Conclusions and recommendations
Local Government funding and adult social care
1. Since 2010 councils’ overall budgets have reduced, resulting in savings in spending on social care, their largest area of discretionary spend. Combined with costs from growing demand for services, the implementation of the Care Act 2014, the National Living Wage and Deprivation of Liberty Safeguards, this has led to a funding shortfall in most councils’ social care budgets. (Paragraph 29)
2. Councils have partly mitigated the impact of budget pressures in the past with efficiencies and savings, but we do not believe this is sustainable and agree that councils have moved from doing ‘more for less’ to ‘less for less’. There is evidence that people are not getting the care required or that the care they already have is not being increased as their needs grow. (Paragraph 30)
Government funding for adult social care 2015 Spending Review and the 2017–18 Provisional Local Government Finance Settlement
3.Our witnesses welcomed the measures already taken by the Government to provide additional funding for adult social care, as do we. (Paragraph 31)
4.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. (Paragraph 38)
Adult social care funding mechanisms
5.The precept is recognition that councils need extra funding and, as a hypothecated tax, is helping to bring social care into the public consciousness. However, Government assumptions about the amount it will raise may be somewhat optimistic. Although some councils are concerned about the impact on their residents of raising council tax, we believe that, given the severity of the current situation, all councils should use the precept to its maximum amount to raise funding for adult social care. (Paragraph 53)
6.The amount raised by the precept is not going to be enough to tackle the funding pressures councils face or cover the increasing costs of the National Living Wage. The £382 million raised by the precept in 2016–17 represents less than 3 per cent of council spending on adult social care, and is significantly less than the cost of implementing the National Living Wage in 2016–17, estimated at £612 million. While the flexibility for councils to raise the precept by an additional 1% in 2017–18 and 2018–19 is a recognition of the scale and urgency of the financial pressures facing social care and the sector’s call for funding to be front-loaded, it is not a significant increase in funding in the context of the funding gap. (Paragraph 54)
7.Furthermore, as the amount raised varies across councils and does not correlate with need and National Living Wage costs, the precept is dependent on the improved Better Care Fund to offset the variations in the amount it raises. (Paragraph 55)
8.Given these limitations, the precept is not adequate as the main solution to the funding shortfall, but we believe that councils should exploit the opportunities it provides for increasing the funding available to them in the short-term.. Arguments about the lack of central government funding will be weakened if councils have not raised the maximum amount available to them. (Paragraph 56)
9.The adult social care support grant is an un-ring fenced reprioritisation of funding from the New Homes Bonus to social care and therefore does not represent new money for councils. Furthermore, it is distributed via the relative needs formula which, having been frozen since 2013–14, no longer reflects current need. Moreover, it represents a small proportion of the funding gap in 2017–18, estimated at £1.6 billion by the Association of Directors of Adult Social Care, and is available in that year only. Although welcome recognition of the upfront funding pressures facing the system, given these limitations it will not significantly ameliorate the funding shortfall in the short- and longer-terms. (Paragraph 60)
10.Despite the fact that the pressures on social care are acute, the improved BCF funding is back loaded in its timing and quantity, which also means that it was not available in 2016–17 to equalise the amounts raised by the precept. For these reasons, the improved BCF should have been available in 2016–17. Furthermore, the Government should confirm that councils will receive the full amount of the improved BCF, even if the savings from the New Homes Bonus are not achieved. (Paragraph 67)
11.The exact details of how the fund will work have not yet been published. Evidence suggested that accessing funding from the BCF was bureaucratic and burdensome. The improved BCF funds should be dedicated to social care and councils should be free to use them flexibly, without having to meet requirements and conditions. (Paragraph 68)
12.As we concluded in paragraph 38, estimates of the funding gap in 2017–18 range from £1.3 billion to £1.9 billion. We call on the Chancellor to use the Budget on 8 March to make the £1.5 billion 2019–20 tranche of the improved Better Care Fund immediately available to meet the shortfall in 2017–18. (Paragraph 69)
13.Estimates of the funding gap vary as there is no single method or set of variables for identifying the precise amount required. We therefore request that the National Audit Office (NAO) build on its earlier work and determine the amount needed to meet the funding shortfall for the rest of this Parliament. We then call on the Chancellor to commit to closing the funding gap in line with the NAO’s recommendation. (Paragraph 70)
14.We note that work to review the needs assessment formula is ongoing and is expected to conclude by the end of 2018. The Fair Funding Review should prioritise work on the adult social care relative needs formula so that an updated formula can be used in the distribution of the improved BCF funding as soon as possible. (Paragraph 73)
Conclusion
15.The funding commitments in the 2015 Spending Review and the 2017–18 Provisional Local Government Finance Settlement were a welcome acknowledgement by the Government of the financial pressures facing the sector. However, the £7.6 billion the Government has said they will generate may be somewhat optimistic because this assumes that all councils will raise the precept by the full amount each year. In the context of the pressures on social care budgets from an ageing population with increasingly complex needs, adults with learning disabilities, the introduction of the National Living Wage and new statutory responsibilities, these commitments will not be enough to secure social care’s future. (Paragraph 74)
16.We look to the Chancellor to address these immediate funding difficulties in the forthcoming Budget. Whatever action is taken in the short term, there are funding, structural and other problems affecting the social care sector in the medium- and long-term, and we shall make recommendations as to how these should be addressed in our final report of this inquiry. There is also an urgent need for a review, ideally cross-party, of the provision and funding of social care in the long term. We shall consider this further in our main report from this inquiry. (Paragraph 75)
3 March 2017