Council social care budgets already under pressure this yea

Councils' social care budgets in England are already under pressure this year, an analysis of government data has found.

The Local Government Association (LGA) said that demand and cost increases were outstripping resource again, on the back of three years of significant overspends on both adults' and children's services.

It issued the warning in a submission to the government, ahead of its Budget on 26 November, in which it called for significant additional investment in social care to stave off financial failure and reform provision to boost productivity and efficiency.

Three years of overspends on social care budgets

From 2022-23 to 2024-25, councils overspent their children's social care budgets by an average of 14.2% per year, found the LGA's analysis of Ministry of Housing, Communities and Local Government (MHCLG) data on authorities' planned and actual expenditure over those years.

Over the same period, authorities breached their planned limits for adult social care spending by 5.2%.

The LGA's analysis found that councils had planned to increase adult social care spending by 9% (6.2% in real terms) and children's social care expenditure by 10% (7% in real terms) this year, compared with the amounts they had budgeted for in 2024-25.

2025-26 budgets already under strain

However, despite these increases, the LGA said that budgets were already under strain, based on MHCLG data for the first quarter of 2025-26 (April to June).

Councils spent £3.912bn on children's social care in the first quarter, equivalent to £15.65bn over the course of the year, against a budget of £15.55bn. Over the same time, they spent £6.711bn on adult social care, equivalent to £26.84bn over the year, against a budget of £26.7bn.

In their submission to chancellor Rachel Reeves, LGA leaders from across the political spectrum said: "Overall, this demonstrates that demand and cost increases are outstripping councils’ available resources.

"Consequently, councils balance their books through measures such as in-year cuts to discretionary service areas and/or drawing on their diminishing reserves. This is not financially sustainable."

Concerns over government bailouts of councils

The LGA also raised concerns about the number of councils requiring "exceptional financial support" from the government this year to help them meet their legal duties to set a balanced budget. Under this, they will be able to borrow or use receipts from the sale of assets to fund day-to-day expenditure; typically, these may only be used to fund capital projects, such as new buildings or infrastructure

Of the 153 councils with social services responsibilities, 26 - one in six - were offered EFS this year, said the LGA.

"The use of borrowing or the application of capital receipts have become normalised as a means for funding councils’ day-to-day spend on vital services such as children’s social care," the association's leaders told Reeves. "This is clearly not a sustainable financial model."

Pressures have impacted on council staff pay

The submission also highlighted the knock-on effects of the funding pressures on the workforce, with most staff in England receiving a 3.2% pay rise this year, below that given to counterparts in the rest of the public sector.

"Lower pay increases undermine the sector’s competitiveness in the labour market leading to recruitment and retention issues," said LGA leaders.

This is in the context of successive LGA reports revealing that social work is the role councils struggle most to recruit to and retain.

With the government having already published its spending review, which set out expenditure plans from 2026-29, the Budget is expected to focus on taxation and the economy, though Reeves has suggested that she may have to announce spending cuts to deal with pressures on the public finances.

Reeves urged to boost social care spending

Nevertheless, the LGA called on her to announce significantly increased investment in local authorities, to help the government meet its policy objectives, but also to address the financial pressures facing the sector.

Though it did not specify a figure, it urged the government to "ensure that all councils receive sufficient funding to invest long-term into family help, child protection, child in care and care leaver services".

The government has provided authorities with £523.5m over each of the next four years to deliver reforms to children's social care, which will be supported by a further £555m from 2025-28, most of whose allocation is yet to be determined.

However, the LGA's call implies that it feels more needs to be provided.

Call to boost investment in prevention, AI and tech

On adult social care, it said authorities needed "an immediate injection of funding" to stabilise the system and make progress on government objectives including speeding up hospital discharge, to free up NHS capacity, and supporting the care workforce.

In relation to the latter, it said ministers needed to fully fund the the first adult social care fair pay agreement, due in 2028-29, for which the government has allocated £500m, which is widely seen as inadequate by sector leaders.

It also urged investment in schemes to test and evaluate adult social care prevention initiatives, technology-enabled care and artificial intelligence. The LGA said the latter could be used boost the efficiency of the adult social care system, improve customer service, for example through chatbots, and enhance data analytics to support prevention, for example, in relation to preventing falls.

"It is imperative that funding matches the sector’s need for support," LGA leaders told Reeves. "Continued grant funding, plus pay and price inflation - at a very minimum - is required to respond to the ongoing needs for improvement support identified in the sector."