The head of Birmingham social services has urged the government to encourage an “honest debate” about the mounting financial crisis councils face in attempting to care for a rapidly growing elderly population.

Peter Hay was speaking at a cabinet meeting where members decided to phase out council provision of meals on wheels over the next three years.

From April 2010, existing customers will receive daily hot meals from an external provider to be appointed by the council.

People who currently receive frozen meals, which they heat in a microwave oven, will be directed to a range of independent or voluntary providers.

The decision reflects the mounting cost to the council of providing meals, with £7.8 million needed to bring the service up to a decent standard.

Birmingham is one of few councils in England still to run its own meals service – most other local authorities have long since switched to independent or voluntary sector providers.

Mr Hay, the strategic director for adults and communities, said research by the London School of Economics demonstrated that it would be impossible for the council to continue to afford in the long-term to directly serve a population which was “growing old and is poorer and sicker than the national average”.

He added: “This is not about clawing back money, it is about trying to make the best use of available resources.

“It is about seeing clearly like many other councils that we can deliver services that provide better quality at potentially less cost. We would then have the money to reinvest in growing demand for social care.”

He said councils were failing to win “the publicity argument” about the financial strains facing social services departments.

“The Government should encourage public debate about how we meet the growing demand. We need an honest debate,” he added.

Claims by Labour that the change was poorly thought through and failed to recognise how difficult it would be to recruit sufficient independent providers of high quality in a city the size of Birmingham were rejected by the cabinet.

Deputy council leader Paul Tilsley (Lib Dem, Sheldon) said: “We have two years in which to develop pilots to meet different local needs.

“No current recipient of meals on wheels will be deprived of that particular service.”