resulted in rocketing costs but the levels of funding available to councils has failed to keep track.
“The Government must use the local government financial settlement to help bridge the £4bn funding gap for 2024-25 or risk already strained council services becoming stretched to breaking point. If the Government fails to plug this gap, well-run councils could face the very real prospect of effectively going bust.
“Long-term reform is vitally needed. The funding model for local councils is broken. The business rates system is overly complex and in need of reform. Council tax is outdated and increasingly regressive. Councils being forced to hike up council tax, in a forlorn attempt to plug increasingly large holes in their budgets, is unsustainable and unfair to local people who are, year on year, seeing less services while paying more.”
The report calls on the next Government to reform council tax, and the wider funding system for local authorities, to ensure council finances are put on a sustainable footing.
On adult social care, the Committee reiterates the call from its July 2022 report on the Long-term Funding of Social Care to urgently allocate more funding to local authorities in the order of several billions each year.
The Voluntary Organisations Disability Group (VODG) said that while the Committee’s report and recommendations are welcome, they reiterate what was already known: councils are unable to keep up with demand for services because of short-term and insufficient funding, and it is the most vulnerable in our society that are paying the highest price.
Dr Rhidian Hughes, Chief Executive, added: “Disability services rely on the state for funding, yet the government has repeatedly failed to meet the funding challenges of today. Adhoc grants continue to fall far short of the sustainable funding needed, and increasingly charities are left in an impossible situation; committed to delivering services but with operating costs that outstrip commissioned fee rates.
“Faced with growing demand for local services, there can be no doubt that councils will be unable to meet the needs of disabled people and their families without the essential support charities provide. Councils and the voluntary sector share a common public-benefit purpose but without investment and a reframed approach to the way services are commissioned, essential support will cease to exist – the effect of which will be acutely felt by everyone.”