The 17bn headache
Author: Jonathan Werran and Dominic Browne, The MJ |
Search is on for new ways to fund services, after LGA report exposes care shortfall
Council experts have called for a ‘shift of funding from acute to preventative care’ to tackle the ‘unprecedented funding gap’ highlighted by this week’s Local Government Association (LGA) finance report.
Some local government specialists even suggested new legislation is required to tackle the funding crisis outlined in the Funding Outlook for Councils. The move would hand incoming health and wellbeing boards powers to re-distribute funding from NHS budgets into preventative local care when needed.
The LGA study, published on 26 June, raised eyebrows across the country when it suggested key council services ? including roads maintenance, libraries and leisure services ? could effectively disappear by the end of the decade due to a massive local government funding gap.
LGA chiefs predict that without an immediate cash injection, local authorities face a 16.5bn shortfall by 2020 if they want to maintain services at current levels. As a result, funding for many popular services will shrink by around 90% in cash terms, LGA officials claim.
The funding gap is mainly attributed to the soaring cost of adult social care. Officials at Smith Square estimate spending on social care will exceed 45% of councils’ total budgets by 2019/20.
In response, Alex Thomson, chief executive of think-tank Localis, told The MJ: ‘The time is ripe for a cross-sector shift of funding from acute to preventative care in order to tackle the unprecedented funding gap and defuse the ticking demographic time-bomb.’
Andy Sawford, chief executive of the Local Government Information Unit, suggested health and wellbeing boards ? which will co-ordinate local health functions across top-tier and unitary authorities from April 2013 ? need ‘legislative force to pool-in health budgets and allocate them locally’.
Greater accountability for health and social care spending is also required, Mr Sawford added. He suggested health and wellbeing boards should be required to provide ‘detailed accounts of how they have transferred funding to prevention’.
At the recent MJ Forum, consultants Ernst & Young, suggested that 7% of the NHS’s acute budget ? which is often used to pay for emergency treatments for the elderly ? could be transferred to cover councils’ soaring social care costs.
Forum delegates said there was growing support across local government for such a cash transfer. But LGA chair Sir Merrick Cockell this week warned such a direct transfer may not be achievable.
‘We’re certainly not saying we recommend simply grabbing some part of the NHS budget. Clearly there may be reallocations in due course, but we need to go through all the options,’ Sir Merrick said.
Ministers responded to the LGA report by urging councils to continue their reform agenda, with a focus on a further round of savings.
Local government minister Bob Neill said: ‘Councils must continue to make savings by sharing back offices, getting more for less from the 60bn a year procurement budget, utilising their 10bn of reserves, tackling the 2bn of local fraud, or reducing in-house management and overhead costs.’
Sir Merrick, however, warned ‘efficiency savings won’t go close to solving this problem’.