A leading representative for adult social care providers is calling on the government to ‘immediately unlock essential funds’ for all local authorities to ensure the sector’s services are uninterrupted.
The call from Care England comes after Birmingham City Council ‘declared itself effectively bankrupt’ on Tuesday.
Care England has described Birmingham City Council’s Section 114 notice – which notifies the government that it cannot meet the spending commitments for the financial year – as ‘a dire wake-up call’, and expressed ‘deep concern’ over the situation.
Birmingham City Council said it currently has an in-year financial gap within its budget in the region of £87m.
And in June announced it had a potential liability relating to Equal Pay claims in the region of £650m to £760m, with an ongoing liability accruing at a rate of £5m to £14m per month.
The Section 114 notice means all new spending, with the exception of protecting vulnerable people and statutory services, must stop immediately, the council explained.
It is ‘a dire wake-up call’ that the current structures in place to support local authorities by the government are ‘not fit for purpose’, said Professor Martin Green, chief executive of Care England.
He added that Birmingham City Council’s Section 114 notice was ‘the latest in a long list of examples, highlighting how the government has failed to meet the needs of local communities and provide them with the necessary funding to support a strong social care system’.
This occurrence is ‘indicative of a larger pattern’, with more and more councils either having already, or looking to, serve Section 114 notices, said Professor Green who warned that ‘the threat of financial insolvency looms over authorities across England’.
Providers and councils alike are ‘forced to operate on a knife’s edge’ because they are ‘crippled by historic chronic underfunding’ he said, while the government ‘offers insufficient support’.
‘Already, parts of adult social care are on the precipice of collapse,’ he warned.
Calling on the government to take action, Professor Green added: ‘The government does have the prerogative to significantly rejuvenate the financial health of councils, and subvert the risk to our public services if they address the social care funding crisis head-on.’
Care England emphasised that Birmingham City Council is ‘by no means the only local authority to currently face extreme financial hardship’, with Woking, Thurrock, Slough, Croydon and Northamptonshire having also issued Section 114 notices in recent years.
On top of this, Kent, Guildford, Hastings, Southampton and Bradford have reported to have cautioned they may be at risk of serving a Section 114 notice in the near future, the representative body said.
‘As a result, as many as one in 10 local authorities have already served, are looking to serve, or have taken urgent action to mitigate serving Section 114 notices after significant concerns have been raised about their statutory obligation to balance their books,’ noted Care England.
Professor Green warned that, ‘without government intervention, all authorities in England are at significant risk’.
He said councils serving Section 114 notices represent a ‘drastic need’ for full reform into the current practices of how the government supports and governs, local councils.
‘Whilst this must be backed by the proper funding, there must also be assurances on how that money is managed at a local level, wherein the government upholds robust accountability measures and enables thorough auditing of councils themselves,’ he continued.
‘Failure to do so is putting essential services at risk. Local authorities are required to find an equilibrium between a legally balanced budget and delivering public services, but are restricted by inadequate central government funding, and their ability to raise the necessary funding locally.
‘Time has run out for Birmingham, and the government must immediately unlock essential funds for all local authorities to ensure adult social care and our public services are uninterrupted.’
Meanwhile, Birmingham City Council said it will tighten the spend controls already in place and put them in the hands of the chief financial officer to ‘ensure there is a complete grip’.
It said: ‘The council’s senior officers and members are committed to dealing with the financial situation, and when more information is available it will be shared.’
Last month, the government announced a £600m package to support recruitment and retention within social care ahead of the winter, but care leaders have warned that this alone will not fix the sector’s workforce troubles.
And last year, the House of Lords adult social care committee called on the government to make adult social care a ‘national imperative’ by establishing long-term funding if the system is to be made fairer and more visible.
A Department for Levelling Up, Housing and Communities said: ‘We have been engaging regularly with Birmingham City Council in recent months over the pressures it faces, including around its equal pay liability, and have expressed serious concern over its governance arrangements.
‘We continue to closely monitor councils’ funding pressures to make sure we understand the costs they are facing.’
They added that the ‘Local Government Finance Settlement for 2023/24 makes available up to £59.7 billion for local government in England, an increase in Core Spending Power of up to £5.1 billion or 9.4% in cash terms on 2022/23’.