Settlement social care funding plan ‘woefully inadequate’

Sajid Javid MP

Reforms to increase funding for adult social care are a “short-term sticking plaster” that fail to address the need for a long-term solution, according to local authority finance leaders. They also accuse the communities secretary Sajid Javid of “robbing Peter to pay Paul” in his efforts to shift funding from the New Homes Bonus to adult social care in today’s local government settlement.

Javid revealed this year’s settlement will see the creation of a £240m fund using savings that result from changes to the New Homes Bonus.

He also confirmed widely trailed news that the government would allow councils to levy a 3% social care precept on council tax for the next two years, raising £208m in 2017-18 and £444m in 2018-19, provided they raise the precept by no more than 6% over the next three years.

Jo Miller, chief executive of Doncaster Metropolitan council and president of Solace, the society of local authority chief executives, said the measures failed to offer a long-term solution for the funding crisis in adult social care.

“Whilst increasing the social care precept will give short-term relief to a few local authorities, ultimately, relying on a regressive taxation system is not a long-term solution to tackling the long-term sustainability challenge our health and social care system faces.

“Likewise, taking money from the New Homes Bonus may alleviate short-term pressures, but simply robbing Peter to pay Paul will not tackle a systemic funding problem. This needs a long-term national solution that does not simply exacerbate existing imbalances.”

Ian O’Donnell, executive director of resources at Ealing council said the 3% precept would target the wrong people. “Because council tax is a regressive tax it has the effect of impacting most the people who need most help.”

Reform of the New Homes Bonus will see money redirected to the social care fund through the introduction of a new “baseline” for housing growth. If councils fail to meet the threshold, the money will be collected in the fund for redistribution. There are also proposals to withhold New Homes Bonus for houses that receive planning permission on appeal.

The communities secretary said: “This will release important funding for adult social care, recognising the demographic changes of an ageing population as well as a growing population.”

.@CommunitiesUK yes but this based on rebadging existing resources and structural increase in the coucil tax @room_151 #localgov

— Stephen Fitzgerald (@SHJFitzgerald) December 15, 2016

Guy Ware, director of finance at London Councils, described the funds produced by the settlement measures as “a drop in the ocean”.

“For London, the overall increase from all the changes will raise about 1% of the amount of money spent on social care over the next three years. In the same period, the over-60s population will go up 6%.

“I don’t think this is even a short-term fix. This is not going to meet the needs we have identified.”

The Association of Directors of Adult Social Services described the measures as “woefully inadequate”.

Ray James, immediate past president of the association, said: “It is over £1bn less than all leading sector experts (King’s Fund, LGA and Nuffield Trust) say is needed to fund adult social care next year and the precept raises less in areas with the greatest need.”

CIPFA said the New Homes Bonus would hit district councils hardest but would help address “distributional inequalities” that would have resulted from using the council tax precept alone.

However, CIPFA’s head of local government, Sean Nolan, criticised the measures announced this week as a “sticking plaster” and failing to provide long-term solutions.

“It scarcely addresses the chronic under-funding now, never mind in the medium to long term,” said Nolan.

He also said the 3% precept was not as generous as it seemed. “Because most councils were already planning to use the existing freedom to increase the social care precept by 2% in the next financial year, to bring it up to 3% is effectively only a real-term boost of 1% for 2017-18.”

The Local Government Association accused the government of failing to find new money.

Lord Porter, the LGA’s chairman, said: “Councils, the NHS, charities and care providers have been clear both before and since the Autumn Statement about the need for an urgent injection of genuinely new additional government funding to protect services caring for elderly and disabled people.

“Given this unified call for action, it is hugely disappointing that today’s settlement has failed to find any of this new money to tackle the growing crisis in social care.”