Seeking further savings from social care after a decade of austerity is “fanciful and deeply worrying”, sector leaders have warned after chancellor Jeremy Hunt announced government departments would need to deliver more efficiencies.
In his statement to Parliament yesterday – which reversed most of the tax cuts in Kwasi Kwarteng’s September mini-budget – Hunt said savings on government spending would be necessary to put the public finances on a sustainable footing, heralding a repeat of the austerity policies of the 2010s.
However, council leaders said this period had left authorities with “no fat left to trim”, meaning a further round of cuts would be unsustainable.
Government funding halved
From 2010-11 to 2019-20, government spending on councils was cut in half, with authorities’ overall budgets slashed by a quarter, according to the National Audit Office. Though councils sought to protect adult and children’s social care – funding for which rose by 8.3% over this time – this was widely seen as insufficient to cope with rising demographic demand and increasing child protection activity and numbers of looked-after children.
While Hunt has not announced the details of any cuts – and how far they will fall on local authorities – the economic backdrop is much worse than in the 2010s because of rising inflation, which has reduced the real-terms value of councils’ budgets.
Last October’s government spending review provided for real-terms increases in councils’ available expenditure – calculated to be 1.8% a year in real terms from 2022-25 by the independent Institute for Fiscal Studies. At the time, the government anticipated inflation would be 4.4% in 2022-23, but it has exceeded 9% since April, reaching 9.9% in August, when last officially measured.
The Local Government Association (LGA) has calculated that the combined impact of rising inflation, including higher energy costs, and the increase in the national living wage in April this year had landed councils with £2.4bn in additional costs this year, compared with 2021-22. At the time this was calculated, inflation was running at 8%, meaning the gap would likely be larger now. The LGA added that authorities were facing funding gaps of £3.4bn in 2023-24 and £4.5bn in 2024-25.
Further savings ‘fanciful and deeply worrying’
Responding to the chancellor’s statement, Association of Directors of Children’s Services president Steve Crocker said: “The idea that further efficiency savings can be made is both fanciful and deeply worrying.
“Children’s services have been operating in a context of significantly reduced funding whilst demand has continued to rise. Local authorities have worked hard to make savings but we are running out of options. There is simply no fat left to trim, instead authorities up and down the country have found themselves having to cut back on early help services which makes no financial sense. This is not right for children and families and only serves to store up problems for the future.”
LGA chairman James Jamieson said councils had “done more than their fair share of the heavy lifting when it came to putting public finances on a more sustainable footing” over the past decade.
“Without certainty of adequate funding for next year and beyond, and given the funding gaps councils are seeing, councils will have no choice but to implement significant cuts to services including to those for the most vulnerable in our societies,” he added.
‘Precious little fat left to trim’
Hunt made his statement on the day that latest performance tracker from the Institute for Government and Chartered Institute for Public Finance and Accountancy (CIPFA) outlined significant pressures across all government services, including social care.
It detailed significant levels of workforce shortages and unmet need across adult care, evidenced by the 52% rise in vacancies from 2020-21 to 2021-22 and the Association of Directors of Adult Social Services (ADASS) reporting waiting lists of over 540,000 for assessments or care, as of April this year.
While the report noted a fall in referrals to children’s social care, in the wake of the pandemic, it cited concerns that cases were growing in complexity and that there may be hidden needs that local authorities were yet to uncover.
CIPFA’s chief economist, Jeffrey Matsu, said: “A fresh round of austerity is neither possible nor desirable. Today’s CIPFA/Institute for Government Performance Tracker report reveals the extent to which our public services are already in crisis. There is precious little fat left to trim from most services and performance has not yet returned to pre-pandemic levels.
“The chancellor has warned that all departments will be asked to look for savings, but with public services already stretched to breaking point these cuts will push them to the brink and will significantly impact the most vulnerable in society.”
Doubts raised over social care reform
Meanwhile, an ADASS spokesperson said: “This winter, people are going without care and support, staff are leaving, carers are breaking down. Less money simply means less care and support, more unfulfilled lives, fewer staff, more of us having no choice but to give up work to care, more of us having restricted access to healthcare. Social care is an essential service and a benefit to all of us.”
Its warning came after Hunt failed to explicitly commit to implementing the government’s reforms to adult social care, after being posed a question by former care minister Helen Whateley.
Referencing Hunt’s time as health and social care secretary, and latterly as chair of the Commons health and social care select committee, she asked: “Can I ask my right honourable friend, particularly considering his experiences of many years, to continue to press ahead with our commitment to reform social care, knowing as he does that social care and the NHS go hand in hand and how important they are to our constituents?”
Hunt, who as select committee chair, backed a £7bn increase in annual funding for the sector, replied: “It is a sector that is in great difficult at the moment, I’m very aware of those concerns, I’m also very aware of the pressures in the NHS at the moment. I’m not making any commitments as to what exactly we will do, but as I said earlier, all of these decisions will be taken through the prism of what matters most to those who need the help the most.”
Health and social care levy scrapped
Ministers had allocated £5.4bn for social care reform from 2022-25, £3.6bn of which will go on implementing the cap on care costs and more generous means-test, from October 2023, and ensure councils pay providers a “fair cost of care”.
This – along with extra resource for the NHS to clear its post-Covid backlog – was due to be funded by the so-called health and social care levy, a 1.25 percentage point increase in national insurance contributions, and an equivalent rise in dividend tax, raising £13bn a year in total.
The two tax rises were scrapped in Kwarteng’s mini-budget and has not been reversed by Hunt. Before his statement yesterday, the government had committed to finding the £13bn a year for health and social care from borrowing.
However, his response to Whateley – and the prospect of public spending cuts – raises questions over this.
A group of six councils are currently preparing to implement the cap on care costs and more generous means-test from April next year, six months ahead of the rest of the country. From the end of this month, they will start conducting early assessments of self-funders who want to be considered for the cap and more generous means-test.
At the same time, councils are working with their IT suppliers to adapt case management systems to the new policy.