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How council funding impacts public health

While focus often falls on the NHS, cuts to local authority budgets have had serious consequences for the UK's healthcare systems.

By Gwen Nightingale and Katherine Merrifield

Conversations about health often turn to the NHS, but, if you step back and look at what makes and keeps people healthy, it is actually things like high-quality and affordable housing, access to safe, green spaces, a good education and employment. Local government is critical to delivering these building blocks of health. But the essential role that councils play in enabling people to live long and healthy lives is not reflected in their current budgets.

Councils have a challenging 2024 ahead of them, and balancing the books is at the forefront of many minds. A significant reduction in council spending power since 2010, soaring inflation rates and an increased demand for services create a perfect storm. Since 2018, 11 section 114 notices have been issued by English councils who are unable to balance the books, and many more local authorities predict this will be necessary in the next 18 months. The result is that many councils are struggling to deliver statutory services, let alone invest in the building blocks needed to support good health. Last month, alongside additional funds, government announced the creation of an expert panel to look into financial sustainability in the sector. This could be a positive step, but only if the panel is given permission to consider the amount of money local government needs and how any government funds are allocated to local areas.

Recent research by the Institute for Fiscal Studies (IFS), funded by the Health Foundation, shows that local authorities are not being allocated funding for public services in line with the needs of their areas. The IFS research looked at funding across five key public services: the NHS, schools, local government, the police and public health. These services are all critical to ensuring the health and well-being of local communities.

Any funding system should be aligned with need, reflecting the fact that some areas have more challenging situations. Some will need a higher proportion of funds to improve well-being and outcomes than others. But the IFS research found that the relationship between funding and need is breaking down, meaning deprived areas are not getting the level of funding they need to address the specific needs of their communities.

The relationship between funding and need remains relatively strong for both NHS funding, where there is a specific top-up to address health inequalities, and also for the public health grant, which has a strong link to deprivation. But this is not the case for local government, where there is less of a focus on providing additional financial support for deprived areas: the most deprived fifth of areas receive on average 9 per cent less local government funding (£92 per person) than their share of needs. In contrast, the least-deprived fifth of areas received on average 15 per cent (£108 per person) more local government funding than their share of needs. And in 2022-23, a quarter of all upper-tier local authorities were receiving at least 10 per cent less funding than they would have been if the funding was in proportion to their updated estimated needs. This is a significant amount that could enable authorities to have the financial resilience needed to retain valuable non-statutory services that contribute to people’s health.

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Well-funded local government could play a transformative role in improving health, but to achieve this, reform is needed so that local areas are able to invest in the building blocks that create healthy, thriving communities. Alongside a restoration of adequate grants, the relationship between funding and need must also be restored. Action now would not only address inequalities, but prevent further costs down the line.

[See also: English councils are facing an “out of control” financial crisis]

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