Councils facing bankruptcy over soaring costs of care

The National Audit Office (NAO) has warned that one in 10 councils are on the verge of insolvency after exhausting their reserves to pay the dramatically rising cost of social care.

According to the NAO, the financial position of many councils has “worsened markedly” since the last audit in 2014, having had their central Government funding cut by almost 50 per cent in eight years.

The report also revealed that the cuts have led councils to make other cuts, such as reducing the number of households having their bins collected each week by 33 per cent since 2011.

Many have also cut the number of food hygiene checks on cafes and restaurants by more than 40 per cent, and others have made other savings by cutting services for young people.

However, despite these cuts, the NAO found that councils seem unable to balance their books because of the increased demanded for social care, combined with cost pressures on them, such as the new national minimum wage.

Official figures show that the estimated number of people aged over 65 in need of care has increased by 14.3 per cent and social care now accounts for 54.4 per cent of local authorities’ total service spending, up from 45.3 per cent in 2010-11.

This extra expense has caused 66 per cent of local authorities with social care responsibilities to draw on their reserves last year and, at that rate, the NAO estimates that 10 per cent of councils will have exhausted their reserves by 2020.

Commenting on the NAO’s report, a Government spokesman said that the needs and reserves of councils are being reviewed and that real-terms increases have been provided for the next two years.

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