The financial impact of coronavirus could leave county and unitary authorities in an unsustainable position, with adult social care facing the biggest cost pressures followed by children’s services.
A study, carried out by business and financial adviser Grant Thornton on behalf of the County Councils Network (CCN), showed all 39 authorities in England could be forced to use up their reserves in 2021/22 to cover a funding shortfall of £2.5bn.
This figure was likely to increase by continuing Covid-related financial pressures, particularly in social care. Of the £2.5bn shortfall, £773m was in adult social care services and £133m in children’s social care.
Drivers of cost in adult social care include increased demand, rising costs of personal protective equipment, reduced income from self-funders and additional staffing, among other areas. The report said feedback indicated ‘that a return to a “normal” social care environment is unlikely.’
For children’s social care, as well as increased costs for providers, the report said Covid-19 was ‘likely to exacerbate the current shortage of foster care placements in some areas’, which could drive councils to more expensive care options.
A second wave of the virus and a further lockdown could increase the funding shortfall to an estimated £4.5bn over the next two years, the report said.
The government has provided £3.2bn of non-ringfenced emergency funding to local councils during the pandemic. The share of funding for the 39 county and unitary authorities was £1.2bn. The government has also provided £600m for infection control in care homes.
However, the CCN document stated it would be necessary for government to develop further packages of financial support as part of a medium-term plan to ensure councils were adequately funded to cover all services.
It suggested these measures could include further emergency funding and an income guarantee to prevent lost council tax and business rates impacting council sustainability.
On the pre-Covid financial landscape, the report said: ‘Funding for adult social care was already a major challenge, with many councils projecting a significant growth in demand alongside increasing complexity of need and a fragile provider market which was in need of additional investment. Government had started to address this in the form of ad hoc, though significant, funding allocations but the longer term solution had yet to emerge, along with the anticipated social care green paper.’
Cllr Carl Les, finance spokesperson for CCN and leader of North Yorkshire County Council, said: ‘Councils across the country are grappling with increased cost pressures in adult social care and other core local services, whilst facing huge reductions in income due to the lockdown and the country entering a recession.
‘Building on this evidence, we want to work with government to develop a comprehensive plan to support councils over the coming months and years. We know ministers are alive to the challenge and hope this report is a valuable contribution to informing future interventions to support all councils.’
In March, Health and Social Care Secretary Matt Hancock wrote to MPs urging them to come forward to help secure cross-party consensus on adult social care.