225,000 care places lost if government U-turns on council funding, says Labour

Labour has said that the equivalent of 225,000 adult social care places will be severely reduced or lost altogether if the government breaks its coronavirus funding promise to councils.

Following new analysis, Shadow Communities and Local Government Secretary Steve Reed warned that a government U-turn on funding for Covid-19 support to local authorities would be a “catastrophe for social care”.

The party explained that councils face a £10bn “coronavirus black hole” that, if not plugged by central government, would result in “21% cuts across the board” – including a £3.5bn reduction in social care budgets.

Reed highlighted that the government had said it would “do whatever it takes” and support councils’ responses to the pandemic, but said that “now ministers are breaking that promise”.

Labour cited research based on 2019/20 budget that estimates local authorities’ coronavirus-related income losses, and data from the Kings Fund and Department for Health and Social Care that shows:

• A £10bn funding hole for local authorities would mean £3.5bn cut to social care. On 2020/21 budgets, 21% cuts across council budgets would mean £3.5bn to adult social care as well £2bn to children’s social care and £700m to public health.
• Equivalent of 225,000 adult social care places severely reduced or gone altogether. A £3.5bn cut in council adult social care spending is equal to 178,000 long-term adult social care places for over 65s, and 47,000 short-term places.
• 40,000 places would go in the Midlands alone and more than 30,000 in each of the North West, South East and London.
• Other key services are at risk of cuts if the government fails to plug the funding gap, including libraries, children’s centres, leisure centres, public parks, road safety, road gritting and street lighting.

Commenting on the figures, Reed said: “Carers and our loved ones they care for are on the frontline of the fight against coronavirus. Local authorities are the biggest funders of social care in England – so when the government promised to stand behind councils through this crisis Labour supported them.

“But now ministers are breaking that promise, leaving councils with a £10bn black hole forcing 21% cuts across the board. Unless the government drops those plans the frontline heroes we’re cheering today will lose their jobs tomorrow and the equivalent of 225,000 frail and frightened older people and vulnerable adults will lose the support they rely on.

“That would be a catastrophe for social care, disastrous for those who lose support as providers are forced out of business, and would once again fail the very people putting their lives on the line to get us through this crisis.

“This government promised to do whatever it takes – if our loved ones see care taken away in their hour of need it will be devastating and unacceptable. The government should change course, now.”

Local authorities are much more restricted in what they can do with their budgets than central government. Councils are not able to borrow to cover revenue spending, or to run deficits by carrying overspends into subsequent years.

If a council fails to balance the budget, a section 114 notice is issued under the Local Government Act 1998, which prevents any new expenditure and gives a council 21 days to make an alternative budget that fits the criteria.

A budget made after the issue of a section 114 notice would involve making cuts to existing services. Across the country, several local authorities have said that they are weeks away from issuing a section 114 notice.

Councils in England have seen government funding cut by £16bn since 2010 – this has resulted in an almost 80% reductions for some. Labour said that this £10bn Covid-19 hole for councils would amount to a £3,525m reduction in adult social care.