New analysis from the County Councils Network (CCN) has outlined how some of the biggest councils in England are facing major budget overspends, due to ‘uncontrollable’ pressures.
This overspending is having the knock-on effect of increasing the cost of delivering services that are required by vulnerable children. All frontline services that are delivered by councils are being affected by these financial struggles, however, increasing demand for care services amongst vulnerable children and a rise in the cost of placing children in care has led to spiralling costs. These spiralling costs are contributing greatly to council financial troubles, with the analysis showing that £319 million of the projected £639 overspend comes from children’s services.
Looking at the overspending with a wider view, the analysis shows that one in ten ‘well-managed’ councils are unsure whether they are able to balance their budget this year, which is a legal requirement. This figure is expected to rise to four in ten for next year, and then six in ten for 2025. The overall funding deficit is anticipated to come to £4 billion up to 2026, regardless of the £2 billion worth of savings and cuts that councils are planning to make in order to prevent the issuing of a Section 114 Notice.
Considering the situation that councils are finding themselves in, the CCN is making a call for emergency funding to support the delivery of children’s services over the next two years, in order to prevent the drastic spending cuts that would be required. Vice Chair and Finance Spokesperson for CCN, Cllr Barry Lewis, said:
“This analysis lays bare the financial challenge facing county authorities. Historic in-year pressures are worsening an already bleak financial outlook, meaning our councils are facing down the barrel of a £4bn funding black hole.
“The majority of the £639m of additional and unexpected spending this year is simply outside of councils’ control. The number of vulnerable children requiring care has risen dramatically post-pandemic, while inflation and a broken provider market in statutory care placements mean councils face no choice but to pay spiralling fees.
“County authorities will do all they can to bring down costs over the coming period and have pencilled in £2bn of unprecedented further savings to help balance the books. But after a decade of continuous cutbacks, the scale of reductions and use of reserves needed to fill the funding shortfall is simply unsustainable.
“Last year the Chancellor stepped in with much-needed additional resources for adult social care. We now need the same priority to be given to vulnerable children, providing emergency funding this year and next.
“Birmingham’s recent financial difficulties and issuing of a Section 114 were undoubtedly made worse by the council’s performance and governance. But, unless we act now, this analysis shows that other well-managed councils are running out of road to prevent insolvency.”
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