New analysis reveals rising demand and reducing resource means council spend is shifting away from prevention and towards crisis intervention

At the Lloyds Bank Foundation for England and Wales we are often challenging local authorities around commissioning and contracting and how too often it excludes or marginalises small and local charities. We will continue to make the case that councils should make greater use of grants and do more to support and work with local charities, but we cannot ignore the overall level of resources that councils have and the extreme financial pressure they have been under for some time. To understand the picture better we commissioned new research from the New Policy Institute looking at local government spending on services for adults and children facing disadvantage.

A Quiet Crisisd analyses official MHCLG data on local authority spending (whether in-house or through grants or contracts) focusing over the 5 years since 2011/12 on services supporting disadvantaged children and working age adults, including homelessness, mental health, learning disabilities, asylum seekers and looked-after children. It identified that overall spending on these services has reduced by 2% over the period, compared to an 8% reduction in spending by local government as a whole. Through a combination of political commitment and statutory duties councils seem to have done their best to manage. But looking below the aggregate figures some really worrying trends emerge.

For starters demand is rising, more people need more help from the same or less resource with for example an 11% increase in looked-after children and a 60% increase in the number of households in temporary accommodation.

To help cope with these demands councils have had to switch away from spending on preventive services towards crisis services. For example on housing there have been large cuts (46%) to the preventive services that would help people stay in their home to help to meet the big increases in homeless people, primarily the costs of temporary accommodation. Similarly, to meet the costs of rising numbers of children going into care, councils are having to cut spending on the very preventive services which would help children, parents and family so care wasn’t needed. Other services that help people move on and avoid repeat crises such as Local Welfare Assistance and carer support have been cut and in just three years spending on youth justice has fallen by 14% and substance misuse services have been cut by a shocking 59%. It’s surely a false economy that in trying to cope councils are forced to cut the very preventive services that can help people before they get into trouble in the first place.

Perhaps most worryingly 97% of the reduction on spending on disadvantage has been concentred in the most deprived fifth or councils, those same places where disadvantage and demand for these services is likely to be higher. Authorities in the North of England and Midlands have been hit hard as well as coastal districts. In contrast the least deprived councils in England have actually increased spending on disadvantage. Put in numbers in 2016/17 the most deprived 20% of councils were spending £278m less per year on services for our most disadvantaged citizens than five years previously, yet the least deprived fifth are spending £55m more. And behind these figures are real people, families and communities.

As detailed in the full report different types of councils have faced different demand pressures and have responded to cuts differently – councils in London for example have had to increase spending on homelessness, and cut that on adult social care to cope. But at its root the causes of all of the issues are clear – big cuts in grants from central government and councils increasingly reliant on what they can raise themselves locally, leaving deprived areas hit hardest.

As a funder ourselves we support some 700 local charities helping disadvantaged people and overwhelmingly in deprived areas. They are all doing their very best but our resources and their efforts are finite and cannot fill the gap. The current approach to funding local government and local services is not sustainable. Northamptonshire may have grabbed the headlines but even well-run local authorities are struggling. There is only so long that more, and a lot more, can be done with less – all that’s left is further reductions in services, a post-code lottery and those deprived communities and disadvantaged people who need help most left further behind.

Central Government needs urgently to look again at how it funds local councils to enable them to provide and fund services for those who need it the most, regardless of where they live. Indeed it is short-sighted not to do so and cuts across the Government’s own objectives. Over the summer Ministers published welcome and laudable strategies to tackle rough sleeping and to work better with Civil Society. However, it remains overwhelmingly at local level, through councils directly in partnership, that rough sleepers can be helped and charities supported. But they cannot do so with words alone.

Next month the Chancellor is expected to set out his priorities in the Budget and in the months that follow the Government will embark on a Spending Review. At every previous one local government has been the “balancing item”, caught in the fall-out between Cabinet Ministers fighting for their own Departments. This time must be different, we need local government first not last in the queue. But councils can only do so if they have the tools for the job.

Local Government needs more funding and fair funding based on need. We called our report a “Quiet Crisis” because sadly to date it has been. Its time now to turn up the volume and make the case for government to change course – starting with getting representations in for the budget by the end of the month https://www.gov.uk/government/publications/budget-representations-guidance/guidance-for-submitting-your-budget-or-autumn-statement-representationsd

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