Councils face shortages in budgets

A number of social services departments across the country face
shortages of millions of pounds in their budgets as a result of the
new local government finance settlement announced last week,
writes Derren Hayes.

Despite the new funding formula guaranteeing social services
departments an annual above inflation increase of at least 3.5 per
cent for the next three years, some authorities feel the settlement
will not be enough to meet their existing spending levels.

Overall, the social services and education budget is to increase
by 6.2 per cent next year, in line with figures announced in
April’s budget.

However, this will not be evenly distributed. Calculations made
according to the new local government formula mean 27 councils will
have their budget increases pegged to the 3.5 per cent
‘floor’ level, while 38 councils will receive the 8 per
cent maximum increase.

Early indications are that this will result in a moderate shift
of resources from the southeast to the north and midlands: London
boroughs and the southeast will receive a 5.4 per cent and 4.5 per
cent average increase in funding respectively, while those in the
Midlands and northwest will receive 7.1 and 6.6 per cent.

Councils are to spend the next month analysing the settlement
before reporting back to the government, but it seems likely some
will be forced to look for savings through service cuts.

Julie Jones, director of social services at Westminster Council,
said the increase of 3.5 per cent would leave her department with a
budget deficit of £3m.

“I think London boroughs are going to have to look at both
service cuts and potential council tax rises,” she said.
“I already spend well above SSA [Standard Spending
Assessment] and the council now faces a difficult choice whether to
take money from other places to continue funding social
services.”

David Munro, executive member for social services at Surrey
Council, which is also set to receive the minimum 3.5 per cent
increase, described a substantial shortfall between what the
council spent and its allocation that would force rises in council
taxes and threatened a number of new schemes.

Although David Behan, chairperson of the Association of
Directors of Social Services, felt the new formula appeared to help
social services in general, he acknowledged that those at the floor
were going to experience “immense budgetary pressures which
could lead to service cuts”.

However, he welcomed the new ring-fenced grants to tackle
systems capacity, workforce training and recruitment and retention
issues.

From April, SSA is to be replaced by Formula Spending Shares.
The new formulae used to calculate each authority’s FSS will
give greater emphasis to ethnicity, deprivation indicators, levels
of domiciliary and residential care, and the cost of foster
care.