One in ten councils could go bust as a result of soaring elderly care costs, a new report warns.
The National Audit Office report published today says local councils are struggling to juggle higher cost pressures against an almost 50% cut in central government funding since 2010-11.
Amyas Morse, head of the National Audit Office, said: “Current funding for local authorities is characterised by one off and short-term fixes, many of which come with centrally driven conditions.
“This restricts the capacity of local authorities and yet the weight of responsibility to respond to increased demand and maintain services remains very much on their shoulders. The Government risks sleep walking into a centralised local authority financial system where the scope for local discretion is being slowly eroded.”
The report highlights that if local authorities with social care responsibilities continue to use their reserves at current rates, one in ten will go bust within three years.
Northamptonshire County Council imposed strict in-year spending controls last month after it went into effective bankruptcy.
The NAO said increased demand for social care and tightening resources were forcing local government into an increasingly narrow remit focused on caring for the elderly.
The estimated number of people aged 65 and over increased by 14.3% between 2010-11 and 2016-17, with social care now accounting for 54.4% of total service spend, compared with 45.3% in 2010-11.
Despite this, spending on social care fell by 3% between 2010-11 and 2016-17, compared with a 32.6% reduction in spending on other services.
Lord Porter, Chairman of the Local Government Association, said: “Only with the right level of funding and powers, can councils continue to make a difference to people’s lives by building desperately-needed homes, creating jobs and school places, providing dignified care for our elderly and disabled and boosting economic growth.”