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£8.5m gap in budget revealed as council leaders warn: ‘without funding overhaul we will not be able to sustain services’

Published: Monday, 4th September 2023

City council leaders are calling for a national overhaul in the funding of social care services after revealing

that a budget gap of £8.5m this year will leave the authority at significant risk of not being able to set a balanced budget next year.

Stoke-on-Trent City Council has announced the funding gap in a report on the authority’s first quarter financial performance, ahead of a meeting of the authority’s cabinet next week (Tuesday, 12 September).

The authority is warning that without a reduction in demand for care services and a rapid decrease in inflation, or significant direct support from government, it will not be able to sustain services.

The announcement comes as a number of authorities across the country have issued calls to government to redress the imbalance in the funding of social care and national warnings that up to 26 councils could be faced with issuing Section 114 notices in the next two years. Such notices are issued when councils cannot balance their books. The notices restrict all new spending with the exception of protecting vulnerable people and statutory services and pre-existing commitments.

The main pressures on the council’s budget position are:

  • Continuing record numbers of children in care – currently at 1,121 children, and with high costs of placements. Forecast pressures to support children’s social care are currently £9.1m.
  • Increased demand for adult social care, with high unit costs of placements particularly in working age adults, residential and nursing, and home care. Forecast pressures to support adult social care are currently £5.2m.
  • At a national level, a proposed pay offer by National Employers that would result in an estimated £1.1m in-year budget pressure, if accepted by trade unions.

Councillor Alastair Watson, cabinet member for finance and corporate services, said: “Since coming into office in May we’ve been scrutinising all spend by the council and it’s become very clear that we’ve inherited a very perilous financial situation.

“We’ve hit the ground running in these four months – getting on top of illegal dumping and clearing a longstanding fly-tipping backlog that’s been plaguing residents; prioritising early intervention and prevention services such as a new family hub model to provide better, more sustained social care; delivering a five-year investment programme into council housing; and tackling anti-social behaviour in our communities.

“We’ve done this while insisting on tight spending controls in response to the financial position we’ve inherited. So far, we’ve reduced a potential £13m budget gap down to £8.5m.

“But as it stands, with record numbers of children in care, with high inflation that increases the unit cost of care for children and adults along with the cost of so many goods and services that we purchase for the benefit of residents, we are spending more money than we can afford – we cannot sustain services like this.

“Ten years ago, we had 655 children in the council’s care, we now have more than 1,100. The cost for us to care for the high number of vulnerable children and adults has very nearly doubled over this period. Yet over the same 10 years the council has been forced to make £250m in austerity savings.

“We’re calling on government to listen to our situation – we are not reckless with public money, we spend wisely for the benefit of local people. If we cannot afford to provide the services we deliver in these circumstances, then the system is broken, not local government. We’re lobbying government for immediate action to help stem this tide.”

The council has revealed that it has delivered £250m in savings over the past 10 years, with its real-terms spending power reduced by 26.9% since 2010. The authority has low levels of financial resilience because it has low levels of reserves, high demand for social care and a weak council tax base. In the past 10 years, the authority has gone from having the 10th lowest average council tax out of 98 unitary and metropolitan districts in the country to the second lowest. This means that council taxpayers are paying less than in other areas of the country, but limits the council’s ability to raise revenue. In the past 10 years, the amount of investment in social care for vulnerable children and adults has increased by 91.4 per cent, from £106.79m in 2013/14 to £204.366m in 2023/24.

Councillor Watson added: “We’re not just calling for system change. We’re taking every practical step possible to audit, control and account for the way money gets spent. We are now instigating a number of thorough reviews with the government, Local Government Association, professional organisations and independent audit panels, including a focus on the use of resources in children’s services and adult social care.

“We are bidding for and using external funding in the best possible way to support communities. We’re collaborating more with community and voluntary groups so that they have the resources to deliver targeted support at a grass roots level to people who need help the most.”