By Will Carruthers, Principal Consultant, 31ten

It’s budget season within local government, which means another round of difficult financial choices for senior leaders. Savings targets increase, budgets are scrutinised and councils face the increasingly difficult task of balancing statutory responsibilities with the resources available to meet them.

The numbers are sobering. English councils spent £144.4bn on services in 2025/26, according to the latest government figures – £5.6bn more in real terms than the previous year. The Local Government Association found that, between 2022/23 and 2024/25, councils overspent their children’s social care budgets by an average of 14.2% annually, and homelessness budgets by 51.9%.

In this blog, Will Carruthers, our Principal Consultant, discusses the importance of knowing the detail behind your spend, in order to make the best-informed decisions, and what best-practice spend analysis looks like.

Spend trends

And the pressures continue to grow – at 31ten, our own modelling suggests that, if recent trends persist, the combined annual cost of children’s social care, adult social care, SEND and temporary accommodation could almost triple by 2040. This is a scenario rather than a forecast, but it illustrates the scale of the challenge.

Councils know that expenditure is rising and officers grapple with these pressures every day, often in exceptionally difficult circumstances. But with spending spread across hundreds of services, thousands of suppliers and an intricate web of contracts and statutory obligations, establishing precisely what drives costs, and where there is genuine scope to influence them, is an increasingly complex task.

Using spend analysis to make better choices

At 31ten, we’ve recently worked with a Council to systematically analyse more than 300,000 transactions covering over £600m of local authority expenditure. The work has reinforced just how much can be learnt by examining the relationships between spending, service demand, suppliers and contractual arrangements. It identified 12 savings opportunities to develop further. It also showed that around a third of spend was pass-through, with few levers available, while demand-led placements were the largest area the council could quickly influence to drive savings.

In children’s social care, rising expenditure is often attributed to growing demand or inflation, both of which are significant pressures. But our analysis also highlighted the importance of changes in the type of provision being purchased, the balance between in-house and external services, and the way spending is distributed across provider markets. These distinctions matter – a council facing higher prices for existing provision has a different set of choices from one increasingly reliant on more expensive forms of care.

Understanding those differences opens up more useful questions about commissioning, market influence and investment in alternative provision. Testing the findings with the people delivering and commissioning services helps establish which opportunities are realistic, and which pressures councils have limited power to change.

There are rarely simple answers, particularly where vulnerable people and families are concerned. But the more precisely councils can identify what is driving their costs, the better placed they are to make informed decisions about where to act.

Understand what’s driving your costs

Our experience suggests councils need to get much more systematic about four things:

1. Understanding what drives expenditure – separate demand-led, contractual and discretionary costs, so savings efforts concentrate where there is genuine scope to intervene.
2. Seeing the whole picture – bring together financial transactions, suppliers, contracts, and service activity to expose patterns that individual systems and directorates can obscure.
3. Identifying where to act – examine supplier concentration, unit costs, contract commitments, and purchasing behaviour to prioritise credible financial improvement opportunities.
4. Knowing whether it’s working – refresh the analysis regularly to establish whether interventions are reducing costs, containing growth or simply shifting expenditure elsewhere.

Make good use of the data you have

This is increasingly where we’re concentrating our work at 31ten, helping councils make better use of the financial and commercial information they already hold, and turning it into a clearer picture of where costs can be influenced.

Our recent analysis has reinforced just how much can be learnt by examining expenditure in this way, and how much potential there is to make that intelligence a more regular part of financial management.

The pressures facing councils will not ease simply because they understand their spending better. But a more detailed, consistent picture of where money goes, why it goes there, and what can be changed offers a stronger basis for making difficult decisions and making them early enough to matter.

Get in touch

Our third party spend diagnostic reviews every transaction in your ledger, matches spend to suppliers and contracts, and translates the findings into quantifiable, credible savings opportunities, each tested with your services and scored for deliverability.

To find out what a diagnostic could reveal for your council, contact Will Carruthers using the details below.