Osborne puts £3.8bn into integrated care but council budgets set to fall again

NHS funding for adult social care set to increase by at least £2bn in 2015-16 but this will not offset overall cut in local government budgets.

Picture credit: HM Treasury

Almost £4bn from the NHS budget will be poured into integrated care to help older and disabled people in 2015-16 but social care funding will be hit by an overall reduction in council budgets, as a result of George Osborne’s spending review announcement today.

The new integrated care fund, worth £3.8bn, is at least £2bn higher than the current level of annual NHS resource allocated to social care, and is designed to provide support for older and disabled people to stay out of hospital and reduce hospital stays.

However, even if all of this is counted as new resources for councils, local government budgets are set to fall by 2.3% in real terms from 2014-15 to 2015-16, suggesting more pain for adults’ and children’s social care, both of which are facing rising demand.

As part of the funding for local government, £335m will be allocated to help councils implement a new deferred payments scheme for self-funding care home residents in 2015 and prepare for the introduction of a cap on individuals’ reasonable social care costs in April 2016. The latter reform will require significant changes to council financial management systems and a large increase in assessments of self-funding care users.

‘Substantial’ eligibility threshold

The government also signalled that its planned national eligibility threshold for adult social care – set to come into force in April 2015 through the current Care Bill – would be equivalent to the current ‘substantial’ threshold used by the vast majority of councils. This will be a disappointment to older people’s and disability charities who have campaigned strongly for a ‘moderate’ threshold.

The £3.8bn integrated care fund will be allocated as pooled budgets to local councils and clinical commissioning groups (CCGs) and is likely to be overseen by health and well-being boards. The government said this would aim to “deliver better, more joined-up services to older and disabled people, to keep them out of hospital and to avoid long hospital stays”.

Councils and CCGs will have to agree locally how the money is spent, but it is not clear what rules the Department of Health will place on how it is used; £350m of the funding is likely to be allocated for capital projects, such as IT funding to improve information sharing between the NHS and local government. The Treasury also announced an extra £200m to be made available from the NHS budget in 2014-15 as an “upfront investment” in new integrated care systems.

Mixed response from council leaders

“The decision to link health and social care funding so closely together in this announcement will have a positive impact in accelerating the changes we are making and acknowledges the role of social care in the delivery of effective health services, particularly for those people with long-term conditions,” said Association of Directors of Adult Social Services president Sandie Keene.

But she warned that it would be “rendered less valuable” if links between adult care and other council services, such as children’s social care, housing or leisure, were “threatened by severe downward pressures on local government spending as a whole”.

The Local Government Association also welcomed the integrated care funding but warned that the wider cuts would mean “some councils will simply not have enough money to meet their statutory responsibilities”, given the gravity of cuts already made to local government since 2011.

“Local services on which people rely will have to be significantly reduced as a result,” said LGA chair Merrick Cockell. “No area of spending can be totally immune and some services will be wound down entirely.”

Further welfare cuts

Osborne also announced further changes to welfare spending in today’s spending announcement, including a five-year cap on total welfare spending – excluding the state pension and jobseeker’s allowance.

This means that if welfare spending rises above the cap the government will have to take measures to rein it in by the end of the five-year period. The announcement prompted concern over further cuts to disability benefits from charity Scope.

Chief executive Richard Hawkes said: “Some disabled people will always need financial support. It doesn’t make them scroungers or skivers. The AME cap divorces the provision of welfare from the demand for it. Where’s the fairness in that? This could create a real terms cut that would suddenly pull the plug on support for disabled people when they really need it.”

The spending review also included measures to require lone parents to prepare for work when their youngest child turns three, as opposed to five at present. There would be no requirement to return to work until the child turns five, however.

The government also said different approaches would be tested to improve employability among disabled people receiving employment and support allowance but deemed to have the potential to return to work, “including engagement with health professionals”.

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