£1.6million grant for adult social care and children's services in Luton as council faces demand pressure

A ring-fenced government grant of more than £1.6m is Luton Borough Council’s share of an extra £500m nationally for local authorities to spend on social care, a meeting heard.

The money is to be divided equally between the local authority’s children’s services and adult social care, according to a report to its executive committee.

Adjustments have been made to LBC’s budget presented to the executive last month to reflect the extra grant, explained the report.

The core council tax threshold has increased from 1.99 per cent to 2.99 per cent, and the adult social care precept will be two per cent in 2024/25.

“LBC’s social care budget has been increased to finance additional pressures emerging through quarter three monitoring, with higher figures than for quarter two,” warned the report.

“The national and global economy is highly influenced by the financial impact of the pandemic, the slowing down of the economy, the cost of living crisis, high inflation and a rise in interest rates.

“These factors have had a huge impact on the financial position of LBC in particular. That continues in 2024/25, as the economy is forecast to grow slowly over the short- to medium-term.

“This has led to increases in demand for key services and caused delays in full delivery of the council’s deficit recovery plan. It means LBC has a potential core budget deficit of about £11m for the year 2023/24.

“The 2024/25 budget could only be balanced by factoring in £5.3m of deficit recovery plan. Delivery of this plan and transformation programme savings will be pivotal to setting a balanced and sustainable budget over the medium-term.

“The provisional 2024/25 financial settlement from central government doesn’t provide enough funding to meet the severe cost and demand pressures to which Luton is subject.

“While government claims core funding for councils will increase by 6.5 per cent in 2024/25, that only accounts for a small proportion of LBC’s net revenue budget.

“This means LBC has no option other than to increase council tax by the maximum permitted percentage, without a referendum, to safeguard essential services,” added the report.

“Councils in England continue to face a funding gap of £4bn as suggested by the Local Government Association and the provisional settlement does little to bridge that gap.”

Luton’s provisional new homes bonus settlement for the next financial year is £490,000, compared to £261,000 in 2023/24. But 2024/25 is expected to be the last year of this grant.

Labour Northwell councillor and finance portfolio holder Rob Roche said: “There was a late announcement of an extra grant, with Luton’s share being £1.64m to cover the significant budget pressures in social care.

“The latest quarter three position in the current budget (2023/24) is showing additional pressures in children’s services, including transport, and in adult social care.

“To deal with that increased demand cost, the grant has been fully allocated to children’s and adult services amounting to £820,000 for each.

“This has no impact on the proposed council tax increase or the net budget requirement of £157.4m, which remains unchanged.”

The committee agreed to recommend the revenue and capital budget to full council on Monday, February 19.