Charity Age Scotland is calling for ‘serious reform’ of social care funding as Scotland’s public sector watchdog reveals that inflation compounded by increasing demand has left councils with a growing budget gap.

Responding to the Accounts Commission report into local authority finances which shows total spending is set to be greater than income across all of Scotland’s councils, the charity says councils and the Scottish government must ‘urgently’ work together to secure more funding for social care.

The Accounts Commission says inflation, increased wages and higher employer National Insurance contributions are key contributors to the growing budget gap.

It also says that ‘intensifying’ service demands, including those for social care as Scotland’s population ages, have led to the increased deficit.

Despite council funding set to increase, the Commission says action is needed now to reduce the shortfall, while councils work to better understand the impact of their financial decisions on marginalised populations.

Almost 23% of councils’ combined £18bn revenue budget will be spent on social care in 2025-26.

However, the arrangements through which councils designate this funding to the bodies responsible for service deliver – integration join boards (IJBs) – can cause problems when local authorities attempt to set budgets, identify saving and transform services. According to the commission.

Age Scotland chief executive Katherine Crawford said the Commission’s findings show “serious reform of the system” is needed:

“Fixing social care should be priority for local authorities and the Scottish government. The system is already close to breaking point and without substantial and long-term investment hundreds of thousands of the most vulnerable older people could be put at risk.

“It is not acceptable for one funding source to blame the other for the poor state of social care.

“Local authorities and the Scottish government need to work together now to invest in this service which, even with its current challenges, saves the NHS considerable sums of money by allowing older people to live in their own homes.

“Serious reform of the system needs to addressed as a matter of urgency. No amount of tinkering around the edges will deliver a national service that we can be proud of.”

This follows repeated calls for the scrapping of non-residential care charges, to ensure all those who need support can access it.

The Commission says the current ‘constrained’ financial situation means it’s more important than ever for councils to involve communities in decisions that impact local services.

Accounts Commission member Derek Yule said councils must provide clearer budget information and work with communities to reform services for the future:

“There’s a growing expectation gap. Councils don’t have enough money to meet current demand, at a time when local communities are being asked to contribute more through increases in council tax and charges for some services.

“With public finances tightening, however, not all cost increases faced by councils can be met by government funding.

“Local action is needed now to find solutions to immediate and future financial challenges.

“This means difficult decisions on what services can be delivered and making major changes in how they are delivered.”

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