Lewisham Council is expected to exceed its budget by £12.9m this year – more than any other London borough except Newham.
Social care costs, in particular for looked-after children, make up most of Lewisham’s unplanned spending. For the fourth consecutive year the council will be forced to dip into its reserves to balance its books.
It was among the 10 councils in the country that most exceeded their children’s social care budget, figures researched by the Bureau of Investigative Journalism (TBIJ) show.
Lewisham’s children’s services directorate will be a predicted £7.7m over budget by the end of the financial year. Several other London authorities also feature in the top 10, suggesting that pressures on child social care costs are particularly acute in London. (However it was a council outside the capital – in Somerset – that was most over budget for child care costs at £14.7m).
This year’s total overspend in Lewisham is set to be more than £3m more than last year’s, which stood at £9.8m (£7m after contingency funds were applied). Adult social care services are set to be £1.5m in the red, while other costs cited include the delayed start to the fortnightly bin service, and a growing population leading to pressure on housing.
Of the £12.9m, £7m was attributed to savings that were not made. For context, £153m savings have been made since 2010/11 out of £160m planned.
In Newham, which is the only council set to overspend by more than Lewisham, managers have been instructed to exercise “strict financial controls on non-critical business”. On the other side of the city in Ealing, where the overspend is forecast slightly lower (£12.3m) than Lewisham’s, a spending freeze is now in place.
Of the London boroughs, 26 (81 per cent) are forecast to exceed their budget this financial year, with just six underspending [see table at bottom].
“Local government in general has been brutally hit by the Government’s failed policy of austerity, and councils with higher social need relative to others, like Lewisham, especially hard,” Kevin Bonavia, Lewisham’s cabinet member for resources, wrote in an email to Lewisham Lately.
“Budget setting has been very difficult for several years now and is only getting harder with no end yet in sight of cuts in government funding.”
Child social care: Staff cuts and “unachieved savings”
This will be the third consecutive year that Lewisham council has gone well beyond its child social care budget. Staff levels were cut as part of budget saving proposals in 2015/16 and services were “realigned”.
The following year, however, savings did not materialise. A critical Ofsted inspection of the council’s children’s social care service in October 2015 diverted more funds in response to the report’s recommendations, which singled out falling standards in early care and protection.
Of the 10 local authorities most over budget for children’s services, nine had received critical Ofsted reports, TBIJ reports.
Bonavia highlighted additional investments of £1.4m in 2017/18 and £2.5m earmarked for 2018/19 to improve the children’s care service.
“In respect of the Children Social Care budget overspend, these have in part been driven by unachieved savings,” he said.
“This does not make it wrong to have tried these reductions. We monitor how the implementation goes and if delayed or falling short or with unintended consequences we stop and review.”
The astonishing cost of looking after vulnerable children
As with many other councils, there are huge pressures on the duty to look after vulnerable children – and this is the single biggest factor in this year’s forecast overspend [by £2.3m] – although salaries and wages going £1.5m over budget was not far behind. Some of the associated costs are eye-opening as is apparent from the table below, taken from the public reports pack of the February budget meeting. Note the £3,707 per week for residential care, required for 41 children as of October last year.
If that residential care – sometimes fixed on councils by court order – is required year round then costs for just 41 children would be pushing £9m a year. The number of looked-after Lewisham children placed in expensive residential care – none of which is based in the borough – has risen from 33 since 2015/6. A shortage of local foster parents also means Lewisham authority relies heavily on more expensive foster agencies.
The bleak national picture
Bonavia pointed out the pressure on the borough’s resources is not unique: “Lewisham’s position of using reserves to cover overspending on social care puts us in the same position as two thirds of social care authorities nationally,” he wrote.
Many councils across the country have struggled to make ends meet for their social care obligations. Last year the Local Government Authority warned that children’s social care was at breaking point.
National Audit Office warning
A report released by the National Audit Office this month highlighted exactly how much more local authorities are concentrating on “frontline” services compared to 2010. This year, councils are spending around 54 per cent on average on social care compared to 46 in 2010/11 in London boroughs.
Much less is now being spent on so-called “non-essential” services such as libraries and culture, it said.
Crucially, the report by the National Audit Office warned that, for as many as one in 10 councils, reserves will run out in the next three years if spending continues at the same rate.
“The financial position of the sector has worsened markedly, particularly for authorities with social care responsibilities,” the report noted, stressing that it had “identified signs of real financial pressure” due to reduced funding and higher demand. It warned that the trends were not “financially sustainable”.
So, is Lewisham Council about to call in the receivers?
In a nutshell, no – at least not for now. While the situation has reached critical levels for several councils, Lewisham is not among the 10 per cent at short term risk of running out of money cited in the National Audit Office report.
Despite this year’s overspending, general fund reserves stand at around £13 million and earmarked reserves are close to £150 million. The latest audit report described the Council as having “a robust balance sheet” and that the “overall level of reserves is sufficient to mitigate short term risks and challenge.”
The same report did sound a slightly critical note about the council’s value for money (although not quite as critical as the leader of Bromley Council recently.
“Spending per head of population is slightly higher than, but not significantly out of line with statistically similar councils” it noted. [Read the latest audit report here].
So, what next?
In the short term, we will pay more council tax, as most residents now know. Again the letter and accompanying bill from the outgoing mayor, Sir Steve Bullock, did not miss the opportunity to highlight “massive cuts in Government funding since 2010”.
The increase will raise funds to spend on social care through the 1 per cent adult care precept (in addition to a 2.99 per cent rise). But that won’t be enough to plug the gap. Even with the rise, next year’s budget is predicated on spending more than £17m of the council’s reserves, compared to £5m last year.
In the meantime, another report out this month called for change. This time it was the measured tones of the Institute of Fiscal Studies in a publication focussing on adult social care, which warned that revenues from business rates and council tax were “highly unlikely to keep pace” with demand.
“There is no easy way to square this circle without backtracking on reforms to local government finance and reintroducing general grant funding,” the report concluded.
London boroughs by budget overspend
Lewisham Lately dug out the figures for 32 London boroughs which can be seen in the figures below. The statistics come with caveats. The figures listed are not final – and in fact, are likely to drop as councils tighten their belts in the final part of the financial year. All councils report differently, so we cannot absolutely guarantee the accuracy – although figures were checked twice prior to publication, and we have linked to relevant documents where possible.
And no, we can’t work out why Kensington and Chelsea’s finances are like that either in the year of the devastating Grenfell fire.
London councils and budget overspends (forecast in March 2018)
Newham: 13.7m The evidence
Lewisham: 12.9m The evidence
Ealing: 12.3m The evidence
Greenwich: 12m The evidence
Hounslow: £7.1m The evidence
Barnet: 4.6m The evidence
Bexley: 2.2m The evidence
Westminster: £6.8m The evidence
Haringey 6.6m The evidence
Hammersmith & Fulham: £6.4m The evidence
Barking and Dagenham: £6.23m The evidence
Islington: 6.2m The evidence
Lambeth: £6m The evidence
Southwark: 5.869m The evidence
Croydon: £5.861m The evidence
Hackney: £5.6m The evidence
Havering: £4.367m The evidence
Enfield: 3.8m The evidence
Sutton: £2.551m The evidence
Kingston Upon Thames: £2.5m. The evidence
Redbridge: £2.1m The evidence
Camden: £1.3m The evidence
Merton: 0.6m The evidence
Brent: £0.3m The evidence
Bromley: 0.221m The evidence
Waltham Forest: -£659,000The evidence
Hillingdon: -1.1m The evidence
Tower Hamlets: -£1.5mThe evidence
Harrow: -£1.648m The evidence
Richmond: -1.973m The evidence
Kensington and Chelsea: -£31.573m. The evidence
*Wandsworth Council’s reporting was so opaque we couldn’t work it out, so no link. This statistic was supplied by the press office.
- Any thoughts or insights on the story above or Lewisham Council spending in general, please leave a comment below or email directly at firstname.lastname@example.org.