An additional £1.5bn pledged to the Better Care Fund will be distributed among councils according to need, the government announced today.
Minister for Communities and Local Government Greg Clark set out a provisional financial settlement for 2015-16 today, following last month’s Spending Review.
Clark said the distribution of the Better Care Fund would be used to compensate councils unable to raise enough from the new 2% council tax precept.
Local Government Association (LGA) chair Lord Porter said councils remained concerned they would not see the benefits of the £1.5bn funding until the end of the decade.
However, he welcomed the announcement of longer-term funding settlements as the minister also announced the government’s commitment to offer a four year fixed budget for councils which requested one and could demonstrate efficiency savings.
Longer-term funding settlement
Lord Porter said: “Giving councils the option to fix longer-term funding settlements is hugely significant. The LGA has long argued that it is crucial for councils to be able to plan ahead for more than 12 months at a time.
“This is an important step towards the financial certainty councils need to run important local services to the high standard our residents deserve and will allow councils to review the level of financial reserves they need to hold.”
The minister said spending power for councils would be virtually unchanged in cash terms. But this represents a real terms reduction of around 6.7%.
Local government had asked for £2.9bn by 2020 as a contribution towards the costs of social care ahead of the Spending Review.
Clark said the government had made £3.5bn available by the end of the decade, distributed fairly among local authorities.
Chief executive of Care England, Professor Martin Green, said: “The Government believes the optional 2% council tax precept for social care, combined with the Better Care Fund injection, will be worth £3.5bn to the sector.
“However, the King’s Fund has calculated this money will only bring £2.7bn, only by 2020, and only if every council raises the full amount of the precept every year. Crucially, this amount is insufficient to plug the current funding gap.”
He added that councils were under pressure from their electorate to freeze council taxes. Last year the average council tax increase was 0.9% despite councils being able to charge up to 1.9% without a referendum.
“It is clear that this money will only begin to address discrepancies in distribution in 2017, due to the decision to back-load the BCF. This means that inequalities will still exist across the country.”
The finance settlement signalled a possible shift in responsibility to councils of the £5bn attendance allowance benefit for older people who need help with their day to day lives, a move welcomed by the Association of Directors of Adults’ Services (Adass).
President Ray James described the move as a substantial reform of the social services system which signalled further welfare reform.
He said: “Measures should be taken to ensure that resources are geared to meeting demand rather than capped at its existing level. As the demographic needs grow, so must the resources to meet them.”
Mental health pledge
Mental health services will also see extra investment as clinical commissioning groups are expected to use their extra funding to increase funding for local mental health services in real terms next year, by at least the level of the CCG’s overall funding growth, and extra funding will be allocated from the national Sustainability and Transformation Fund.
Clark said he noted criticism from the Public Accounts Committee about previous inclusions of the existing Better Care Fund and Public Health Grant in councils’ spending power and added he would now only report resources over which councils have discretion.