Council tax hike not enough to fill care funding gap, warn town hall chiefs

Increased tax would raise extra £400m in 2016-17, not enough to meet increased costs of living wage and care packages, says LGA

Councils in England face a significant shortfall in adult social care funding in the coming financial year despite the government allowing them to raise council tax by 2% to fund adult services.

Figures compiled by the Local Government Association (LGA) for its response to the local government finance settlement for 2016-17 suggest that even if all 152 authorities took advantage of the council tax ‘precept’ there would be still be a significant funding gap.

As a result even councils that intend to apply the council tax precept, which can be applied on top of the standard council tax rise without the need for a local referendum, face having to find ways to save money.

The LGA called for the government to bring forward an extra £700m in funding due to be provided to councils in 2018-19 to help them meet cost pressures in 2016-17.

Spending review settlement 

In its spending review in November, the government announced significant cuts in core government funding to councils. But it offered councils two ways to manage the mounting pressures on adult social care, such as rising levels of need and the national living wage, which will be set at £7.20 an hour for over 25s from April, above the current minimum wage of £6.70.

One was the opportunity to increase council tax by an additional 2% a year in each of the next four years, so long as that any money raised from this “precept” was spent on adult social care. This was on top of councils’ right to increase the tax by 1.99% for general services without having to put the rise to a referendum.

The government has said that, if all councils applied the precept in each of the four years, it would raise almost an extra £2bn a year by 2019-20; however, think-tank the King’s Fund has put the figure closer to £800m on the basis that many councils will not pursue the rise each year.

Funding falls short

In its joint submission to the spending review with the Association of Directors of Adult Social Services, the LGA said that councils faced increased adult social care costs of at least £800m in 2016-17, including about £340m to implement the living wage.

The LGA has now calculated that, if all councils took advantage of the council tax precept, it would raise £400m in 2016-17. However, overall, when the cut in government grant to councils is taken into account, authorities with social services responsibilities are facing a 3.2% cut in their budgets in 2016-17, said the association.

The second source of government support was an increase in the Better Care Fund – the government-mandated integrated budget with health – given directly to local authorities, rising to £1.5bn in 2019-20. However, none of this money will be available in 2016-17 and very little (£105m overall) in 2017-18, with £825m pledged for 2018-19.

In its statement today, the LGA urged the government to bring forward £700m of the Better Care Fund funding to 2016-17 so that councils could fill the shortfall in funding in the coming year. It also said the government should support rather than criticise local authorities that take advantage of the option to apply social care council tax levy.

Pressures on councils 

Council budget proposals for 2016-17 illustrate how local authorities feel that the council tax precept will not be enough to manage additional cost pressures in adult social care this year.

Leicester City Council’s budget proposals for 2016-17, for example, note that a 2% rise in council tax would generate an estimated £1.8m which is only around a third of what adult social care will need to pay for the introduction of the national living wage, never mind the rising cost of care packages.

The council said it was working on savings that would enable it to live within its budget for adult social care in 2016-17, including reducing the number of people referred into the system through offering community-based alternatives, reducing the cost existing service users and cutting the number of care home placements.

Meanwhile Devon County Council expects to collect an extra £6.5m by applying the council tax increase for adult social care but says the cost of introducing the national living wage will be £7m in 2016-17.

Newcastle City Council, which is proposing to cut 30 full-time equivalent posts in adult social care in 2016-17, expects to raise £1.7m from the council tax rise but says this is “nowhere near enough to address the scale of the financial pressures we face”.

‘Impossible position’

Sharon Taylor, vice chair of the LGA, said: “While extra council tax flexibilities and income will help ease some of the funding pressures facing councils, it would be wrong to think this will be enough to solve the long-term pressures facing local services and communities.

“After years of striving to keep council tax as low as possible, town halls find themselves in the impossible position of having no choice but to ask residents to pay more council tax over the next few years while possibly having to offer fewer services in return.”



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4 Responses to Council tax hike not enough to fill care funding gap, warn town hall chiefs

  1. get me out of here February 1, 2016 at 10:41 am #

    Really is a perfect storm of cuts. Raising Council Tax really will not go down well with voters especially Tory voters. No doubt, though, it makes sense as the residents really are a captive cash cow ready for milking. The only recourse individuals will have is to move to smaller lower band properties if they can or move out of the country if they can. Interesting that the Government doesn’t want a levy on bankers bonuses to pay for the care of the elderly, wonder why they haven’t considered this?? Increased Taxation by other means. Also blindingly obvious that in poor areas raising Council Tax just pushes up the Council Tax benefit bill.

  2. Gerald February 2, 2016 at 2:53 pm #

    Since when have the Councils related to any funding given to them by any Government when setting their so called contributions. They have been underfunding for years, to understand why, one has to ask the Counsellors responsible.

  3. Paul Treloar February 2, 2016 at 4:57 pm #

    We’re very concerned about the situation regarding the funding and provision of social care by local authorities. From our work with people trying to access services and secure appropriate support, whether at home or elsewhere, we know already that there are significant numbers who are either told they can’t be helped or that they need to make significant financial contributions themselves which they cannot afford.

    Sadly, stories such as the above show that the position is going to get worse before it gets better, with obvious knock-on impacts for spending on health, benefits and emergency interventions.

  4. Nik Taylor February 4, 2016 at 4:01 pm #

    If we continue to concentrate on only meeting the care needs of those people who are assessed with eligible needs and no more the evidence is overwhelming, Adult Social Care budgets will be impossible to manage and adequate care difficult to deliver.

    With Local Authority’s constantly looking at ways to improve services and the experience of those with care and support needs, their families and carers I am staggered that quality assured information and advice has not been given the pivotal role that the Care Act saw for it as prevention.

    Money raised by the Council Tax precept will be money wasted if spent on more of the same. We must look more closely at services that build ‘Care Navigators’

    Searchable web based info is great but it often triggers questions and a need for guidance. Personalised advice has to work alongside ‘menu driven’ information.

    This ‘Search and Rescue’ approach can make a difference and does not have to cost the earth to implement.

    The Care Adviser Network is working on projects that work hand in hand with services that will become self-sufficient and chargeable within one year, providing free advice at the front door and a clear care advice pathway

    What’s not to like?