Government confirms extra social care cash but council leaders bemoan failure to fund wage rise

Councils to get biggest real-terms budget increase in a decade, including additional social care funding, but LGA says £220m extra needed to cover minimum wage increase

Photo: Michail Petrov/Fotolia

The government has confirmed an additional £1.5bn for social care in 2020-21 as part of a funding boost ministers hailed as the best settlement for town halls in a decade.

However, while council leaders welcomed the announcement, they raised concerns about the government’s failure to directly fund rises of over 6% in the national minimum and living wages from April, which risked further destabilising an already fragile care market.

Announcing the local government funding settlement yesterday, housing secretary Robert Jennick said that the resources available to councils would increase by 4.4% in real terms, the biggest rise in a decade. This relies on all authorities increasing their standard council tax rates by 2% – the maximum allowed without having to put any increase to a referendum – and those responsible for adult social care increasing the tax precept that provides dedicated funding for the service by a further 2%.

The latter would raise about £500m for social care, while the sector will also be boosted by an additional £1bn in government grant for authorities to spread between children’s and adults’ services.

‘Desperately-needed new money’

The settlement was broadly welcomed by the Local Government Association, whose chair James Jamieson said: “We are pleased the government has acted on our call for desperately-needed new money for councils to meet the rising cost pressures they face this year and published this final settlement quickly so councils can effectively plan how to provide local services.

“Extra funding for social care this year, council-tax raising powers and the continuation of key grants confirmed today are good news and will ensure councils can help older and disabled people to live more independently, support our most vulnerable young people and continue to deliver vital services.”

However, the LGA criticised the government’s failure to provide specific additional cash – which it estimated at £220m – to fund the impact on councils of this April’s 6.2% rise in the national living wage for over-25s, to £8.72 an hour, and 6.5% in the national minimum wage for those aged 21-24, to £8.20 an hour.

“We are disappointed that the government has not used the final settlement to provide the £220 million needed to pay for the faster than expected rise in the National Living Wage (NLW) from April,” Jamieson added. “Councils fully support the NLW but this unforeseen new cost pressure needs to be funded to avoid the fragile care provider market being further destabilised.”

What the funding settlement means for social care

The local government funding settlement is made up of resources provided by government for councils, and those raised by authorities themselves, and involves cash that town halls can spend freely and that it must dedicate to particular services, notably social care.

Authorities with social care responsibilities (upper-tier authorities) are due to receive the following in 2020-21:

  • A share of the government’s general revenue support grant, worth £1.35bn for upper-tier authorities.
  • A sum based on the amount of business rates they raise locally plus business rate income redistributed centrally by government (£9.85bn for upper-tier authorities).
  • Money raised through council tax, worth an estimated £26.9bn for all English authorities (upper and lower-tier) based on the assumption that rates are increased by 2% in 2020-21.
  • The adult social care precept – an additional levy whose proceeds must be spent on adult social care – worth an estimated £2.4bn based on a rate increase of 2% in 2020-21.
  • The improved Better Care Fund, worth £2.1bn, which must be spent on adult social care.
  • A social care grant worth £1.4bn, a £1bn uplift on last year, to be spent on adult and children’s social care.

In addition to these sums, upper-tier authorities will also receive funding from NHS clinical commissioning groups through the Better Care Fund, to spend on adult social care (including to implement their Care Act responsibilities). This sum was worth £2.1bn in 2018-19, according to NHS Digital.

One Response to Government confirms extra social care cash but council leaders bemoan failure to fund wage rise

  1. A Man Called Horse February 12, 2020 at 4:25 pm #

    The problem is that LA’S are allowed to fleece Council Tax Payers for 4% every year for the next 5 years. Everyone should be aware that Council Tax is a regressive tax that must be paid by all under threat of prison if not paid. Council Tax is unfair in that the poor and the very poor are expected to pay 20% of their own Council Tax out of whatever resources they have leading to more and more defaults and the courts imposing additional charges for none payment. Since the poorest also have to pay some of their own rent as not fully funded via benefits their disposable income is squeezed resulting in many millions living below the welfare benefit minimum income needed to sustain a civilised existence. Council Tax is a form of legalised theft that disproportinately disadvantages the poor.

    Local Government also imposes service charges on people on relatively low incomes and this is not addressed by Central Government. The only way to fund essential local community services is through an increase in direct taxation via tax rises, preferrably on those most able to bear the load. Incidentally 2% pay rises are pathetic and are wiped out by tax rises and rent rises for poor people.

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