Learning Disability Today
Supporting professionals working in learning disability and autism services

When local councils go bust: who really pays the price?

Birmingham City Council announced proposed plans this week to cut £23.7 million from its adult social care budget in the next financial year and save £51.5 million from the Children, Young People and Families department.

This is part of a ‘unprecedented ‘ £300 million savings plan to help meet its wide-ranging statutory duties after the council issued a Section 114 notice in September, which is a formal admission it does not believe it can meet its expenditure commitments from its income.

It is also renegotiating children’s travel contracts with the aim of saving £13m a year, which will directly impact children with special needs and disabilities (SEND) with out-of-area school placements.

With nearly one in five council leaders in England saying they are likely to declare de facto bankruptcy this year, these drastic cost-cutting measures could now be seen across the country.

What impact will this have on people with a learning disability?

Social care budget cuts will have a “devastating” impact on those who draw on care and support, such as people with learning disabilities, with many saying social care is on the brink of collapse.

The annual 2023 Sector Pulse Check report by Hft and Care England already revealed that care providers are grappling with staff shortages and financial constraints and two in five (40%) providers reported a deficit, with 43% forced to close a part of their organisation or hand back contracts.

Further cuts mean social care providers in the city will have to make difficult financial decisions about reducing their capacity or exiting the market entirely, leading to a lack of care options. Some campaigners say this could lead to a rise in admissions to long-stay mental health hospitals.

Yet, Birmingham City Council insists that adult social care and children’s services would take a lower percentage cut than back-office functions responsible for council bureaucracy.

It told Learning Disability Today that the savings for most directorates are currently at proposal stage and subject to review and the council’s aims to prioritise services for the most vulnerable.

The spokesperson said: “The council is going through a challenging period due to the financial position and we understand it is an unsettling time for many of our residents.

“As we review the saving proposals for the Children, Young People and Families directorate, it will be inevitable that services will need to be changed as a result, and this process allows us to continue making improvements to provide efficient services. We will do all we can to minimise the impact during this difficult time and continue to prioritise the services for the most vulnerable residents in the city.”

These budget cuts are also likely to have a major impact on unpaid carers. Dominic Carter, Director of Policy and Public Affairs of the Carers Trust, told the BBC that unpaid carers are already under huge strain, with many having to give up paid work and being plunged into poverty. Now they will be left with no option but to shoulder extra caring responsibilities, pushing them to breaking point.

A survey published this week found that four in 10 (41%) family carers are considering leaving the workforce or reducing their working hours due to caregiving demands.

The report from Centre for Social Justice found that the government could lose £2.8 billion in 2024 in benefits payments to individuals who are not working due to unpaid caring, plus another £3.3 billion in lost taxes and national insurance contributions.

Impact of travel contract cuts

Assisted transport for disabled young people and children will be hit by massive cuts. Around 5,000 children in Birmingham currently use the Young People’s Travel Service and 95% of children using the service are thought to have special educational needs.

All discretionary spending on school transport will now be reviewed in Birmingham and all funded travel for children who travel fewer than three miles will be cut.

Currently, the biggest contract is held with National Express, who have confirmed to Learning Disability Today that they are not planning to bid for Birmingham City Council’s Home to School contract at this time.

A spokesperson for National Express Accessible Transport, added: “We will continue to deliver school transport services until the existing contract comes to an end.”

School transport costs across the country have exploded in recent years. A recent analysis by Isos Partnership for the County Councils Network (CCN) found that school transport costs are set to triple to £1.125bn over the course of a decade. This is namely due to yearly increases in the number of eligible SEND pupils and parental expectations for individual travel arrangements.

The analysis revealed that two thirds of the school transport budget for councils in county areas is on school transport for SEND pupils, with council-funded taxis now just as common as minibuses.

This number has risen exponentially in recent years after SEND legislation led to an increase in the number of children with Education, Health and Care Plans (EHCPs): rising from 105,000 eight years ago to 230,000 in 2023.

However, special schools struggled to keep up with demand which has meant that councils are now required to transport tens of thousands of young people over long distances across large rural counties, with many families relying on individual travel arrangements such as taxis.

As a result, the CCN says that many councils have already overspent on their school transport budgets this year, and budgets are getting increasingly out of control with rising demand.

Birmingham City Council was under fire last year when a Daily Mail probe found that it was over-paying a taxi firm for home-to-school transport. Latest figures show that it is reportedly currently spending £19,409,323 on taking vulnerable children to school via private taxi companies, a rise compared to £12.7m for 2017/18.

Is it time for funding reform for local councils?

A recent report from the cross-party Levelling Up, Housing and Communities (LUHC) Committee said that 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.

The report found that increasing demands on council services such as social care and SEND provision has resulted in rocketing costs but the levels of funding available to councils has failed to keep track.

It said that 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.

Over the past decade, councils have faced increasing demand for statutory services and yet central government grant funding for councils has dropped by 40 per cent in real terms between 2009-10 and 2019-20 (from £46.5bn to £28bn).

A National Audit Office (NAO) report showed councils’ spending power fell in real terms by more than 50% on a like-for-like basis between 2010-11 and 2020-21. This has meant councils have been more reliant on funding generated locally, through council tax and business rates.

The Department for Levelling Up, Housing and Communities (DLUHC) under Michael Gove recently added £600m to the annual local government finance settlement, of which £500m will go to upper-tier authorities with social care responsibilities.

Vice chair of the County Councils Network, Barry Lewis, however said the settlement “will be bitterly disappointing for England’s county authorities”. He added his group had “put together a strong case for emergency funding” to address “significant financial headwinds councils face which are outside of our control”. And he warned that due to “no additional funding” councils will have to “no choice” but to reduce services and levy the highest level of taxation.

What happens now in Birmingham?

The Leader of Birmingham City Council Cllr John Cotton said that Birmingham has lost over £1 billion in funding since 2011 – added to a rising demand for services and inflation mean that, across the country local authorities are facing some of the biggest budget challenges in living memory.

Independent Commissioners called in to help the council say that it “ignored the warning signs” of its financial crisis and caused a “self-inflicted” disaster that will take years of cuts to rectify. This crisis includes a rapidly escalating equal pay claim bill of at least £760m and problems implementing a new IT system costing £100m.

The council, which is the largest local authority in the UK, also owes more than £2.9bn to lenders.

Formal consultation with the council’s corporate trade union representatives has now begun, and these will be followed by directorate collective consultation meetings.

The budget proposals will go to cabinet on 27 February with a recommendation for approval and will then be voted on by all members at full council on 5 March.

Key figures

  • Total expenditure on adult social care rose in 2021/22 to £26.9 billion, an increase of 3.3% in cash terms and 3.8% in real terms over 2020/21.
  • By 2028, councils in England’s counties will be spending over £1.1bn a year on SEND school transport alone.
  • The number of children with Education, Health and Care Plans (EHCPs) rose from 105,000 eight years ago to 230,000 in 2023.
  • The government could lose £2.8 billion in 2024 in benefits payments to individuals who are not working due to unpaid caring, plus another £3.3 billion in lost taxes and national insurance contributions.
  • Birmingham has lost over £1 billion in funding since 2011.
  • Grant funding for councils has dropped by 40 per cent in real terms between 2009-10 and 2019-20 (from £46.5bn to £28bn).


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