Council services have been ravaged by decades of funding cuts, leaving the social care system on the verge of collapse and a funding gap of £5 billion, and growing, insist MPs.
The government has been derelict in its duty to local authorities by failing to set out a funding settlement that addresses immediate service pressures or plan for future challenges, says a report* published today by the Housing, Communities and Local Government Committee.
It calls on the government to end its piecemeal approach to local authority funding and revenue raising, and provide a financial settlement that adequately supports local authorities to serve their communities and close the multi-billion gap in local authority funding.
A decade of funding cuts and increasing pressures on “safety net” services, particularly social care, has gutted funding in a range of “non-essential” services including transport, housing and culture.
This is likely to be exacerbated by the government’s failure to set out plans for future funding, with the current four-year funding settlement coming to an end this financial year without a replacement in place, says the report.
The rising demands for social care is placing an intolerable financial burden on local authorities, it says.
Years of reviews and deliberation have failed to produce concrete measures that adequately address the level of day-to-day demand or plan for future need. Without new dedicated revenue sources at a local and national level, social care will continue to dominate local authority spending at a cost to other services.
The continual squeeze on funding has given local authorities little choice but to provide “bare bones” levels of service. The government must clarify what services it expects local government to provide and be prepared to set a level of funding sufficient to facilitate it, emphasises the report.
Business rate retention lacks transparency in how it operates and is too complex. The government should consider bringing back the Revenue Support Grant to give extra funding to struggling councils, the report recommends, adding that a review of the Council Tax system is long overdue.
In the longer term, local authorities must be given greater freedom to pursue their own solutions to ensure financial stability, it says.
Committee chair, Clive Betts MP said: “There is a disconnect between the services taxpayers expect their local authorities to provide and the level of service possible under current government funding.
“Over the last decade we have seen a regular chipping away at funding, while adding further statutory obligations for them to meet. This constant stress on local government is now compounded by a failure to even set out how much money they will be allocated in the next financial year. “
He continued: “The battle to meet ever increasing demand for social care has left few further sources of revenue to divert towards it and will now need a dedicated funding solution. The government’s attention has been elsewhere for too long and it must now establish a system of funding that both addresses immediate need and supports local authorities in meeting challenges of the future.”
Sally Warren, director of policy at health think tank The King’s Fund, added that the report rightly focuses on the need to improve social care funding for local authorities in the short-term.
“But the social care system is no longer fit for purpose, and long-term reform is needed to solve this issue for the future. I hope the prime minister will see good on his commitment to fix social care, and give people the confidence that care will be available in the quantity and of the quality we would all want for ourselves and our families,” she said.
“At the same time, cuts to the public health budget mean that local authorities are increasingly focussing on treatment at the expense of prevention services that could help people avoid health problems in the first place.
“Reductions in funding have coincided with rising incidence of some sexually transmitted infections, record numbers of drug deaths, and a stall in life expectancy gains. A £1 billion funding boost is needed to restore services to the level they were at in 2015/16.”
*Local government finance and the 2019 Spending Review. A report prepared by the Housing, Communities and Local Government, 21 August 2019.