Cost crises From social care to special needs, the issues fuelling insolvencies

Once vanishingly rare, the prospect of English local authorities going bust now offers no surprise – four councils have in effect done so in the past year; some declared a state of “financial emergency”; a further one in five believe it is “fairly or very likely” they will become insolvent in the next 18 months.

Local government is no stranger to budget cuts – austerity has shrunk town hall spending by about 40% over the past 12 years. But there are fears inflationary costs and a decade of cuts ha ve hollowed out the capacity of authorities to deal with four long-term existential pressures.

Children’s services 

Described by an independent national inquiry in 2021 as a “tower of Jenga held together by Sellotape”, England’s council run children’s departments have for years strained to cope with rising demand for child protection services.

Over the past decade, the number of looked-after children in England has risen from 68,000 to 83,800. More recently, Covid, the cost of living crisis and rising poverty have fuelled increases in referrals for child protection, mental health help and family support.

An explosion in numbers of high-cost privately run children’s home placements has pushed many local authority children’s services to the brink. In 2018, just 120 placements cost at least £10,000 a week. By 2023, it was more than 1,500 .

The rise of the extreme £500,000 a year care placement pushed up spending on children’s services this year by nearly 14% , with councils becoming increasingly outspoken at what they see as “profiteering” by the care industry .

Years of focusing available resources on child protection interventions has meant the decline of early intervention programmes such as parenting classes and Sure Start that help steer struggling families away from expensive and traumatic crisis.