Rising Demand for Council Services Driving Financial Pressures

RISING demand for essential services continue to add to significant budget pressures at Reading Council.

Ahead of the provisional Local Government Finance Settlement later this month, which is when councils find out how much funding they will receive from Government, two separate reports to next week’s Policy Committee outline the financial challenges as more people in Reading turn to the Council for support.  

Latest in-year budget projections for 2024-25 show:

• £5.7 million in additional children’s social care pressures at Brighter Futures for Children, due primarily to increased costs of looking after vulnerable children and young people, many of which are presenting with more complex needs
• £1.2 million in tackling homelessness pressures, with 174 individuals or families currently in need of emergency accommodation,  compared to 71 in April 2022
• £1.4 million in pressures in adult social care, due to the increased cost of care packages and more vulnerable people requiring support, with a 4% year-on-year increase in the number of residents needing support

The Council does not finalise its budget for 2025/26 until February next year. Once the finance settlement from Central Government is confirmed, it will be in a better position to finalise the savings which will be required to deliver a balanced budget.

At this time however, the increase in demand for Council services is driving a projected funding gap of £6.4 million for next year, increasing to a projected £15.6 million by 2027/28.

Earlier this year the Council agreed in-year saving mitigations totalling £8.5 million to partially offset some of the increased costs of demand-led pressures, which are on target to be delivered.

Transformation programmes are also on-going in both adults and children’s social care, focused on managing demand and reducing costs.

In adult social care services, these include using technology to enable people to remain at home for longer; intensive occupational health support for people being discharged from hospital, allowing them to regain their independence more quickly; and investing in new in-house accommodation and day services for residents with learning disabilities.

Brighter Futures for Children’s transformation plan includes joining a regional fostering hub to increase the number of foster carer placements, which reduces the need for expensive accommodation;  examining options to build Council children’s homes, reducing the need for expensive accommodation; and increasing SEND places in-borough to reduce expensive home to school transport costs.

In addition, a series of management actions have also been implemented internally to manage expenditure, including a cross-council hold on filling non-essential posts, greater management oversight of all non-essential spend, and a reduction in agency spend by limiting it to essential roles only, as well as a review of the existing capital programme.

The Council’s draft Medium Term Financial Strategy will be discussed at a meeting of Policy Committee on Wednesday 18 December (https://democracy.reading.gov.uk/documents/s33803/MTFS%20Update.pdf)

On the same agenda is the Council’s Quarter 2 Performance and Monitoring Report, which details the latest demand-led service pressures which are directly impacting the Council’s budget (https://democracy.reading.gov.uk/documents/s33798/Quarter%202%20Monitoring%20Report.pdf)

Councillor Liz Terry, Reading Borough Council Leader, said:

“The impact on council budgets everywhere caused by the rise in demand for services is not new, but the culmination of this trend over several years means many councils now find themselves in the same position, particularly those in areas where need is highest. An unprecedented 18 councils were given exceptional financial support (EFS) from Central Government in February to help meet their legal duty to balance their books this year.

“In Reading, local demands mirror those seen at other councils, whether that is the spiralling cost of looking after vulnerable children, more older people now coming through the system post-Covid, or the cost of providing emergency accommodation, exacerbated by a lack of affordable housing, high local rental costs and the high cost-of-living.

“There are positive signs that the new Government is listening to local authorities. There have been welcome announcements on clamping down on blatant profiteering by private companies at the expense of local councils, particularly those who provide placements for vulnerable children,  increasing the number of affordable homes, a fairer funding system which directs limited money to the areas with the highest need, and providing councils with multi-year settlements, which would allow us to plan for more than just one year at a time.  The fear, however, is that it won’t be enough. The financial resilience of local authorities has been eroded over a number of years, with 14 years of austerity and shortsighted cutbacks to preventative services combining with the high cost-of-living, which means more people now turn to their local council for help.

 “It can be easy to talk about these pressures in terms of pounds, but I don’t forget the individuals behind the numbers. It is the job of local councils to support their vulnerable residents. We do not shy away from this responsibility, but the reality is further difficult decisions are on the more immediate horizon before the impact of new Government policies can take effect.”

Following the meeting of Policy Committee next week, a public consultation on the budget is set to launch on December 19, with details publicised nearer the time.