Social care could be drastically cut as councils face £2.8bn funding shortfall

Only council tax hikes of up to 7.99 per cent each year until 2025 would save services from axe, say leaders

Care services for frail, elderly people and children are likely to be in the firing line, the government is being warned (AFP via Getty Images)

Social care could be drastically cut unless chancellor Rishi Sunak provides a substantial injection of funding to local authorities, council leaders have warned.

England’s largest councils say they could be forced to slash services in the face of a multi-billion-pound black hole in their finances.

County councils have calculated they will have a £2.8bn cash shortfall in the next three years even if council tax bills rise by 1.99 per cent each year, the maximum allowed for general spending.

The chancellor is thought to be considering allowing local authorities to raise council tax to address their shortfall without the need for a referendum, just as other household bills are already going up.

But the County Councils Network said the only way to avoid major cuts to services would be to increase council tax by up to 7.99 per cent every year, which would add £392 to an average bill over the next three years.

Council leaders said that with the cost of living rising, a total rise of at least 24 per cent would be unacceptable and unfair on households.

A rise of that scale would mean the average Band D bill would average £2,386 a year by 2025, up from £1,898 now.

Councils were already struggling from years of austerity even before coronavirus hit, but lockdowns and social distancing caused their income to plummet and they faced extra bills for supporting people through the pandemic.

At the start of the year, authorities warned they were up to £2.2bn short of funding.

Hiking council tax cannot be the sole answer to filling the shortfall, argued the county council chiefs, who called for a chunk of cash for the next three years in Mr Sunak’s spending review on 27 October to avoid services being slashed.

Authorities said they were facing the most significant pressures in social care, so fees in adult social care could be increased and preventative services in children’s social care cut back.

Other potential effects include tightening eligibility criteria, the leaders warned.

The £2.8bn cash shortfall was calculated from the financial plans of the 36 councils that belong to the network, which cover almost half of England’s population.

Although council tax is imposed by district councils, bills include a “precept” for the counties.

They predict the legacy of Covid-19, such as greater demand for children’s services and higher costs in adult social care, will keep straining their budgets in future years.

It’s thought Mr Sunak is considering letting local authorities increase the social care precept element of council tax above the 2.99 per cent limit.

Carl Les, finance spokesperson for the County Councils Network, said: “County local authorities face an extremely difficult three years coming up, with rising costs of delivering services, demographic pressures and the legacy of coronavirus meaning that we need to find savings or increased income of £2.8bn over the next years to balance our books.

“We are acutely aware that the cost of living is rising and that many households have suffered from the economic impact of the pandemic.

“Therefore, large-scale council tax rises to make up our funding shortfall would be unacceptable and unfair for hard-pressed residents.

“It would also be an unsustainable approach to funding services, raising variable amounts across the country.

“We appreciate the tight fiscal environment facing the chancellor, but we are calling on the government to inject further funding into the system for local authorities over the next three years, in order to avoid a further round of large-scale reductions in services.

“The government’s levelling-up agenda must begin with making public services adequately funded.”

The Independent has asked the Treasury to comment.