Back office cuts 'will not pay for council services'

Unless reform is introduced immediately the money available by 2020 to fund council services will have shrunk by 90% in cash terms, a detailed financial projection by the Local Government Association (LGA) reveals. The shortfall cannot be made up through efficiency gains and better use of IT, as central government claims.

The LGA's report Funding Outlook for Councils from 2010/11 to 2019/20 says that the rapidly rising cost of providing adult social care, combined with the growing cost of delivering councils' other explicit statutory responsibilities such as social services, waste collection and concessionary travel, will soak up almost all of council spending. Improved efficiency gains will not be enough to cover the huge funding gap, says the LGA.
In 2010/11 the cost of providing central services, which includes building costs, administration and IT, was around £3bn. The cuts required to council services excluding care and waste management are more than five times that figure.

Sir Merrick Cockell, LGA chairman, said: "Efficiency savings won't go close to solving this problem. We need an immediate injection of money into the adult care system to meet rising demand in the short term, alongside a major revision of the way it is paid for and delivered in future.

'Local government is best placed to ensure care is provided in a way which offers dignity to the individual and value for money for the taxpayer. It has to be in a position to do that while also delivering the other services local people expect.'

The report, which the LGA says is based on conservative estimates, shows that unless urgent reform is introduced, a £16.5bn funding shortfall will exist between the amount of money available to councils to provide services and the predicted cost of maintaining them at current levels. The 28% cut in the amount of money councils receive from central government between 2010/11 and 2014/15 has contributed considerably to this situation.

It is also suggested that a fundamental change may be required in the statutory demands placed on councils, as well as a shift in residents' expectations of what services a council will provide.

The report also finds:

• The rising cost of providing social care and waste services means that the money available to deliver all other services falls from £24.5bn in 2010/11 to £8.4bn in 2019/20.
• The gap between the money available for providing services and the predicted cost of maintaining them at current levels starts at £1.4bn in 2012/13 and widens every year to reach £16.5bn in 2019/20.
• Spending on social care will exceed 45% of council budgets by 2019/20.

Cockell said: "By the end of the decade, councils may be forced to wind down some of the most popular services they provide unless urgent action is taken to address the crisis in adult social care funding."