How can councils protect health in the face of financial strain?  

By Jennie Leggat | 07 December 2023

Local government plays a critical role in shaping people’s health, because it has the power to design, deliver, and invest in the things that keep us healthy – the building blocks of health. But many local governments across England are currently struggling to provide and maintain some of these building blocks – things like decent housing, good education, access to transport and green spacesas their finances are under strain.

Overall spending power reduced by 10.2% between 2009/10 and 2021/22, driven largely by a 31% reduction in funding from central government. This has recently been compounded by soaring inflation rates driving up the costs of providing services, alongside increased service demand, particularly in adult social care and children’s services. The situation is particularly difficult for local authorities in deprived areas, where the amount of funding received strays furthest from population need.  

This financial strain has increased the risk of councils issuing Section 114 notices – ‘going bankrupt’. Both Birmingham City Council and Nottingham City Council have hit the headlines in recent months due to issuing such notices, but they were not the first to do so, and they’re unlikely to be the last. Since 2018, 11 such notices have been issued by English councils, and 83% of local authorities report facing funding gaps in 2024/25.

The sheer number of councils in this precarious position points to a fundamental flaw in the current system of local government funding. Despite this, central government has dragged its heels on reforms, meaning that many councils across England now need to embark on far-reaching savings exercises to balance their budgets, which may impact population health.

What does this mean for health?

Given that local government is key to ensuring that the building blocks of health are in place, many measures that could be taken to save money may be detrimental to the health and wellbeing of local communities, both in the short- and long-term. For example, closing day care centres for disabled people would have a significant impact on the health of service users and carers, due to increased isolation, reduced contact with health care professionals, and less opportunity for respite.

Closing museums, theatres, parks, libraries, and leisure centres may save money, but would erode community cohesion and pride, to the detriment of community wellbeing, and would remove spaces for people to be physically active and keep warm.

Cutting discretionary school transport to save money could have a negative impact on child health in rural areas. In particular, families with low incomes may be unable to fund alternatives, like travelling by car, and will find it harder to find funds for public transport, impacting school attendance and subsequent educational attainment. Longer journey times on public transport may also lead to reduced participation in extracurricular sports, reducing physical activity and social interaction.

For residents on the lowest incomes, paying more to travel to school or to access services is likely to place a strain on finances. This may be exacerbated by additional measures that councils may take to rectify finances, such as increasing council tax and cutting jobs. Together, this financial strain would both negatively impact the mental health of low-income households and increase their risk of falling into poverty, which would put them at twice the risk of poor health than those more affluent.

This risk of erosion of people’s health will not only be detrimental for affected individuals – limiting both quantity and quality of life – but will also further increase strain on council finances. This is in part because health and social care services will need to respond to ever-increasing demand occurring secondary to poor population health, but also because the council will miss out on the long-term economic returns that investments in the building blocks of health can have. For example, estimates suggest that, for every £1 invested in them, youth services deliver £6.40 overall return, public transport delivers £3.58, and vocational training returns £15.53, in part due to improved health outcomes.

Protecting people’s health

No council will take decisions to cut services lightly, but it’s clear that difficult decisions are needed to rectify financial shortfalls, many of which will negatively impact population health. However, given how vital good health is – not only for individuals, but for the economy – these impacts must be identified and minimised; this can be done using a Health Impact Assessment.

A Health Impact Assessment is a useful tool to systematically identify the implications of decisions on population health and health inequalities, and implement measures to mitigate them. Such tools have been shown to be effective across populations and policy areas. As such, we recommend that this assessment is used to evaluate major financial decisions made within local authorities. To do this, decision-makers can use the practical resources provided by the Wales Health Impact Assessment Support Unit alongside evidence for how each building block impacts health provided in the Health Foundation’s Evidence Hub. Doing this will allow council decision-makers to minimise the impacts of these difficult, unavoidable decisions on the people at the heart of the local communities that they serve, until such a time as the local government funding model is reformed to provide sufficient and sustainable funding.

Jennie Leggat is policy analyst at the Health Foundation

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Health Finance S114 Mental Health Poverty