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.