The public services “quadruple whammy”

June 13, 2018   By Adam Lent, Director, NLGN

This post first appeared in The Local Government Chronicle on 12th June 2018.

Welcome to the Quadruple Whammy: the confluence of factors rearing into view that could push local government and the wider public sector over the edge within the next few years.

The first wham is well-evidenced in the report published today by the Association of Directors of Social Services: tipping-point austerity. We have known for a long while now of the stress suffered by public services because of the cuts. It seems, however, we are moving into a new phase where stress gradually morphs into breakdown.

As the ADASS report revealed, only 34% of financial directors of councils that provide social care are fully confident they have sufficient funding to meet their statutory duties in this financial year. A figure that falls alarmingly to 10% for 2019/20. The report also details a sector increasingly dipping into reserves while still over-spending on social care. It is very hard in this context to conclude, despite ministerial assurances, that Northamptonshire and Somerset do not mark the start of a qualitatively grislier financial period for local councils.

The second wham is economic weakness. Today saw grim findings from the well-respected ManpowerGroup survey which showed 2018 being the slowest year for hirings since 2012 when fears of recession were widespread. This comes on top of an unexpectedly sharp fall in manufacturing output and a slew of other indicators which suggest an economy tottering between stagnation and contraction.

Stagnant labour markets, redundancies and weaker pay only result in even higher demand for the acute services that respond to the personal and financial consequences of economic turmoil. But maybe even more significantly, a weak economy means low tax returns severely limiting a Chancellor’s options when it comes to easing the pain imposed by cuts.

The third wham is an emerging labour crisis. Over 100,000 jobs in health and social care remain unfilled. This is despite a recent study that suggested the workforce will have to grow by 450,000 over the next fifteen years to keep up with demand. The upside to this might be lower salary costs but remarkably the ADASS report showed that the financial pressure on social care of planned rises in the National Living Wage will grow from £378 million of extra salary costs this year to £585 million next year.

And finally, there is rising demand. Like the cuts there is nothing essentially new here but also like the cuts, it is the length of time demand has been rising and the context of the three other pressures that is creating a qualitatively more perilous situation. As the recent National Audit Office report concluded, unrelenting growth in demand will ultimately push local government towards provision focused on only the most basic social care as discretionary services are jettisoned to protect statutory duties.

Pressure like this ends one of two ways. Either services enter a state of slow, long-term decline punctuated by moments of deep crisis. Or there is a wholesale rethinking of public service delivery based on new ways of working (many already developed by councils) and a more realistic and sustainable fiscal settlement. So far, the Government has shown no serious appetite to consider the latter. But when the former scenario takes a grip, it will, as in the past, be the realities of electoral politics that will force a change… one way or another.

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