Spending review expected to deliver ‘some’ extra social care funding

Social care leaders believe the government will provide new money amid reports government will allow council tax rise to fund care

By Andy McNicoll on November 20, 2015 in Adults, Social care leaders, Spending review 2015

Story updated 22 November

Social care leaders believe the government will provide new money for social care in this Wednesday’s spending review but are anxious over how it will be delivered.

The news came as it was reported that chancellor George Osborne was planning to allow local authorities to raise council tax to raise dedicated funds for adult social care.

Ray James, president of the Association of Directors of Adult Social Services, told Community Care said: “I think there will be some additional money for social care. The questions will be, how close to enough will it be? How is the living wage treated? And to what extent will the government try to count the money twice through the spending power of the NHS and local government?”

The government has previously been accused of presenting the Better Care Fund, a pooled budget between councils and NHS, as both £3.8bn extra NHS spending and £3.8bn extra social care spending.

Council tax plan

James was talking before news broke of a government plan to allow councils to raise council tax by an additional 2% so long as the money raised went only to adult social care.

Currently, councils cannot raise council tax by 2% or above each year without triggering a referendum of the local population to sanction the rise. However, the plan, reported in The Guardian, would enable authorities to raise council tax by up to 2% – or more if they were prepared to face a referendum – to fund all services each year; and then levy additional tax only for adult social care without this being put to a vote locally.

It is not clear whether councils would be allowed to raise the additional 2% in each of the four years of the spending review period – 2016-17 to 2019-20 – or whether the additional 2% would be for one year only or levied cumulatively over the course of the four years.

Council tax accounts for 42% of local government revenue in England when all authorities – including those without social services responsibilities – are taken into account. The Guardian said that the plan could see an extra £2bn raised for adult social care by the end of the Parliament.

Funding pressures

If correct, this would not be sufficient to meet the shortfall in expected resources identified by Adass and the Local Government Association, arising from pressures including:

The introduction of the national living wage from next April, which the LGA says will cost councils an extra £1bn per year by 2020.
Inflation and demographic pressures which, combined with the living wage, will add £2.1bn to councils’ annual costs for social care.
The additional £172m a year needed by councils to meet the costs of complying with the landmark ‘Cheshire West’ Supreme Court ruling.

Also, commentators warned that the reported proposal to meet the social care shortfall would disadvantage poorer areas whose low tax base meant they raised a relatively small proportion of their resources from council tax and relied more on central government grant.

On Twitter, King’s Fund assistant director Richard Humphries said that the “obvious flaw” in the plan was that “councils in more deprived areas can raise less from council tax than richer ones”.

There are already concerns that a separate plan – to scrap the main central government grant for councils in exchange for allowing them to keep all of the money they raise from local business rates – will benefit richer authorities but disadvantage poorer ones.

Protection for NHS

Already announced is the fact that the spending review will increase funding for the NHS by £8bn a year in real terms by 2020 over 2015-16 levels. NHS England chief executive Simon Stevens has called for extra investment and funding protection for social care but the Treasury has given no guarantees over local authority funding. The Better Care Fund will continue as it is enshrined in law but NHS leaders are fiercely opposed to social care receiving any of the additional £8bn for the NHS, arguing that the health service needs all of this resource.

Additional targeted funding for adult social care – whether through the BCF or council tax – may also only partially compensate for wider cuts in the resources available to local authorities to deliver their responsibilities.

James said directors were “seriously troubled” about the prospect of further significant cuts after having to reduce adult social care budgets by the equivalent of 31% over the past five years, accounting for demographic pressures and inflation.

Have councils run out of road for savings?

Talking to social workers and directors about next week’s spending review, it’s clear many are anxious they’ve run out of road to make the scale of savings they fear George Osborne will demand.

John Bolton, social care consultant and former Department of Health finance lead, has researched the way councils are delivering efficiencies across England. What’s his assessment of the situation?

“My personal view is we’ve cut prices [for providers] to the bare minimum. We’ve also cut staffing levels in most places to what is just about sustainable, so there’s not much further to go there,” he says.

However, Bolton believes there’s still scope for some councils to remodel the way they deliver social care. A shift from traditional dependence on residential care to more community-based support that promotes independence could deliver savings, he says.

“The issue is many places have already done that and have been working on it for the past five years. They’re already managing demand much better and they have more community options. So they have less wriggle room.”

That’s reflected in conversations with directors, managers and social workers over the past week.

Asked how this spending review compared with the last, one told me: “Five years ago there was lots of talk of new models that could get us over the line. I’m not hearing that now. Instead we’re at those deep in the trenches decisions. It has a very, very different feel.”

“We couldn’t really be more worried,” said another. “When you look after 2017, things start to look very, very scary. We can’t be leaner without it genuinely having a huge effect on the safety and wellbeing of people.”

And what’s the impact of the current funding pressures? Here’s one person’s take: “There’s hardly any non-statutory work and you also end up having to weigh up different statutory duties. Do you prioritise safeguarding ahead of hospital discharge? That sort of thing.

“Huge pressure is being brought to bear on informal carers and families. Then safeguarding alerts are up, mental health is worse and all of our partner organisations are under the same strain we are. Everyone’s trying. Of course you need good partnership working but it shouldn’t mask a system that’s financially unsustainable.”

The Treasury is under pressure from a number of sources to boost social care funding. NHS leaders have warned further social care cuts will hit the health service. The care sector has also issued a series of warnings over staffing shortages and care home closures. Yesterday, crisis talks were held between care providers, charities and local government leaders amid concerns several providers could pull out of the market.

Closure threat

Professor Martin Green, chief executive of care home representative body Care England, attended the meeting. He said the talks highlighted the “imminent” threat of closure facing some services if the government failed to meet the social care funding pressures, notably the new living wage being introduced from next April.

He said: “The moment that [the living wage] comes in it is about cash in the bank. There has been a lot of focus on large corporate providers recently but around 75% of care homes and domiciliary care providers are small. There’s a risk they just won’t have any money left to pay staff wages and banks will foreclose on them.

“Around 60% of costs for providers are staffing. This is a regulated sector as well. You can’t simply say ‘we’ll have less staff’, like you might if you were running a department store, so there’s less room for manoeuvre”.

The meeting was the latest example of care providers, social care directors, campaigners and local authority directors joining forces to raise funding concerns.

James said the unified campaigning from the sector, and the support of NHS leaders, had brought high profile media and political attention.

“Yet despite all of that I don’t think we’ve yet seen the strength of signals from government ahead of the spending review that we’d like to have seen so it’s hard to be as confident as we would like,” he said.