Threats loom for London’s social services

Local authorities in the capital are bracing themselves against the threat of losing £420 million from their grant for providing social care for physically and mentally disabled people, drug and alcohol rehabilitation and mental health services.

The news is due before the end of this year when ministers will make final decisions about how council funding will be distributed between 2008 and 2011.

This announcement will tell the London boroughs if the government is going to fully implement a radical social services funding formula. This would mean removing the funding protection that prevents drastic cuts being made to several regions' personal and social services grant. This new funding approach severely underestimates need in urban areas, and without funding protection, councils in the capital could lose almost £420 million from their social services funding.

The funding threat is posed at a time of increasing demand for social care services, which has already forced 80 per cent of London councils to restrict their care to only adults with substantial or critical needs.

London is set to lose out on funding because the new formula is inaccurate and unfairly discriminates against urban areas by using overly simplistic methods to work out an area's  need. It does not take full account of people with complex and multiple needs, such as people with mental health and drug problems who tend to live in more urban areas.

New analysis by London Councils shows that the revised formula contains regional biases, which skew too much funding to areas like Yorkshire and Humberside and the North East.  Without funding protection the formula would give many councils more money than they actually spend on social care services. Hull would receive 36 per cent more than it spends, Doncaster would receive 32 per cent more, Sunderland would receive 28 per cent more and Barnsley would receive 27 per cent more.

Conversely, Harrow, which is already receiving less money that it spends and has been forced to restrict services to people with critical needs, would lose a further 14 per cent of its current funding share. This would reduce its government grant to just 54 per cent of what it currently spends.

Regional biases also mean that Yorkshire and Humberside would receive government funding for 99 per cent of the amount it spends each year on younger adults' social care.  But London would receive funding for just 68 per cent of its expenditure.

A collection of authorities outside of London, in regions including the North West, West Midlands and Yorkshire and Humber that are set to benefit from the new formula, are putting pressure on central government to remove funding protection.

London Councils Chairman, Councillor Merrick Cockell, stressed that ''If the Government bows down to pressure and applies the raw funding formula without funding protection, it could have serious long-term implications for the future provision of social services for vulnerable adults throughout the capital.'

Notes to editors:

More than 90 per cent of London boroughs are set to lose out on funding if the new formula is introduced.

Examples:

• Harrow - a service that is moving to critical - stands to lose £1.2 million from its total social services formula share, leaving it to make up 46 per cent of its expenditure on these services, according to new analysis by London Councils.
  
  
• Lambeth would stand to lose almost 20 per cent of its total social services formula share, a reduction of £37.1 million a year.
  
  
• Southwark would lose £38.7 million from its total social services formula share, a reduction of over 18 per cent.
  
  
• Wokingham, a council outside London which can only provide care to people with critical needs, could lose almost £3 million from its younger adults' social services formula share a reduction of 20per cent from covering its overall expenditure costs.
  
  
• Kensington and Chelsea stands to lose almost £23 million from its total social services formula share, a decrease of 22.1 per cent from the funding it received under the old formula.
   

The figures below show the social services formula share for all local authorities. Column one shows the amount for social services in this year's local government finance settlement, column two shows the social services loss if damping is removed and column three shows the percentage loss if damping is removed.

CLG (2007) Local Government finance formula grant distribution : consultation paper (p67)

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