Adult social care: a pre-Budget report Contents

3Government funding for adult social care: 2015 Spending Review and the 2017–18 Provisional Local Government Finance Settlement

31.Our witnesses welcomed the measures already taken by the Government to provide additional funding for adult social care, as do we. Sarah Pickup of the Local Government Association said that local government would otherwise be “in a significantly worse position”64 and Ray James of the Association of Directors of Adult Social Services said it was “very welcome recognition for social care”.65

32.In his 2015 Spending Review speech, the then Chancellor of the Exchequer acknowledged the pressures on social care, saying “The truth we need to confront is this: many local authorities are not going to be able to meet growing social care needs unless they have new sources of funding”.66 Accordingly, “£3.5 billion of support for adult social care by 2019–20” was announced, taking the form of:

33.At the same time, he announced that central government grant to local authorities would be reduced by £6.1 billion by 2019–20, which it was stated would be matched by projected increases in council tax and business rates of £6.3 billion by 2019–20.68 The Government also said that it would consult on changes to the local government finance system which would rebalance support to those authorities with social care responsibilities.69

34.In December 2016, in his statement on the 2017–18 Provisional Local Government Finance Settlement, the Secretary of State for Communities and Local Government said that “Over recent months we have listened to, heard and understood calls from across the board saying funding is needed sooner in order to meet short-term pressures”.70 He announced:

35.When we asked Marcus Jones, the Minister for Local Government at the Department for Communities and Local Government, about the sufficiency of the Government’s funding commitments for social care, he said that “There is a package there, dedicated to social care, in the region of up to £7.2 billion, which is significant additional funding to that which has been available to date”.72 The table below sets out the Government’s figures on the available revenue for social care to 2019–20. The figures assume that all councils will use the precept to increase council tax.

Table 1: Expected available revenue for social care to 2019–20

Year

Adult social care precept

Improved BCF

(£m)

Adult social care support grant

(£m)

If councils opt to raise precept to 2%

(£m)

If councils opt to raise precept to 3% in 17–18 and 18–19

(£m)

2015–16

0

0

0

0

2016–17

392.8

392.8

0

0

2017–18

814.2

814.2 + 208

105

241.1

2018–19

1,289.8

1,289.8 + 444

825

0

2019–20

1,811.5

1,289.8 + 444

1500

0

Source: DCLG Core spending power supporting information, 15 December 2016

The funding gap

36.Many organisations in the sector say that, even taking into account the funding commitments in the 2015 Spending Review, there is a ‘funding gap’ in adult social care which has resulted from the funding available not keeping pace with the costs of increasing demand for care (which we examined in paragraphs 11 to 13), and which is likely to continue unless additional funding is provided. Although the Government announced additional funding in the 2017–18 Provisional Local Government Finance Settlement, namely the flexibility to raise the precept in 2017–18 and 2018–19 by 3% and a £240 million adult social care support grant in 2017–18, 73 these amounts represent a small proportion of the estimated funding shortfall. In chapter 4, we examine the evidence we received about the sufficiency of the funding from the social care precept, the improved Better Care Fund and the adult social care support grant.

37.We understand that there is no single method of identifying the funding that is required, with organisations arriving at slightly different figures depending upon the variables used and when the estimate was made. In the course of our inquiry, we were presented with various estimates for the funding gap. The table below sets these out:

Local Government Association

“The immediate pressures threatening the stability of the care provider market could amount to at least £1.3 billion [ … ] On top of that, councils also estimate that by 2019–20, a further £1.3 billion will be required to deal with the additional pressures brought about by an ageing population, inflation, and the cost of paying the National Living Wage.” 74

The Association of Directors of Adult Social Care

Ray James of ADASS: “We say the gap is £1.4 billion in 16–17. It rises to £1.6 billion in 17–18 and then as a result of the additional injection of BCF in later years drops to £1.4 billion and £1.1 billion in the final period.” 75

The King’s Fund, Nuffield Trust and Health Foundation

“The social care funding gap is likely to be at least £1.9 billion in 2017–18 and £2.3 billion by the end of this Parliament.” 76

Health Foundation

“With pressures rising by around 4% a year—from an ageing population and the rising prevalence of chronic conditions—there is still likely to be a funding gap in 2019–20 of at least £1.7 billion.” 77

The Institute for Fiscal Studies

£1.3 billion to £2.5 billion by 2019–20, depending on whether councils continue to protect social care spending. 78

38.Authoritative sources in the social care sector say that, despite the Government’s funding commitments, there will still be a funding gap by 2019–20, estimates of which range from £1.1 billion to £2.6 billion. For 2017–18, estimates of the funding gap range from £1.3 billion to £1.9 billion.


64 Q60 [Sarah Pickup]

65 Q61 [Ray James]

66 HM Treasury and Rt Hon George Osborne MP, Chancellor George Osborne’s Spending Review and Autumn Statement 2015 speech, 25 November 2015

67 HM Treasury, Spending Review and Autumn Statement 2015 (November 2015)

68 HM Treasury, Spending Review and Autumn Statement 2015 (November 2015)

69 HM Treasury, Spending Review and Autumn Statement 2015 (November 2015)

70 Department for Communities and Local Government and the Rt Hon Sajid Javid MP, Oral statement to Parliament: Provisional local government finance settlement 2017 to 2018, 15 December 2016

71 Department for Communities and Local Government and the Rt Hon Sajid Javid MP, Oral statement to Parliament: Provisional local government finance settlement 2017 to 2018, 15 December 2016

72 Q373 [Marcus Jones]

73 Department for Communities and Local Government and the Rt Hon Sajid Javid MP, Oral statement to Parliament: Provisional local government finance settlement 2017 to 2018, 15 December 2016

74 Local Government Association, £2.6 billion could be needed to fix social care—LGA warns, 13 October 2016

75 Q61 [Ray James]

76 The King’s Fund, the Nuffield Trust and the Health Foundation, The Autumn Statement: Joint statement on health and social care (November 2016)

77 The Health Foundation (SOC153)

78 Institute for Fiscal Studies, Green Budget 2017: UK spending on health and social care (February 2017)




3 March 2017