Social care funding: time to end a national scandal Contents

Chapter 1: Introduction

1.Adult social care in England is inadequately funded. As a result, many people who need state-funded care are not receiving it. 1.4 million older people (14 per cent of the population) had an unmet care need in 2018.1 Family and friends, most often women aged 50–64, are taking on an increasing amount of unpaid care, and most carers say this is having a negative impact on their health.2 Care workers continue to be underpaid and undervalued. The number of older people and working-age adults requiring care is increasing rapidly, and public funding is not only not keeping pace, but has declined in real terms by 13 per cent between 2009/10 and 2015/16.3

2.Social care funding is also unfair. People with cancer receive treatment free of charge on the NHS, while many people with dementia have to pay hundreds of thousands of pounds for their social care. National funding for social care is distributed unequally across local authorities. The funding shortfall has meant local authorities are paying care providers a far lower rate for local authority-funded care recipients than self-funded care recipients, and those care providers with a high proportion of local authority-funded care recipients are struggling to survive.

3.This report sets out our conclusions on the challenges for adult social care funding and considers options for reform and ways of achieving it. Our report does not consider issues of quality or the nature of provision of care. Unless otherwise specified, the report refers to care for both older people and those of working age. This chapter gives background on the present funding system for social care.

Existing funding arrangements

4.Social care in England is funded primarily by local authorities, with contributions from care users, national government, and the NHS. Local authorities contract out services to care providers, who range from large national private companies to smaller local organisations, including charities and voluntary bodies. In 2016/17 local authorities spent £18.15 billion on adult social care, divided roughly equally between care for older people and for those of working-age.4 Table 1 shows the distribution of sources through which local authorities funded adult care in 2016/17.

Table 1: Estimated breakdown of gross adult social care funding, 2016/175


Amount and proportion of funding

Council tax

£8.0 billion (38.6%)

Business rates

£3.8 billion (18.1%)

Other income (predominantly NHS partnerships)

£3.2 billion (15.5%)

Government grants

£3.0 billion (14.7%)

Care user contributions

£2.7 billion (13.1%)

Source: Ministry of Housing, Communities and Local Government, Local authority revenue expenditure and financing England: 2016 to 2017 individual local authority data:outturn (24 August 2017): [accessed 26 June 2019]; Local Government Association, The lives we want to lead: the LGA Green Paper for adult social care and wellbeing, July 2018: [accessed 26 June 2019]

5.To be eligible for local authority funding, an individual must pass a needs assessment and a financial assessment. If the individual qualifies for funding, the local authority will determine a “personal budget”, which sets out the total cost of care needs and the distribution between individual and local authority contributions.6 Any individual with more than £23,250 in assets will not receive public funding. Box 1 describes the assessments in more detail.

Box 1: Eligibility for public funding

The needs assessment is conducted by a local authority employee, such as a social worker or occupational therapist, who considers whether the individual has eligible needs for care and support such as help with “managing everyday tasks like washing, dressing and cooking” or wider social needs. The assessment can happen over the phone or in person.7

In the financial assessment, the local authority determines how much an individual can afford to pay towards their care. If an individuals’ assets value higher than £23,250, they will receive no funding. Where assets value lower than £14,250, individuals will pay “only what they can afford from their income”. Individuals falling between the two thresholds will pay an affordable amount (as assessed by the local authority) from their income, and a means-tested contribution from their assets.8

If the individual is receiving care in their own home (domiciliary care), the value of the individual’s home is not included in the financial assessment. If they are living in a care home, the value of their house is included. Any outstanding mortgage debt is deducted from the value.9

Income is calculated on a weekly basis. Individuals are expected to pay a large proportion of their income towards care costs, but they will always be left with a minimum of £24.90 a week (a Personal Expenses Allowance). The assessment assumes that individuals claim all social security benefits for which they are eligible.10

Public funding sources

6.Traditionally, as shown by Table 1, social care funding has come from local authority budgets, which are themselves comprised mostly from central government grants and receipts from council tax and business rates. Most is not ring-fenced for social care, meaning local authorities are free to allocate funding according to their views of needs and priorities in their area.11 Unlike the National Health Service, budget decisions are therefore made at a local rather than national level.

7.Box 2 describes actions taken by the Government to make more funding available for social care in response to the challenges set out in Chapter 2 of this report.

Box 2: New sources of public funding

From 2016/17 to 2019/20 local authorities have been allowed to add a social care precept to council tax of two per cent in each of the four years, up to a total of eight per cent. From 2017/18, local authorities were permitted to raise the precept by up to three per cent for that year and 2018/19, but without an increase in the eight per cent maximum. Forty-four per cent of local authorities chose to bring the precept forward by increasing it by three per cent in both 2017/18 and 2018/19, and will therefore not be able to raise a further precept in 2019/20. 12

Originally introduced in 2013, the Better Care Fund (BCF) pooled money already due to be allocated to clinical commissioning groups and transferred to social care from NHS funding. In 2015, the Government pledged additional national funding for the BCF, known as the improved Better Care Fund.

An additional £240 million was added to the Better Care Fund for 2018/19 and 2019–20 to invest in social care to alleviate pressures on the NHS over the winter.

The Adult Social Care Support Grant was announced in 2017/18 as a one-off £240 million grant for social care funding, distributed according to the relative needs of local authorities. It was extended in 2018/19, but only with £150 million. For 2019/20 it was expanded to included children’s social care and increased to £410 million.

1 Age UK, New analysis shows number of older people with unmet care needs soars to record high (9 July 2018): [accessed 16 May 2019]

2 Written evidence from Carers UK (SOC0046)

3 Written evidence from The Health Foundation (SOC0047)

4 NHS Digital, Adult Social Care Activity and Finance Report: Detailed Analysis (23 October 2019): [accessed 30 May 2019]

5 Since 2016/17, government grants have increased with the improved Better Care Fund. This totalled £1.84 billion in 2019/20, which, as an indication of magnitude, would have increased government grants in 2016/17 figures to 23.6 per cent of gross adult social care funding.

6 Age UK, Paying for permanent residential care (April 2019): [accessed 29 May 2019]

8 The means-tested contribution is calculated as £1 per week for every £250 of capital between the capital limits. Department for Health and Social Care, Social care: charging for care and support (January 2019): [accessed 29 May 2019]

11 House of Commons Library, Adult Social Care Funding (England),Briefing Paper, CBP07903 12 February 2019

12 Local Government Association, ‘Council tax will fail to protect adult social care services this year’, (6 March 2019): [accessed 16 May 2019]

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