Do you know how funding for adult social care works? For many, figuring out the national and local rules for care funding is a lesson in confusion. Local councils are primarily responsible for social care in the UK (and each council offers slightly different services to accommodate the needs of their local citizens), but there’s also government funding to consider. Today we’ll be talking about where adult care funding comes from and what the future implications for it might be by taking inspiration from the Institute for Fiscal Studies’ (IFS) report “Adult social care funding: a local or national responsibility?”

Elderly Care Funding – Where Does the Cash Come from?

Adult social care spending takes up a sizeable portion of councils’ budget each year (over a third, according to the IFS reports). This money comes via council tax, business rates (a tax on commercial businesses) and grants from the government. However, in recent years councils have seen their grants reduced, and these types of grants are set to end in 2020.

Push and Pull Factors Stretches the Fund

Adult social care funding appears to be moving towards more control from central government in certain aspects and devolution to local councils in others. The government appears to want all councils to use the same assessment criteria, yet they want less involvement in obtaining the money needed for adult social care spending.

“Social care needs assessment processes have been standardised and national minimum eligibility criteria introduced, where previously councils had more flexibility to determine who was in need of social care services…[there is] a more general trend with government policy on local government finance pointing towards each council having more responsibility for raising its own revenues.” 

Clearly, this new environment will be challenging for councils; they will have standards for care dictated by central government, but the responsibility for raising the money needed to meet those standards will be mainly in their own hands. Ring-fenced grant funding, a dictated budget that is measured by a central government assessment of adult social care needs, has resulted in a notable drop in adult social care spending in the last decade. Questions are being raised on the central government’s ability to judge local needs, both from a financial and caregiving perspective; similarly, the demographics of a local area can change drastically, and economic drivers, as a potential consequence of Brexit, mean that flexibility of funding and services provided will likely be crucial for the foreseeable future. Combine this with an ageing population, and we see the strain on local services may be about to increase significantly.  

Raising extra cash for this increased strain on local social care services must come from somewhere. According to the IFS report, business rates revenues and council tax are unlikely to “keep pace” with the projected rise in social care spending. For the budget to keep up with demand, councils would need to make some rather unpopular changes to business rates and council tax. Another potential option would be to use a larger proportion of the council budgets to fund social care spending, but the possible cost to other services, such as local police, will also likely be unpopular.  

What’s the Answer? 

Several solutions have been suggested for the issue of adult social care funding. One is to create a ring-fenced grant (taken from council tax and business rates revenues) that completely covers adult social care spending for all of England; however, this will take a reported £15 billion of spending out of local council hands, who are arguably the people that best understand where the budget should be spent. Other problems concerning the ring-fenced grant proposal arise when considering the exposure such funding has to council tax fluctuations; a set amount for adult social care could mean that funding could be syphoned from other services if the council tax bill decreases.        

The report from the IFS suggested a fully centralised system as a potential solution, which would “fully insulate adult social care from changes in local tax revenues.” By careful assessment of local needs and strong partnerships with councils, central government could gauge an accurate idea of spending needs: “if the government could accurately assess spending needs, it would also be easier to achieve a consistent standard of care across England.” 

What do you think is the best route for adult social care spending in England? Should we completely devolve, completely centralise, or combine the two? Post your comments below!

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