12.We asked the Department what it meant by financial sustainability. The Department told us that it believed that the sector as a whole was sustainable if the amount of resources available to it was sufficient to deliver the statutory services that it is required to provide. It explained that, in order to make that judgment, to some extent it has to “cost those services and do that assessment.” The Department told us that local authorities prioritised adults and children’s social care in their spending, and the Department in its monitoring, because the requirements are set out in statute and they involve vulnerable individuals. We have previously pointed out that increasing demand for these services means that local authorities are spending a greater proportion of their funding on social care services, which is putting pressure on other services. The share of local authorities’ service spend devoted to adult and children’s social care grew from 45.3% in 2010–11 to 54.4% in 2016–17. The rate of looked after children, for example, is now at a 25 year high.
13.There are a range of other services that make up the general responsibility of local government, such as libraries and youth services, which local people can reasonably expect their council to provide. The Department told us that its judgement about overall financial sustainability also covered whether there is flexibility in the system to respond to events, emergencies and to be able to provide the broader local leadership expected by communities in local authorities’ delivery of locally-led non-statutory services. However, the Department was not able to provide us with any firm sense of how sustainable the local authority sector is beyond required statutory services it monitors closely, asserting that it was not possible to quantify this. This is not helpful for anyone who is interested in the sustainability and citizens’ experience of services outside the Department’s narrow monitoring and we note that local authority spending on emergency planning fell by 34% between 2010-11 and 2016-17.
14.When we asked about the monitoring of services other than social care, we were disappointed to hear the Department say that it considered the financial sustainability of local authorities and councils being able to set a balanced budget and manage their finances in 2019-20 to be a different thing to “levels of service provision and how far they should provide their services.” While accepting that these two issues are interlinked, the Department told us that it would look at what levels of service provision that would be expected from local authorities next year as part of the Spending Review.
15.As part of Spending Reviews, the Department helps the government as a whole to decide how much it should cost to deliver the statutory services local authorities are expected to provide. The same analysis also contributes to the Department’s ongoing assessment of financial sustainability. The Department told us that the ‘top-down’ fiscal analysis that it undertook was based on projections of what the sector may need to deliver its services, and therefore included the cost of those services today and projections as to how those will change in future. We asked the Department about its role in relation to the full range of local authority activities, recognising that other departments have policy responsibility for specific services. The Department told us that it provided a central point where other government departments could raise concerns about any statutory services they are responsible for. It explained that it was the role of other departments to keep an eye on the services they are responsible for, to determine their priorities, and to talk to the Department if they think that services have been “de-prioritised or squeezed too far”. This includes where the government wants to protect services at a certain level. The Department said it has helped the Government in its decisions to respond to service pressures, and described that part of the reason for additional social care funding was to stop authorities “from diverting money from other services that are also important, particularly to the public”. The Department has not identified the services that have this level of importance in its view.
16.We asked the Department what information it held that underpinned decisions to support other services by providing funding. However, the Department’s answers were not reassuring. It told us that it did not hold a list of statutory services which specified the government’s minimum expectations of the level of service that should be provided or what it expected these would cost. The Department added that “the Government are certainly not including as part of their approach at the moment some kind of state-of-the-nation oversight or comprehensive performance assessment-style assessment of local government services in the round.”
17.The Local Government Association estimates that the funding gap facing councils in 2019-20 is approximately £3.2 billion. In its analysis, it highlighted that this funding gap meant that there was a continuing threat to “other services our communities rely on, including libraries, cleaning streets and maintaining park spaces.” We asked the Department what use it made of the LGA’s work, whether the Department disagrees with the LGA’s assessment, and if not, how that assessment could be reconciled with the Department’s claims about the sector’s sustainability. The Department told us that it was committed to listening to the views of local government, but the extent to which it would use the work of other organisations would depend on the reasons for any differences from the Department’s figures. It explained that its understanding was that the LGA’s methodology to estimate the funding gap facing local councils was very similar to its own and included analysis of individual service levels and their cost
18.The Department told us that it did not dispute the LGA’s estimate, but that there were a range of reasons why the two estimates were different, including difference in the time periods covered, expected service demand and the data sources used. The Department told us that the LGA’s assessments “look much further into the future” than the current spending review period. However we noted that the Department has made, and the LGA has published, assessments that run to 2019-20. The Department similarly asserted that the LGA may have used some different assumptions to project changes in service demand and service costs. It told us that it used publicly available data on inflation and productivity when preparing its analysis ahead of the spending review in 2015, and similarly used publicly available data on population. It also told us that it also used departmental data on households, which is now publicly available, as well as data released by different departments. The Department of Health and Social Care releases data on adult social care pressures. DEFRA releases data on waste projections, and DFT does the same for roads. The LGA’s list of its sources for the estimates it produced at the same time include very similar information. The Department has previously explained that where formal projections did not exist, it had used a combination of “population and other projections, policy judgments, and bespoke analysis to develop an understanding of future demand.” Its final explanation regarding the differences in the estimates was that the LGA may have different views about the level of services that local authorities should provide which it considered to be a policy decision.
26 Qq 2, 65
27 Qq 43, 57, 70. , 19 December 2018
28 Public Accounts Committee, , Fiftieth Report of Session 2017-19, HC 970, July 2018, conclusion 4
29 Comptroller and Auditor General, , Session 2017-19, HC 1868, January 2019, Figure 4
30 Qq 66-67, 70, , 19 December 2018
31 Q 88, Comptroller and Auditor General, , Session 2017–19, HC 834, March 2018, Figure 10
32 Q 82
33 Qq 44-56
34 Qq 72-75
35 Qq 38, 42
36 Qq 74, 88
38 Qq 3-4, 98, 103-104
39 Qq 100, 103-104, (LGS0002)
40 Qq 88, 100-101
41 Local Government Association, , Local Government Association, June 2015
Published: 6 February 2019