1 week Ago
It’s worth reminding you at this point of the difference between devolution and local government reorganisation. Devolution is the passing of powers from Westminster to Hampshire and the Solent, enabling us to decide matters currently dictated by central Government more locally. Local government reorganisation is the amalgamation of existing councils into bigger single units that carry out all the functions currently shared between the Borough, District, and City Councils and the County Council.
The financial challenges faced by all councils, but most particularly by the County Council, are very much front and centre of everyone’s thinking. Let me give you an example from this year of the kind of challenges we face. Hampshire County Council increased its share of council tax by 5 per cent on April 1.
Each one percent of council tax in Hampshire nets £8.2 million in additional income for the county council. So a 5 per cent increase resulted in additional income of £41 million.
Not much when set against an overall budget of £3.1 billion. The ever-increasing pressures on social care are at the heart of the financial challenge we face.
This is no better indicated than when we think about the number of people who are reliant upon the County Council to pay their care home costs. Currently, the net number of care home residents for whom the County Council picks up the cost of their care increases by 30 per month. That’s an additional 360 people this year.
The County Council has a tariff system with care home providers, which enables us to negotiate beneficial rates due to the significant proportion of the market for which we pay. The minimum rate at which the county council agrees on this tariff is £1000 per week. So, if we need to pay for an additional 360 people this year who join the many thousands for whom we pick up care home costs, and each of these people is on the minimum tariff, then the equation is 360 times £52,000, which equals £18.
7 million in additional costs this year. So, almost half the increase in income from council tax is taken up by those additional 360 care home residents. This is before we consider any other cost pressures; the ever-increasing number of children requiring support for their Special Educational Needs, increasing wage costs, Employer's National Insurance, and inflationary pressures.
Employers' National Insurance looms large as a challenge when we consider the future. The increased taxes levied by the Chancellor in October are forcing care home providers to increase their charges to those who currently self-fund their care. The consequence of this is that they use up their own resources more quickly, resulting in the County Council having to commence payment for even more care home residents in the future.
Indeed, our estimation is that by this time next year, the net number of those for whom we meet their care home costs will have increased to 40 additional people per month. It is this background that drives my thinking around local government reorganisation. To my mind, there is little point in creating new councils that are not financially stable, are not able to produce sustainable budgets, and most importantly, are not financially resilient enough to withstand the financial shocks which so often come about as a consequence of holding responsibility for adults’ and children’s social care.
All we will otherwise do is condemn the new Councils to the same kind of challenges that both Hampshire and Southampton have faced in recent years. That will be a disservice to all our residents, regardless of the boundaries eventually agreed..
