Council tax hike to boost adult social care budgets by £382m but funding gap remains

Council tax rises will raise an extra £382m for adult social care in 2016-17.

Government figures show that 144 of the 152 English authorities have taken advantage of the adult social care precept, which allows them to increase council tax by up to 2% to pay for adult services.

The tax rise allowed by the social care precept is in addition to councils’ ability to increase council tax by up to 2% without having to get approval from voters via a local referendum.

In areas where it has been used, the precept will see the average Band D household pay an extra £22.39 a year and raise an average of £2.65m for local adult services.

Hopelessly inadequate

Richard Humphries, assistant director, policy, at the health think tank the King’s Fund, said the money due to be raised from the precept was in line with predictions but there remains a huge gap between the money raised and what is needed just to maintain adult social services at their present level.

“Even if this raises £382m it still falls way short of the funding gap in adult social care, which is about £1.2bn,” he said. “So this is a hopelessly inadequate response to the growing pressures on social care.

“Local authorities have to wait until 2018 before any significant new money arrives through the new Better Care Fund. What happens between now and then is anyone’s guess.”

When Chancellor George Osborne announced the precept in November, he said that if used fully councils could raise £2 billion a year for adult social care services by the 2019-20 financial year.

Tax frozen

The eight local authorities that have decided not to implement the adult social care precept have frozen their council tax for the year.

The authorities that have not used the precept are: City of London; Ealing; Hammersmith and Fulham; Hillingdon; Hounslow; Kensington and Chelsea; Merton; and Stoke-on-Trent.

Of the councils that have not taken advantage of the precept Humphries said: “I suspect it’s a mixture of political and financial calculus.”

No shortfall

Hammersmith & Fulham Council said it had managed to avert the need for a council tax rise by re-negotiating planning deals with developers, which has freed up an extra £51m for the borough to spend.

A spokesman for Kensington and Chelsea Council said: “As a consequence of careful financial management the council faces no shortfall in its budget and therefore has been able to continue to provide excellent services for the borough’s residents, without the need to increase council tax. We also remain one of the very few councils to continue to offer support to those with moderate needs.”

When Ealing announced it would not apply the precept in February, Yvonne Johnson – the borough’s cabinet member for finance – said: “We know people will be rightly concerned about social care provision, and while we cannot avoid the consequences of the overall reductions in council funding, we will lessen the impact by finding an extra £2.3m for social care in this budget.”

Ealing has frozen its council tax for eight consecutive years.

Residents are struggling

Councillor Ray Puddifoot, leader of Hillingdon Council, told Community Care that “we don’t need to do it because sound financial management” has left the authority £40 million in the black despite freezing council tax for the past eight years.

Councillor Theo Dennison, Hounslow’s cabinet member for finance and citizen engagement, said: “We’re not increasing the council tax by applying the precept because we don’t need to.

“We are of course going through very difficult financial times, having to balance the books in the face of unprecedented government cuts to our funding while trying to maintain hundreds of services for residents. It’s very challenging, and we’re having to make some tough decisions about what services we can and cannot afford to provide.

“However, we will not ask our residents to pay any more for services than necessary, when we know many are struggling to make ends meet.
 
“We have a prudent approach to financial management and there are robust plans are in place to cope – for now – and keep services for the most vulnerable in place without asking people to pay more.”