Rapidly climbing demand for child social care coupled with high inflation have pushed UK councils to breaking point, leaving many turning to “imaginative procurement” to help balance their budgets.
Of the 47 urban authorities in the Special Interest Group of Municipal Authorities (SIGOMA), one in 10 are considering filing a Section 114 notice this year, which prevents all new spending except for that which is legally required, according to a recent SIGOMA survey.
A further 20% said they may have to trigger the notice next year.
Children’s social care provision was the most common cause of financial pressure cited, though inflation, energy costs and wage rises were also “significant factors”.
Vital services such as adult social care and foster care saw price increases of more than 10% this year, with SIGOMA warning of “real potential for unmet need and capacity shortages across key services as a result”. More than half of respondents reported risks to the future standards of service in adults or children’s care as a result of the high costs, and the group cautioned the situation is “set to get worse” as high interest rates will soon begin to impact existing loans.
Increased demand without a proportionate increase in funding, staff scarcity caused by the restrictions on the use of people from within the EU, and the higher hourly rates driven by the supply-demand dynamic have made this issue “among the top, if not the top, of priorities in councils”.
SIGOMA senior policy and communications officers, Sam Blakeman, told Supply Management there are several ways councils could mitigate these impacts.
He said: “Councils may seek a renegotiation of existing contracts or look for options within them to mitigate costs. This might be an area where procurement could play a part. There is obviously scope within this situation for imaginative procurement working closely to understand what the council needs and what it can afford.
“We aren’t suggesting that there is any magic solution that procurement can provide, but capable officers who can communicate with providers and understand the needs of service directors thinking about how statutory services can be discharged without increasing cost, will be an essential part of the mix.”
However, the difficulties of meeting demand for social care means councils might struggle to manage the “statutory requirements” to deliver these services.
Blakeman said: “Procuring care services is a complex and increasingly expensive activity with councils often forced into bidding wars to procure the services they need. Councils are treading a line between obtaining the most favourable terms in care contracts without forcing suppliers out of the market.”
He added councils are calling for reforms to care services, for example, a cap on the hourly rate for care workers, who are increasingly providing services through agencies, which is “of course more expensive”.
Many of the surveyed councils said this was the first time they were having to consider these “drastic actions”, due to their lack of cash reserves to balance the current year’s budget.
In response to the difficulties councils are facing the government has promised to implement a fair cost of care initiative, which will assess what constitutes a fair local rate for care services within each jurisdiction. But, Blakeman warned, councils are concerned what this may mean locally “if government gets it wrong or does not provide fair funding to match this”.
Upon triggering Section 114, the council will have three weeks to produce a budget which makes the necessary cuts to local services to reduce spending. Under the Section, only statutory services (such as safeguarding valuable people) will be funded, though existing commitments and contracts will continue to be honoured.