Supplementary written evidence the Local
Government Association (PEX 13A)
FUNDING OF ADULT SOCIAL CARE IN ENGLAND
1. Adult Social Care is one of the major
responsibilities of local government and its funding should be
considered as part of the totality of funding local government
services, not in isolation. CLG figures for 2009-10, published
on 25 November 2010,[61]
indicate that net current expenditure on social care was £20.967
billion out of total net current expenditure on services, excluding
housing benefit, of £103.985 billion.
2. Of the figure of £20.967 billion,
CLG's analysis shows that £14.572 billion relates to adult
social care and £6.395 billion to children's social care.
3. In 2009-10, total net current expenditure
was funded broadly as follows:
| £bn |
Specific grants | 45.767
|
| Area Based Grant and Police Grant | 7.567
|
| Revenue Support Grant and Business Rates |
24.016 |
| Council tax and other income | 26.553
|
| |
| Total | 103.403 |
| |
The difference between the funding figure and the figure
for net expenditure on services quoted above reflects a number
of other expenditure items, such as council tax benefit, and their
associated funding. This difference is typically a very small
number which can be ignored for the purposes of this analysis.
4. Based on the National Statistics compilation of returns
councils have made of their 2010-11 budgets,[62]
the available revenue funding for local authorities for the current
year was estimated to be as shown below.
| £bn |
Specific grants | 45.7
|
| Area Based Grant and Police Grant | 9.1
|
| Revenue Support Grant and Business Rates |
24.6 |
| Council tax and other income | 26.3
|
| |
| Total | 105.7 |
| |
5. In the Comprehensive Spending Review (CSR), the government
announced funding for departments for the years 2011-12 to 2014-15.
In the case of local government in England, the settlement confirmed
that some £3.4 billion of what had previously been specific
or Area Based grant would for the future be funded through Revenue
Support Grant and redistributed business rates. This gives a total
of £28.0 billion as the revised "baseline" or 2010-11
starting point for comparison of the future available funding
from this source with what has been made available in the past.[63]
6. Compared to this £28.0 billion baseline, the
CSR announced that the funding for English local authorities through
Revenue Support Grant and redistributed business rates would fall
to £25.0 billion in 2011-12, £23.4 billion in 2012-13,
£23.2 billion in 2013-14 and £21.9 billion in 2014-15.
These figures include new personal social services funding of
£530 million for 2011-12, £930 million for 2012-13,
£1 billion for 2013-14 and £1 billion for 2014-15.
7. The CSR does not give local authorities a clear indication
of the amount of specific grant funding they will receive, either
in total or at individual authority level. A few individual specific
grant funding streams have been announced, including additional
money for re-ablement and other additional funding that will be
provided for social care through the NHS. This funding stream
amounts to £0.8 billion in 2011-12 (of which £150 millio
is re-ablement and £650 millio other funding) and will rise
to £1.0 billion by 2014-15.
8. Until the government announces the complete picture
for local authority grant funding, therefore, it is only possible
to estimate the position by making broad assumptions based on
the trajectory of the various departmental settlements shown in
the CSR. In the case of council tax, the government is allocating
£0.7 billion per annum to fund a council tax freeze in 2011-12.
This grant, if fully taken up, is sufficient to fund the equivalent
of a 2.5% increase in council tax in 2011-12.
9. On the assumption that specific grants increase or
decrease in future in line with the CSR settlements of the relevant
departments, and assuming a zero council tax increase in 2011-12,
increases of up to 2.5% thereafter and modest growth in the council
tax base, the LGA estimates that local authorities' funding for
the CSR period will be broadly as shown in Table 1 below.
Table 1
| 2011-12
(£bn)
| 2012-13
(£bn) | 2013-14
(£bn)
| 2014-15
(£bn) |
| Specific, area based and police grants[64]
| 52.3 | 52.3 | 52.6
| 52.6 |
| Revenue Support Grant and business rates |
25.0 | 23.4 | 23.2
| 21.9 |
| Council tax and other | 26.4
| 27.1 | 27.9 | 28.8
|
| Total | 103.7 | 102.8
| 103.7 | 103.3 |
| |
| | |
10. These figures are in cash terms, not real terms.
11. In interpreting these figures, it is important to note
that the specific grant funding includes a very large amount for
schools and children's services. This funding has historically
been ringfenced and the ringfencing for schools' funding will
continue into the future. Excluding this funding for schools and
children's services, the LGA's estimate of total available funding
is shown in Table 2 below. The figures are, as before, in cash
terms.
TABLE 2
| Year | Total funding excluding
schools and children's
services (£bn)
| Estimated inflation (%) | Real terms reduction in
funding (%)
|
| 2010-11 | 68.1 | 3.0%
| |
| 2011-12 | 65.8 | 2.0%
| 6.2% |
| 2012-13 | 64.2 | 2.3%
| 4.3% |
| 2013-14 | 64.5 | 2.6%
| 1.8% |
| 2014-15 | 63.4 | 2.7%
| 4.2% |
| |
| |
12. In conclusion, therefore, it can be seen that the
LGA's estimate is that local government in England will see a
decline in its funding for services other than schools and children's
services over the next four years. The funding reduction is estimated
to be about 16% in real terms. Currently, spend on adult social
care absorbs almost one-quarter of this funding. This is the backdrop
against which questions about the adequacy of funding for social
care have to be answered.
13. Local authorities have to manage the totality of
demands on spending within this level of funding. In the case
of adult social care, the LGA believes that, on the evidence,
real terms growth of 4% per annum is a reasonable measure of the
demographic and other cost pressures in the long term. This estimate
is comparable with research carried out for the previous government's
2009 Green Paper "Shaping the Future of Care Together"
(Cm7673). The impact assessment published by the Department of
Health to accompany that Green Paper states at page 15:
"The Personal Social Services Research Unit (PSSRU) at
the London School of Economics (LSE) undertook modelling for the
Government of the scale of demographic change and the financial
pressure that this represents for social care and other services
for people with care and support needs. The modelling work estimated
that the current social care system would need to receive increases
in funding of a minimum of 3.2% in real terms growth per year
each in order to maintain the levels of support provided currently
(without assumptions about productivity gains, this could increase
to 3.7% in real terms per year). This estimate is for older people
only.
"However, funding alone cannot ensure that the level
of support provided will meet future demands. Reform of the overall
system is needed to ensure that resources are used most effectively
and the system is delivering good quality support for all. To
illustrate this point, modelling by the PSSRU shows that even
with a substantial growth rate increase of 2% in real terms year
on year, the demographic changes mean that despite these increases:
— by 2012, the social care system would no longer be
able to support the same proportion of people that it does currently
(those with critical and substantial needs and those on low incomes);
— by 2026, around 50% of people in the lowest socioeconomic
groups and with critical or substantial needs would get no state
support. This is in comparison with an estimated 20% (of people
with critical or substantial needs) receiving no state support
in 2009;
— alongside the social care system, demographic change
will also drive up demand for disability benefits."
14. The estimates referred to above assume that the unit
costs of social care increase in real terms by 2% per annum Even
if, because of the impact of pay restraint, unit costs do not
grow at this rate in the short term, the conclusion of the research
quoted above would appear to be that, without significant real
terms increases in funding it is likely that there will be considerable
pressure on councils' ability to maintain services on the current
eligibility criteria (it should be noted that there is debate
about whether tightening eligibility criteria results in a more
effective or ultimately more economical service). That pressure
on services will clearly be all the greater in the light of the
likely significant real terms reductions in funding, notwithstanding
councils' efforts to deliver ongoing efficiency savings.
Local Government Association
December 2010
61
Local Authority Revenue Expenditure and Financing: England 2009-10
final outturn, published at http://www.communities.gov.uk/publications/corporate/statistics/revenue200910finaloutturn Back
62
Local authority revenue expenditure and financing England: 2010-11
Budget, published at http://www.communities.gov.uk/publications/corporate/statistics/revenue201011budget Back
63
ie the £24.6 billion funding allocated for 2010-11 plus the
£3.4 billion from specific Area Based Grant that will from
April 2011 be brought into the ambit of Revenue Support Grant/business
rates funding. Back
64
These estimates include the additional resources, initially £800
million in 2011-12 and rising to £1 billion per annum, due
to be transferred to local authorities by the NHS for re-ablement
and other social care interventions. Back
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