This briefing sets out the acute financial pressure councils face, and the steps we feel the Government needs to take to address this situation. We provide detail on three key areas of council activity that are experiencing sharp financial and/or demand pressures: adult social care and winter pressures; children’s services; and housing and homelessness services.
Introduction
The LGA have sent our Autumn Statement submission to The Chancellor in advance of the Autumn Statement. In it we highlight that our analysis shows that councils are facing funding gaps of £2.4 billion in 2023/24 and £1.6 billion in 2024/25. These gaps relate solely to the funding needed to maintain services at their current levels. The funding gap in 2023/24 is equivalent to councils stopping all spending on waste collection, library services and recreation and sports combined.
This briefing sets out the acute financial pressure councils face, and the steps we feel the Government needs to take to address this situation. We provide detail on three key areas of council activity that are experiencing sharp financial and/or demand pressures: adult social care and winter pressures; children’s services; and housing and homelessness services.
Special Educational Needs and Disabilities (SEND)
Dedicated Schools Grant (DSG) and high needs funding pressures are one of the biggest challenges that councils with education responsibilities are currently facing. This is the result of an ever-increasing demand for SEND support and the growing number of children and young people who have an Education, Health and Care Plan (EHCP)
Actions the Government should take now:
- Provide the additional funding required/necessary to meet the year-on-year increase in need for Education, Health and Care Plans.
- Provide a guarantee that all council Dedicated Schools Grant deficits will be written off.
- Urgently bring forward legislation that gives councils the powers to lead local SEND systems and to hold health and education partners to account for their work supporting children and young people with special needs.
Facts and figures about SEND
- Department for Education (DfE) statistics show that at January 2023 there were over 517,000 children with an EHCP, an increase of 9 per cent on 2022.
- The number of EHCPs has increased every year since they were introduced. We do not believe that the proposals set out in the Government’s SEND and Alternative Provision improvement plan will result in this increase either slowing down or stopping.
- The Society of County Treasurers conducts regular analyses of council high needs block deficits and the results of their most recent survey, undertaken in March 2022 show that the total deficit facing those councils that responded stands at £1.36 billion, rising to £2.6 billion in 2024/25. Extrapolating those figures for all councils gives an estimated deficit of £1.9 billion in March 2022, rising to £3.6 billion by 2025.
Housing and homelessness
Councils share the collective national ambition to tackle local housing challenges and create great places for current and future generations. Housing consistently appears in the top ten priorities for British residents. It is mentioned as a key issue almost three times as frequently by 18 to 34 year-olds than older age groups.
There are significant ongoing challenges in ensuring that everyone can live in a home that meets their current and future needs – challenges that encompass availability, affordability, security, and quality. Our member councils have raised significant concerns about frozen Local Housing Allowance (LHA) rates, the rising cost of living, the closure of Afghan bridging hotels, wider asylum and resettlement pressures, and an insufficient supply of affordable housing. These are driving increases in homelessness and reducing councils’ ability to source suitable accommodation.
Actions the Government should take now:
- Roll-out five-year local housing deals to all areas of the country that want them by 2025.
- Uprate LHA rates to the 30th percentile of local rents and introduce an explicit, national-level focus on homelessness prevention (with an associated funding regime).
- Provide a long-term rent deal for council landlords to allow a longer period of annual rent increases for a minimum period of at least 10 years, providing certainty for investment. This should include flexibility for councils to address the historic anomalies in their rents as a result of the ending of the rent convergence policy in 2015.
Facts and figures about housing and homelessness
- Government data published in July 2023 shows that more than 104,000 households were in temporary accommodation at the end of March 2023 – the highest figures since records began in 1998.
- There are also more than 1.2 million households on council housing waiting lists. This comes at a huge cost to councils who spent at least £1.74 billion on temporary accommodation in 2022/23.
- The self-financing settlement in 2012 distributed debt to stock-holding councils on the assumption that anticipated rent income would be sufficient to fund works to raise all homes to the Decent Homes Standard (DHS) and maintain them there, and to pay off debt over a 30-year period. The settlement is now 10 years old, and its underlying income and expenditure assumptions have both been superseded.
- Income within the HRA is not only now lower than that provided for in the self-financing settlement, but this income is now expected to cover both higher costs and higher standards of stock and service delivery. Our research estimates the 7 per cent rent cap imposed for 2023/24, whilst supporting tenants in the short-term, will amount to a cumulative deficit to council HRAs of £664 million after two years. This comes on the back of 1 per cent annual rent reductions in the social rented sector for four years from April 2016, resulting in an estimated 12 per cent reduction in average rents by 2020/21.
Contact
Arian Nemati, Public Affairs and Campaigns Adviser
Email: [email protected]