Birmingham is to receive additional funds to cope with its fast-growing elderly population despite the unprecedented scale of public spending cuts, it has emerged.

The Government has promised significant grants to help the city meet the soaring costs of care.

But the exact amount of cash on the table is yet to be identified and council social services cabinet member Sue Anderson said she would not “open the Champagne” until the scale of additional funding became clear.

Coun Anderson (Lib Dem, Sheldon) said she had held positive discussions with ministers and had been assured that “additional money will be coming our way”.

The council believes it will have to find almost £300 million more over the next decade to meet growing demand for social services, not just from an ageing population living far longer but also from an increase in the number of adults with learning disabilities. Some of the extra money will be allocated to Birmingham’s primary care health trusts but with conditions attached to ensure that it is to provide care packages for elderly people leaving hospital.

Coun Anderson added: “We have had very solid assurances in public that additional money will be coming forward.”

The prospect of a financial lifeline came as the cabinet agreed to continue rolling out a programme of personal budgets for social services customers.

The change is based on assessing individual need, allocating an annual budget per person, and allowing people to choose the services they wish the money to be spent on.

Applicants will be helped to decide the best way to use the money to improve quality of life and independence, often by buying services from the voluntary and private sectors rather than relying on the council.

About a quarter of the council’s social services clients already have personal budgets, and all clients will be assessed over the next two years.

One important aim is to pass much of the cost of service provision from the council to voluntary and not-for-profit bodies.

But the ability of such organisations to meet demand in a city the size of Birmingham is being questioned.

There are also fears that a small number of private providers could join together, dominate the market and force up prices.

Coun Anderson is talking to an external provider about commissioning 500 personal assistants to help elderly and disabled people with everyday tasks.

She admitted that many people would need help to understand the range of private and voluntary sector services available.

The only alternative to a system of personal budgets would be to “throw a sackful of money” at social services, she said. But even with some additional Government funding, the council will not have enough money to keep pace with demand.

By 2017-18 the number of nursing and residential care places required in the city is expected to rise by 14 per cent, while requests for services by people with learning disabilities will have risen by 17 per cent.

Sir Albert Bore, leader of the council’s opposition Labour group, supports the move to individual budgets but has doubts about the ability of the private and voluntary sector to deliver.

Coun Len Clark (Con Quinton), executive member for social care, pointed out that non-council provision of social services is already extensive.