Long-term funding of adult social care – Report Summary

This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.

Author: Levelling Up, Housing and Communities Committee

Related inquiry: Long-term funding of adult social care

Date Published: 4 August 2022

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Rt Hon Boris Johnson MP, in his first speech as Prime Minister, promised to “fix the crisis in social care once and for all”. Since then, there has been a global pandemic that ravaged the adult social care sector, and the Government has announced a variety of reforms which include:

  • An £86,000 spending cap on how much people pay for personal care, and a more generous means test so more people are eligible for state-funded care;
  • Implementing Section 18(3) of the Care Act 2014, so that people who receive care in a care home can access the same, usually lower, fees paid by their local authority;
  • Introducing a fair cost of care policy, so that the fees paid by local authorities increase to a sustainable level for providers;
  • The People at the Heart of Care White Paper: the Government’s 10-year vision for reform of the sector, including proposals for housing, workforce, unpaid carers, innovation, technology, data, assurance, and market-shaping;
  • Introducing the Health and Social Care Levy to raise funds for the NHS and social care, ringfencing £5.4 billion over three years to fund the charging and sector reforms outlined above; and
  • Progress on integrating health and social care: through the Health and Care Act 2022 and the Joining up care for people places and populations White Paper.

Our report examines the short-term and long-term demands for funding and the impact of the Government’s proposals. Ultimately our recommendations are designed to benefit the people behind the figures: those who need care, their loved ones, and care workers.

Overall funding

The message rang clear throughout our inquiry: the adult social care sector does not have enough funding either in the here and now, or in the longer-term. Covid-19 has highlighted the underlying structural challenges of rising demand, unmet need, and difficulties recruiting and retaining staff; and has also exacerbated them. In addition, there are severe current pressures arising from increases in the National Living Wage and the National Minimum Wage, and from rising inflation. Through the Health and Social Care Levy, the Government has introduced a mechanism to raise additional funds. However, the majority of funding from the Levy will go to the NHS, and the money that is going to adult social care is for reforms, not cost pressures. Furthermore, we received concerns that the Government has underestimated the combined cost of its charging reforms.

  • The Government should allocate additional funding this year through the adult social care grant, to cover inflationary pressures and unmet care needs, and should announce this as soon as possible so that local authorities can plan how to cope best with the pressures they are facing.
  • The Rt Hon Boris Johnson MP said as Prime Minister that that he would fix the crisis in social care once and for all. We commend the Government for attempting to prevent unpredictable and catastrophic care costs for people and introducing reforms to the sector where previous Governments failed to act. But it should be under no illusions that it has come close to rescuing social care, and needs to be open with the public that there is a long way to go.
  • The Government has missed the opportunity afforded by the Health and Social Care Levy. Members of the public are seeing taxes on their payslips going to health and social care, yet we heard the money going to social care “won’t touch the sides”.
  • We do not wish to pit the NHS and adult social care against one another. The two systems are interdependent and each needs to be adequately funded to reduce pressure on the other. Wherever the money comes from—from allocating a higher proportion of levy proceeds to social care, or from central government grants—the Government urgently needs to allocate more funding to adult social care in the order of several billions each year, at least £7 billion.
  • The Government should re-evaluate the combined impact of its charging reforms, Section 18(3), and the fair cost of care. It should regularly monitor take-up of Section 18(3) and update its models accordingly. The Government should provide further funding to local authorities, if necessary, on top of additional funding for underlying pressures.

Balance of funding sources

As well as there being a large and growing funding gap in adult social care, our evidence was clear that the balance of funding sources needed to be addressed to achieve greater geographical fairness and help sustain the adult social care market so that more people can access more reliable care. Short-term, ad hoc grants and one-year funding settlements hampers local authorities’ ability to plan and forecast, which in turn affects the financial certainty of care providers. We are also concerned by the sheer number of reforms and new ways of working in respect of adult social care that involve and affect local authorities.

  • We recognise the benefits of raising a proportion of funding for adult social care locally. As we have argued in previous reports, we support greater fiscal devolution. In finding the right balance of funding sources for adult social care, however, we are concerned by the increasing reliance on locally raised tax revenue as currently constituted. We have previously made proposals for how locally raised revenue can be based more fairly. We also recognise that the decision to raise the social care precept will become a harder sell for councils when residents have already seen their National Insurance Contributions increase to pay for health and social care. In deciding how much additional funding to provide from the centre for adult social care, the Government must proceed with the aim of rebalancing the sources of funding so there is not such a reliance on council tax.
  • The Government must provide a multi-year funding settlement to give local authorities the visibility they need both for their own sustainability and also to help shape sustainable local care markets.
  • The Government must update the adult social care relative needs formula by the next financial year. This should be implemented alongside the Fair Funding Review and council tax equalisation.
  • The Government should publish a new burdens assessment by the end of the year to determine the level of resource needed by local government in terms of staff, expertise, and funding to deliver the full package of adult social care reforms.

Sector reforms

Stakeholders roundly praised the Government’s 10-year vision in its People at the Heart of Care White Paper. We commend the Government for introducing many welcome initiatives such as those relating to housing and data which could make a significant difference in the long-term to people’s lives. However, the Government currently has nothing more than a vision, with no roadmap, no timetable, no milestones, and no measures of success. The Government’s commitment to “making every decision about care a decision about housing” is welcome, but we are alarmed that so much of the detail has not been shared. Ensuring that the adult social care workforce feel valued and are rewarded with wages that are commensurate to the highly skilled nature of their work is critical, but there is nothing in either the People at the Heart of Care White Paper, or in the Government’s integration proposals, on pay. We also think that £25 million over three years is a totally inadequate amount to allocate to initiatives to support carers, which will do little to assure carers that their contribution is valued by the Government.

Integration strategies should seek to integrate not just health and care but health, care and housing. Ensuring there is holistic care that fits around a person’s needs includes preventing care needs from arising by having suitable housing, enabling people to live independently in their own homes, and ensuring that people receive the right care and support in the right setting, recognising that most people who receive care do so in their own home.

  • The Government should publish a 10-year plan for how its vision in the People at the Heart of Care White Paper will be achieved, taking into account how the different policies interweave and affect one another.
  • The Government should publish a 10-year strategy for the adult social care workforce. The strategy should not just be a wish-list but needs to be a clear roadmap with core milestones, outcomes, and measures of success.
  • The Government’s integration proposals must include a requirement to work towards achieving parity of pay for comparable roles across the NHS and social care.
  • We recommend that integrated health strategies have proper regard to a person’s housing needs as part of their care provision.