Adult social care funding to rise by 2020, claims Osborne

But sector leaders say not all councils will be able to take advantage of a new 2% council tax levy to fund social care

George Osborne delivered the spending review on 25 November (Photo: Tolga Akmen/LNP/Rex Shutterstock)

Adult social care spending will rise in real terms by the end of this parliament, George Osborne has claimed in his autumn statement today.

But other services are set to suffer as overall local government funding is due to fall over the next five years.

The chancellor said local authorities would be able to levy new funds of up to 2% on council tax each year, provided this was ring-fenced to be spent on adult social care.

£2bn in the care system

He told the House of Commons that if authorities made full use of this power it would bring almost £2bn into the care system annually by 2019-20. The Local Government Association subsequently calculated that the reform would bring in £1.7bn by 2019-20.

On top of this, the government spending review committed an extra £1.5bn a year to the Better Care Fund by 2020, which local authorities will be able to access from 2017-18.

However, even with the additional money for adult social care, local government revenues are set to fall by 6.7% in real terms by 2019-20. While adult social care will be protected by its ring-fenced funds, this means other services, including children’s social care, will suffer.

Is the money enough?

On the government’s figures, the council tax rises and the Better Care Fund money would deliver an extra £3.5bn a year for adult social care by 2019-20. This is more than the £2.9bn that the Local Government Association and Association of Directors of Adult Social Services said would be necessary to meet the costs of rising demand, inflation and the new ‘national living wage’ which, from April 2016, will increase social care staff costs.

However, while both associations welcomed the money, Adass president Ray James warned that it would not be enough.

“Ministers must know that the proposals do not deliver sufficient funding to meet the growing number of older and disabled people requiring increasingly complex care and support and the Chancellor’s welcome announcement of the living wage,” he said.

He said the fact that the extra Better Care Fund money would not come in until 2017 raised serious concerns about how social care would be funded in the interim and warned that the projected revenues from council tax were “optimistic”.

Government costings assume that all councils will take up the 2% additional council tax rise for adult social care every year from 2016-17 to 2019-20 , but care provider leaders questioned whether this would actually happen.

United Kingdom Homecare Association campaigns director Colin Angel questioned on Twitter how many councils would take up the 2% levy, while Care England chief executive Martin Green said there was “no guarantee” that all councils would do so.

Poorest councils least able to take advantage

Social worker and practice improvement specialist Gerry Nosowska said the poorest councils most in need of extra funding would be least able to take advantage of the levy.

“This move from central funding, which is distributed based on where it is most needed, to a greater reliance on local revenue raising means those poorer councils where you have fewer people in employment and paying council tax will struggle to raise as much revenue as richer councils,” she said.

This was borne out by analysis by think-tank the Social Market Foundation and consultancy iMPOWER. iMPOWER calculated that a 2% council tax rise would be worth £1.8m next year per 100,000 population for Richmond, but just £662,000 per 100,000 population for its fellow west London borough Wandsworth.

The Social Market Foundation graph below shows the difference in council tax receipts per person aged over 65 between areas.

Source: Social Market Foundation

Source: Social Market Foundation

Nosowska added that poorer councils were likely to have higher demand for social services, a point made on Twitter by social care finance expert James Lloyd, of think-tank the Strategic Society Centre.

Regressive move

He said that rates of disability were typically higher in poorer areas and suggested that it was “a regressive move to rely more on local taxes”.

The spending review sets out how government money will be allocated from 2016-17 to 2019-20. Its key points were announced in the autumn statement, delivered by Osborne this afternoon.

Children’s services

No extra funding was announced for children’s services. The government committed to maintain in cash terms the Department for Education’s central children’s services budget at over £300m a year, though this will mean a real-terms cut.

Osborne pledged an additional £600m for mental health services including talking therapies, crisis care and peri-natal mental health services.

He also threw out controversial changes to tax credits which would have left 3.3m families £1,100 worse off.

British Association of Social Workers vice chair Maggie Mellon said this was good news for local authorities with high levels of poverty and demand for public services. The pressures on children’s social care arising from rising poverty were highlighted by an investigation published today by Community Care, which found that council spending on essential items for children in need rose by 20% under the coalition government.

She added social care staff were often on the minimum wage and were themselves reliant on tax credits.

Integration by 2020

Besides the funding announcements, the government also unveiled plans to integrate health and social care by 2020, with local areas coming up with a plan to do so by 2017, and the process driven in part by the Better Care Fund.

Ministers will not impose how integration will work locally but the spending review document suggested three ways in which it may work:

  • Accountable care organisations, an example of which is being formed in Northumberland, which involve a partnership of organisations being responsible for meeting health and social care needs locally.
  • Devolution deals, such as that in Greater Manchester, under which health and social care is joined up across a large urban areas.
  • Lead commissioning arrangements, under which all health and social care funding is brought under a single plan.

Cap on costs still in government’s sights

The government also said it remained committed to social care funding reforms that had been due to come into force in April 2016, but which were delayed earlier this year following concerns that councils would struggle to implement them.

As already announced, the government said the cap on care costs and more generous means-test for residential care would come into force in April 2020. The spending review document said that councils would be given money to prepare for this reform in 2019-20; it was not made clear whether this would be part of the additional money allocated to social care through the Better Care Fund in that year.

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One Response to Adult social care funding to rise by 2020, claims Osborne

  1. peter beresford November 25, 2015 at 9:23 pm #

    thanks for this brief and clear account of the implications of today’s Spending Review for social care. Not an encouraging prospect for a chronically underfunded and distressed field of policy