Councils still in funding crisis despite welcome recognition for adults’ social care

When the Chancellor of the Exchequer, during one the most important events of the parliamentary calendar, pledges what looks like an extra £3.2bn a year to adult social care, the sector feels it has to preface any concerns by emphasising how welcome this recognition is.

Neglected sector

In a sector so long neglected, senior figures have rushed to emphasise their gratitude for even a settlement most agree remains a long way from resolving the funding pressures facing councils and providers.

The Autumn Statement gives councils a new ability to raise a 2% council tax ‘precept’, ring-fenced for adult social care, and pledges an additional £1.5bn to the Better Care Fund (BCF) by 2020.

The government says the council tax rise would raise almost £2bn if all councils take it up in full in each of the next four years, though think-tank the Institute for Fiscal Studies (IFS) has put the figure at £1.7bn. Unlike most of the existing money for the BCF, which is channelled through the NHS, the new money will go directly to councils

Embedding inequality

But critics are saying the settlement will embed inequality between areas and withhold urgently needed funding, potentially until the end of the decade. Meanwhile, concerns that adult social care will remain dangerously underfunded persist.

The government has said that, overall, funding for local authorities will fall by 6.7% from 2016-20, and this dip will be even sharper if councils do not obtain the full rise in council tax for adult care.

Regressive tax

Independent social care consultant John Bolton, formerly the Department of Health’s social care finance chief, says while any extra funding is welcome, the 2% precept is problematic.

“It is a regressive tax in the sense that the areas that have been hit hardest so far by a reduction in grant to local government are the areas with generally higher deprivation and the least ability to raise income through council tax.”

His concerns are borne out by figures put out by the IFS, which show that full take-up of the council tax precept would boost adult social care budgets by between 4% and 17%.

In addition, the government plans to phase out grants to local authorities and instead allow councils to keep 100% of their business rates. At the moment councils give half of their taxes from local business back the Treasury, from where it is redistributed according to need.

“If you keep your own business rates and there is no other redistribution mechanism then poorer areas are going to be disadvantaged. This is not an equitable solution for social care,” Bolton says.

Discretionary budgets

He adds government may still introduce special provisions to mitigate against the risk for councils in relying on business rates, but that remains to be seen.

James Lloyd, director of the Strategic Society Centre, says the 2% levy is “meaningless”.

“A 2% ring-fence that sits on top of a largely discretionary budget means councils will just spend any additional money they raise on social care, but may just reduce the money they would have spent on social care elsewhere.”

Bolton thinks in reality councils will have to take up the opportunity to levy more funds through council tax increases.

“Some will do it reluctantly, but they will need and want to raise money to protect their care services,” he says.

But adults’ services departments will still have to contribute to the overall reduction in council budgets.

Councils overspending

According to recent Association of Directors’ of Adults’ Social Services (Adass) figures, 76% of councils are currently overspending on their adults’ services budgets.

Lloyd says not only will authorities be able to raise comparatively less per head in poor areas through a council tax levy, but these areas are likely to have higher demand. He points out that there is a correlation between poorer areas and higher levels of disability, with local authorities with poorer and older populations like Blackpool struggling the most.

Census data shows the proportion of the population reporting a disability was 9.3% lower in the poorest 10^th of local areas than in the richest 10%, a significant variation in the potential demand for care.

Lloyd says for poorer councils with higher demand, the loss of grant funding and reduced ability to raise funds themselves will mean tighter eligibility and less generous support packages when it comes to home care, as well as further downward pressure on the residential care market.

Responsibility shift

He believes the real purpose of the 2% precept is to shift responsibility for big picture funding decisions down to local government.

“When, over the next five years, families and care providers complain services are underfunded, the Treasury will just point to the 2% precept and say it is up to local authorities,” he says.

The other big-hitting promise in the spending review was an extra £1.5bn for the Better Care Fund by the end of this parliament. This doesn’t include a pledged increase in  the Disabled Facilities Grant from £220m this year to £500m in 2019-20. But Adass president Ray James says he is concerned the money is being back-loaded.

Back-loaded funding

The funding won’t be available until 2017, rising to the full £1.5bn by 2020 but the phrasing of this pledge means it is unclear how the money will be phased in in the intervening years, with some fearing the sector won’t see most of the money until the final year of the parliament.

James says: “The sector is in funding crisis now but a material part of the additional funding won’t be seen for some years. If new funding doesn’t come through until later years there will be big problems.”

Immediate decisions

He adds while the funding is deferred, care services continue to face immediate decisions regarding winter pressures and care home places.

James says it must be made clear in guidance that the additional money must be spent on social care and not by the NHS. He believes this is the intention, but adds Adass will be working to influence the guidance.

The Autumn Statement also allocates a further £600m for mental health services including crisis care, talking therapies and perinatal mental health. This will form part of the overall settlement for the NHS but is separate to the £1.4bn pot announced earlier in the year for child and adolescent mental health and eating disorder services.

Mental health task force

How the money will be phased in is not yet clear, but it is likely to be linked to the mental health task force convened in March and could be used to implement its recommendations due to be announced by the new year.

British Association of Social Workers mental health lead Faye Wilson says the money is welcome but not sufficient to supplement the need for support services from local authority social care. She is concerned that while money is allocated as part of NHS budgets, services are facing an unprecedented loss of approved mental health professionals, who can only be employed by councils.

It has been pointed out the £600m figure is the same as the amount a Community Care investigation found had been cut from mental health trusts since 2010.

Mental health charity Rethink says putting this money back into the system simply replaces money taken out in previous cuts and returns funding to where it was five years ago.

Wilson says: “We’re such a long way back, bridging that gap is going to take an awful lot more than this £600m.”