New analysis has revealed that councils across England are spending an average of 78% of their council tax and general funds income on adult and children's social care services. The figures, published by the Chartered Institute of Public Finance and Accountancy (CIPFA), highlight the immense pressure on local authority finances as demand for essential care continues to escalate.
Measuring the Social Care Burden
The CIPFA analysis uses a specific financial measure known as net revenue expenditure (NRE). This metric excludes fees, charges, or grants that councils receive for specific services that residents pay for directly. By focusing on NRE, the report reveals the true extent to which social care costs are consuming the discretionary funds available to local governments.
This heavy allocation to social care significantly reduces the ability of councils to reallocate non-fee money to other vital local priorities. Services such as libraries, parks, road maintenance, and community initiatives are increasingly squeezed as financial resources are diverted to meet statutory care obligations.
Disparities Between Authority Types
The burden of social care spending is not evenly distributed across different types of local authorities. The report finds that county councils are spending the highest proportion of their NRE on social care, with a staggering 86% allocated in the 2024/25 financial year.
This contrasts sharply with London boroughs, where the figure stands at 72%. The variation underscores the different demographic and economic pressures faced by councils in rural counties compared to those in the capital, though all are grappling with rising demand.
Special Educational Needs Deficits Reach Crisis Levels
The CIPFA report also delivers a stark warning about the financial crisis surrounding special educational needs and disability (SEND) provision. It finds that SEND-related deficits have reached new records and are, on average, a remarkable twenty times the size of councils' unallocated financial reserves.
Demand for, and spending on, high-needs provision has consistently outpaced the dedicated schools grant funding provided by central government. This mismatch has led to what the institute describes as "significant deficits" which are "causing significant financial stability issues" for local authorities.
Last year, some of England's largest councils warned that the escalating cost of supporting children with SEND could push several local authorities to the brink of bankruptcy within just a few years. The institute states plainly: "The scale of the problem is overwhelming."
Drawing on reserves or similar short-term fixes will not be sufficient to resolve the deficit. It demands a strategic, long-term policy response to protect special education needs services and ensure financial sustainability.
In response to this growing crisis, CIPFA has called on the government to publish "comprehensive SEND reform as soon as possible" to address the systemic funding shortfall and ensure vulnerable children receive the support they need.
Homelessness Spending Hits Record Highs
Adding to the financial pressures, the report warns that the financial risk linked to homelessness is increasing across England. This problem disproportionately affects London boroughs and non-metropolitan districts, placing further strain on their already stretched budgets.
The ratio of homelessness spending in these areas hit a record high of 11% of NRE in 2024/25. This is a stark contrast to metropolitan districts and unitary authorities, where the figures were just 2% and 3% respectively. The disparity highlights the acute housing crisis in certain regions and its direct impact on council finances.
A Call for Financial Resilience and Innovation
The report concludes that in the 2024/25 financial year, English local authorities faced intensifying financial pressures. Demand-driven costs and accumulated deficits have further eroded already stretched budgets, fundamentally undermining financial resilience.
It urges councils to critically examine their financial resilience by considering local context, including:
- Demand trends for key services
- Reserves strategy and management
- Asset profile and potential for optimisation
- Capacity to pursue innovative approaches to delivering on local priorities
The analysis presents a clear picture of a local government finance system under extreme duress, with social care costs dominating budgets and threatening the viability of other essential public services.
