Social care: still unresolved

The 2015 Spending Review marks the mid-point of a decade of austerity. For those who may depend on adult social care in England, that is a worrying thought. During the first half of the decade, state expenditure for people who need personal help fell by around ten per cent in real terms as the local authorities responsible bore the brunt of successive years of cuts.

Councils had to relentlessly push down the prices they paid providers, creating serious concerns about the low morale and stretched time of care workers, and the implications for standards of care. Eligibility was restricted: hundreds of thousands of people whose needs would once have been considered severe enough to receive state support, mostly in their own homes, were shut out from what was already a tightly rationed system.

This is almost certainly contributing to the rising pressure the NHS faces. In looking at the drivers of dire NHS trust finances, Monitor recently pointed to a six per cent rise since last year in bed days occupied by patients whose transfer of care had been delayed, often because no arrangement could be made for their personal and safety needs.

Any number of think tanks and charities has argued that something must be done, as has NHS England Chief Executive Simon Stevens. This summer, the Local Government Association looked over the next five years of austerity to come, as well as the impact of the Living Wage announced over the summer, and warned that a further £2.9 billion funding gap was likely to emerge.

The Treasury's game of give and take

In response, Wednesday’s Spending Review saw George Osborne announce a new power to raise council tax by two per cent, bringing in £2 billion ring-fenced for social care if every local authority took the opportunity, and a new grant of £1.5bn through the Better Care Fund in the later years of the parliament. Gap closed and problem solved?

Not quite.

At the same time, the central grant to local government, which provides almost a third of the pot from which social care is currently funded, is to be slashed by more than half. That translates to a reduction of around £2.1 billion in the underlying funding for adult social care.

The Spending Review emphasises that new local tax sources will help offset these wider cuts. But this still means local authority spending falling by 1.7 per cent a year in real terms. Furthermore, overlooked by most of the media response to the Spending Review, this will mean council tax rising each year by the two per cent already permissible, on top of the additional two per cent for social care. The Office for Budget Responsibility assumes that despite the political implications, councils will indeed come close to this, hiking rates by 14 per cent by April 2019.

Reading the small print

While the Spending Review’s provisions for social care may stop the situation getting worse, the truth is that it is already unacceptable.

There are also troubling questions about the impacts on fairness of this. In general, poorer areas of England will have to put up council tax far more for the same return than wealthier areas. As the Institute for Fiscal Studies has shown, for some inner city councils, imposing the two per cent additional increase each year would cover less than a tenth of their current adult social care costs. Meanwhile other, often wealthier areas would find the new income covering almost a fifth of theirs.

The most opaque part of the pledge, meanwhile, is the money to be delivered through the Better Care Fund, which will kick in at some level from 2017. A cynic might argue that delivering it in this ring-fenced way serves the rather convenient purpose of making this look like a generous increase – rather than an amelioration in a central grant which is otherwise trending relentlessly down. It will also make it easy for extra conditions, limitations and demands to be attached, perhaps making this feel like less than £1.5 billion in truly additional money.

Closing the gap, saving the day

Nonetheless, add this to total increases of around £3 billion in the locally raised funding that goes to social care – assuming its share stays constant, and the OBR is right about aggressive rises in council tax – subtract the cuts in the central grant, and the LGA’s underlying “gap” appears to be more or less closed.

But we should be careful about assuming that this means the problem has been solved. For a start, people living in the least fortunate areas may face a much tougher picture. And while at a national level the Spending Review’s provisions for social care may stop the situation getting worse, the truth is that it is already unacceptable. Four Seasons, a major care home provider, is already announcing that it needs to start closing less profitable care homes. The pressure created on the health service is already among the factors tipping it into deficit. The LGA assume that ongoing “efficiencies” must be made each year – but the consequences of squeezing either prices or the numbers of recipients much further could be dire.

In two or five years’ time, despite these provisions, the state of adult social care will still be a source of deep concern for those who fund, deliver and need it. The need for a bigger solution – along the lines of taking money from state pensions, compulsory private saving, or new taxes – will not have gone away.