IFS warn councils will need billions to fund rising cost of adult social care

Councils will need billions of pounds of extra funding over the course of the next parliament to pay for adult social care, a leading economic think tank has warned.

The Institute for Fiscal Studies (IFS) said a growing elderly population, increases in the number of disabled adults and wage rises were factors behind the need.

Councils are largely dependent on council tax and business rates to find their spending, with a gap likely to open up between the income and what they need to meet the rising cost of service provision, the IFS said.

Its analysis suggests that by 2024-25 councils will need an extra £4 billion a year from the government to maintain social care services at current levels, if council tax rises in line with inflation.

The figure would rise to £18 billion a year by the mid-2030s.

If council tax goes up by 4% a year every year – double the rate of inflation – councils may need an additional £1.6 billion a year in real-terms funding in five years’ time, the IFS said.

David Phillips, author of the work and an associate director at the IFS, said: “The additional funding announced for councils next year could be just a lull in the storm. Detailed public spending plans for 2021-22 and beyond have not yet been published.

“But we do know that councils will rely on council tax and business rates for more of their funding going forwards.

“And those revenues just don’t look like they will keep pace with the rising costs of services like adult social care – even with council tax bills going up at 4% a year, which is double the rate of inflation.

“That means finding billions more in funding to top up existing local tax revenues, even before thinking about new initiatives like free personal care.”

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