Spending review analysis – follow the money and it isn’t there

“Some in local government have concerns about the financing of social care. I can announce that grant funding for social care will be increased by an additional £1bn by the fourth year of the spending review. And a further £1bn for social care will be provided through the NHS to support joint working with councils.”

Those words from chancellor George Osborne in his spending review statement last Wednesday were designed to allay fears that care services for older and disabled people could be decimated by the magnitude of cuts to local government that he also announced, 28% in real terms from 2010-11 to 2015.

They were also designed to place responsibility for cuts firmly in the hands of English councils, which spent £14.4bn on adult care, excluding client contributions, in 2008-9.

“There is no justification for local authorities to slash and burn and for local authorities to tighten eligibility as far as the settlement goes,” care services minister Paul Burstow told Community Care on the day of the CSR.

The warning follows Burstow’s criticisms of councils that have already started to cut services, for instance by raising eligibility thresholds. By next year, 80% of councils will no longer be meeting users’ moderate care needs, up from 75%, a Community Care investigation found last month.

However, the £2bn announced by Osborne was not all it seemed.

For one, the figures for the overall cut of local government budgets took into account the £1bn allocated to councils for social care – it was not additional money.

This was not how it was received by social care leaders.

“That’s not the way it’s being presented,” Sarah Pickup, honorary secretary of the Association of Directors of Adult Social Services, said last Friday. “The impression we are getting is that we should end up with some new money.”

Moreover, the £1bn was not ring-fenced, meaning it could be spent on any service. Research by the think-tank the New Local Government Network has found that councils saw adult care as a funding priority, although this is not always the case.

There are also doubts over the other £1bn for social care, which will come from NHS budgets.

Again, this is not ring-fenced. Under the previous government, funding was allocated by government to primary care trusts to spend on dementia, carers’ short breaks, end-of-life care and disabled children but much of this was not used for the intended purpose.

Pickup fears this may happen again.

“We know that money going through the NHS has not made it through the system to be spent on what was intended and that was just within the NHS let alone being transferred to social care.”

Although the NHS received a real-terms increase in funding from 2011-15, this amounts to just 0.1% a year and includes the money allocated for social care. In addition, the NHS must find £15bn to £20bn in efficiency savings over the course of the spending review period while also undergoing the most radical overhaul in its history.

Indeed, while primary care trusts will be expected to allocate the extra money to adult social care from 2011-13, from 2013 this responsibility will pass to new – and untested – GP consortia, with the abolition of PCTs.

The larger question is how much adult social care will need over the next four years as the demographic pressures of an ageing population and the greater life expectancy of disabled people start to bite.

In its submission to the CSR, Adass said that councils would need to spend an extra 1% a year in real terms from 2011-15 to meet demographic pressures. This assumes that councils make efficiency gains of 3% a year through investment in services such as reablement and telecare to reduce, prevent or delay people’s future needs for care. Adass said its figure understated the likely pressures on councils over the medium term. However, even finding an extra 1% a year for adult social care will be hard given the spending review’s cuts to local government.

Councils may be able to offset some of the cut in government funding through rises in council tax but the impact of this is uncertain and will vary from area to area according to political pressures. Otherwise, councils face continuing with some of the actions they took before the CSR reported – tightening eligibility criteria and raising charges for users – the very things Burstow has warned are now unjustifiable.

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