Social care costs ‘could account for half of council revenues by 2035’
Adult social care costs could account for half of the local taxes raised by councils unless ministers rethink their local government funding reforms, a leading economic think tank has warned.
The Institute for Fiscal Studies (IFS) said there was the risk of a growing “funding gap” for adult social care in England, with access to services increasingly varying from one local authority area to the next.
Under current Government plans, general grant funding for councils is due to be abolished from 2020, leaving authorities dependent on council tax and business rates for the vast majority of their expenditure.
However the IFS said that, even if council tax revenues were to increase by 4.5% a year – more than double the projected rate of inflation – social care spending could amount to half of all the revenues raised by local taxes by 2035, up from the current figure of 30%.
That would mean less money available for other services – including children’s services, housing, and bin collections – which have often already seen cuts of 20% or more since 2010.
At the same time, the Government’s changes will mean some councils will find their revenues increasingly differ from their spending needs, making it difficult to maintain consistent access and quality of service for social care across the country.
The IFS said the Government could provide ring-fenced grants to top up councils’ own tax revenues, although there was no guarantee they would actually be spent on social care as councils could simply cut back the amount of their own money which they allocate.
If ministers wanted to ensure ring-fenced grants were spent in full on social care, then the IFS said the services would have to be fully funded by central government grant.
However this would run against the grain of the Government’s reforms, removing more than a third of councils’ spending from local control, reducing residents’ say in local spending decisions.
Polly Simpson, a co-author of the IFS report, said: “The Government has to decide whether it thinks adult social care is ultimately a local responsibility, where councils can offer different levels of service, or a national responsibility with common standards across England.
“If it opts for the latter, it cannot expect a consistent service to be funded by councils’ revenues, which are increasingly linked to local capacity to generate council tax and business rates revenues.
“In that case, centralised funding for social care would seem more appropriate, and could allow closer integration with the NHS, which is also centrally funded. But it would make England even more centralised than now, and go against the Government’s devolution agenda.”
A Government spokesman said: “We have provided an extra £2 billion to support the social care system, and recently announced a further £150 million for next year.
“We will shortly outline the Government’s plans to reform social care to ensure it is sustainable for the future in a green paper.”
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