Cllr James Fredrickson is the Cabinet Member for Public Health on West Berkshire Council.
Let’s turn back the clock. Prior to the events of a windy morning on the 18th of April, the key political talking point wasn’t the trials and tribulations of a snap election. Rather, politicians and the media were grappling with how to fund the burgeoning demand for social care services. Whilst the March Budget’s offer of an extra £2bn was welcome news to local authorities around the country, this offered only a short term reprieve. The reality is that councils continue to face the responsibility of delivering social care, whilst grappling with reductions in their financial support from central government.
To put this into perspective, my own authority, West Berkshire Council, have faced central government funding being reduced from £33m in 2011 to £3.7m in 2017/18. This accounts for roughly one sixth of its overall revenue budget. Whilst the adult social care precept has lessened the impact of this reduction, the public ultimately pay more through council tax for increasingly stretched services. This story is reflected across much of the south of England. In Wokingham and Bracknell, reductions in central government funding have compelled authorities to take full (circa five per cent) council tax increases.
At the same time, the number of people over 65 as a proportion of the population is increasing year on year. In West Berkshire, the population of over 65s is expected to increase by 27 per cent over the next 10 years. This will only increase the demand for adult social care services that are already facing financial pressures.
It is no surprise then that councils are becoming increasingly creative in finding new ways of raising funds. Through their powers of General Competence, authorities are embracing the Government’s devolution agenda and looking to generate additional sources of income for themselves. From local lotteries, utility companies, community loans and rental and commercial property portfolios – councils across the country are generating income to protect, deliver and bolster their services. Many of which are funded through the Public Works Loans Board, a Treasury department designed to fund local government capital projects. According to the Sunday Times, this has amounted to £1.3 billion of loans in the last year alone.
Some have criticised this activity, claiming that PWLB loans have contributed to increased competition and ultimately an increase in land values.
However, when we look at the evidence, this doesn’t stack up.
As councils look to profit from the difference between the PWLB’s low rates and property yields, they can work to lower profit margins than conventional developers, making previously unviable land open for council projects.
Further, rather than developers holding land to inflate value, councils are more concerned with delivering housing and services. Through the PWLB they can then develop their own land into viable housing and infrastructure sites, thereby expanding the supply of land available for investment.
Even where councils are looking to purely generate rental yield, they are still governed by state aid rules, ensuring that they compete with the market fairly. Here revenue is increasingly derived from ‘safer’ investments, as councils tend to have a longer term view of delivering services, rather than short term risk taking.
Of course, councils must proceed with caution when looking to generate their own income and extra funding alone will not deliver the structural change that care delivery requires. However, necessity is the mother of invention. If councils can be empowered to take matters into their own hands, the government’s solution to the future of social care funding may well be staring them in the face.
Once the landscape clears on the 9th of June – councils will still be looking for a route to sustainable social care funding. If the PWLB door remains open, they may be on the right path.