Michael Burton 14 July 2020

OBR issues warning on soaring care and council costs

OBR issues warning on soaring care and council costs image

Soaring costs for adult social care along with indebted local authorities struggling to balance their budgets post-virus are among the key risks to the Government's spending plans warns the Office for Budget Responsibility (OBR) today.

Its latest analysis of the public finances the OBR predicts a deficit of between 13%-21% this year with total public sector debt hitting 100% before the deficit returns to between 2.2%-6.8% by 2024.

However, its Fiscal Sustainability report warns that among the risks to its spending projections is long-delayed but unspecified investment in the care sector including higher pay.

It adds: ‘Adult social care represents a source of fiscal risk, with demographic and other cost pressures raising demands for spending and governments announcing periodic top-ups to strained budgets. The funding system itself is a source of fiscal uncertainty as governments have recognised that reform is necessary but have been unwilling to decide how.’

The OBR also warns that ‘local authorities’ finances could come under greater pressure than we have assumed, leaving them unable to meet statutory obligations without additional funding from central government.’

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