Autumn Statement - 22 November 2023

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.

The number of children in care is now at its highest since current records began in 1994 – at over 82,000 – and has been rising annually since 2009. The number of children needing support from children’s social care more widely had begun to fall from a peak in 2018 when the Covid-19 pandemic hit, with numbers and rates of children in need and child protection plans now rising again. The complexity of needs of children post-Covid has also increased as observed by Ofsted and social workers. This is placing additional pressure on councils and social workers, with more resource required to support each child and family.

Actions the Government should take now:

• Meet existing cost pressures in children’s social care, including fully funding placements for unaccompanied asylum-seeking children and care leavers.
• Fund the roll-out of well-evidenced interventions to reduce demand for children’s social care placements and retain and expand placement capacity.

Facts and figures about children's social care

• Expenditure on fostering and residential placements increased by 39.6 per cent in cash terms from 2016/17 to 2021/22 to £3.8 billion. Over the same period, the number of children in care rose by 13 per cent from 72,600 to 82,170.
• Research by Newton found that the impact of the new regulation for children in care and care leavers aged 16-17 could add £368 million to council spend on semi-independent accommodation by 2026/27, nine times more than the £41 million per year of additional funding from DfE over the next three years.
• Councils are supporting ever-increasing numbers of unaccompanied asylum-seeking children (UASC) and care leavers, with Home Office funding for these placements failing to fully cover costs. This is especially the case for former-UASC care leavers, who now make up 26 per cent of care leavers aged 19-21.
• The Independent Review of Children’s Social Care found that investment of £2.6 billion over four years was needed to reform the children’s social care system and rebalancing spending towards earlier help. To date, the Government has committed £200 million over two years.
• Pressure in children’s social care is also leading to children’s social workers leaving council social work or leaving the profession altogether. DfE statistics show that the current vacancy rate, children and family social workers leaving during the year and sickness absence rate are all the highest in the data series.
• The Care Review highlighted that the additional cost of employing agency staff is approximately £26,000 per worker per year, meaning a loss of over £100 million per year from children’s social care services.
• £500,000 to fund an extension to the Return to Social Work programme could bring 200 social workers back to the profession, and government-funded training programmes and bursaries could encourage retraining from other profession.

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.

Over the last two years, the Government has produced a white paper on the future of adult social care (December 2021), a follow-up plan to the white paper (April 2023), and made additional funding available, most notably £7.5 billion across 2023/24 and 2024/25 as announced at the 2022 Autumn Statement. However, much of the Government’s attention in recent times has been on older people, hospital discharge and winter. As important as these issues are, adult social care is about so much more, including services for working-age people with a learning disability or mental health problem, unpaid carers, and the dedicated care workforce which delivers services to thousands of people every day. Although we accept the Government has taken meaningful steps to address the financial issues in adult social care, the Government still has some way to go to address the challenges faced by local authorities.

Councils are all too aware of the impact on their residents: the person of working age waiting more than six months for an assessment of their needs; the unpaid carer struggling to balance work with caring duties; the care worker working long hours but finding it difficult to make ends meet; or the care provider owner who has ceased trading. We all know these people are real and we all know they would very clearly state that adult social care is far from fixed.

The additional funding made available in the 2022 Autumn Statement is helpful but much of the funding will be absorbed by meeting pay and inflationary pressures.

The 2023 Autumn Statement is a critical opportunity for the Government to signal that its understanding of, and commitment to, adult social care extends far beyond a focus on hospital discharge of older people.

Actions the Government should take now:

• Provide funding to enable improvement in pay (parity with comparable roles in the NHS), conditions and career development opportunities for the frontline care workforce not directly employed by councils.
• Introduce an independent review of care worker pay for those not directly employed by councils.
• Provide substantial new investment to help tackle unmet and under-met need through an expansion of provision, including preventative services, and in new models of care, including housing, and funding for the voluntary and community sector.

Facts and figures about adult social care

• 76 per cent of directors of adult social care services are concerned their budget is insufficient to meet statutory duties around market sustainability in 2024/25. 52 per cent are similarly concerned about their ability to meet statutory prevention duties in 2023/24, up from 40 per cent in 2022/23.
• Directors are planning savings of £806 million in 2023/24, up from £597 million in 2022/23, but only 17 per cent of directors are fully confident in delivering those savings.
• Despite some improvement on last year, the workforce vacancy rate remains stubbornly high at 9.9 per cent, equivalent to 152,000 vacant posts being advertised on an average day. Turnover rates also remain high at 28.3 per cent (a slight improvement on last year when the rate was 29 per cent).
• From 2015/16 to 2021/22 the number of working-age adults receiving long-term care increased by 1.4 per cent while the number of older people receiving long-term care fell by 10 per cent.
• In 2021/22 councils spent approximately the same amount of money – £8.3 billion – on long-term support for both working-age adults and older people despite many more thousands of older people being supported (529,000 older people supported long-term, compared to 289,000 people of working age).

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 30^th 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.

Arian Nemati, Public Affairs and Campaigns Adviser

Email: [email protected]