Magazine article Public Finance

Social Care Figures Make a Low Total

Magazine article Public Finance

Social Care Figures Make a Low Total

Article excerpt

Simon Stevens, the head of NHS England, has suggested some of the funding spent on generous increases in the state pension could be used to prop up social care.

Why is this important? It is clear that adult social care faces a substantial gap between the funding it needs to keep providing current levels of service and the amount it is likely to get. The population is ageing and the number of adults with learning disabilities is rising; in addition, the national living wage is likely to have a profound impact on the financial viability of independent social care providers.

All told, social care will need an additional £4.9bn a year by 2019/20 to cope with rising demand and pay increases. Meanwhile, government projections of local authority income, out of which social care is funded, suggest that councils face a loss of £3.5bn in resources over that period.

Councils are primarily funded from business rates, council tax and central government grants. Despite a healthy forecast for business rates and council tax revenue, the rate at which central government is withdrawing grants means they will need to cut other services by £8.4bn, almost one fifth of total spending on services, to keep up with demand for social care.

The government has a couple of ideas. The problem is these are not going to be enough.

First, it will allow councils to increase council tax by an additional 2% a year, as long as they spend this on social care. This could raise an estimated £1.8bn a year by 2019/20 if all councils take up the offer. However, many areas will absorb the pain of cuts rather than saddle their residents with large council tax rises.

Council tax varies widely between parts of the country, correlating poorly with demand for care. It's therefore by no means certain that the £1.8bn will find its way to the councils most in need of the extra cash. …

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