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Councils facing £1bn social care funding gap, LGA warns

Consumers Feel The Pinch With Christmas Around The Corner

Local authorities are facing a £1bn social care funding gap in 2019/20 as council tax rises fail to cover the cost of running services, the Local Government Association (LGA) has warned.

The LGA estimated that despite the ability to raise council tax to 2.99% and an option a further 2% through the social care precept, local authorities will remain well short of the funding required.

Cllr Richard Watts, Chair of the Local Government Association’s Resources Board, said: “Adult social care provides vital support to millions of people every day but is at breaking point.

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“Extra council tax income for adult social care has been helpful in recent years. For many that option has run out this year and the extra money the rest will raise will do little to prevent those who rely on services seeing the quality and quantity reduce.”

The LGA revealed that 67 of social care councils (44%) were unable to level any more social care precept in 2019/20.

This left 83 social care authorities in England who were considering or who had approving using the precept, with 38 using the full amount available.

The LGA said the precept would raise and extra £197m for services, well below the £290m required to cover increases in the National Living Wage.

Council leaders further warned that the social care funding gap is projected to rise to £3.6bn by 2025.

Cllr Watts added: “Raising council tax has never been the answer to fixing our chronically underfunded social care system. It has raised different amounts of money in different parts of the country, unrelated to need, and risked adding an extra financial burden on households.

“Investing in social care is the best way to keep people out of hospital and living independent, dignified lives at home and in the community. This is not only good for our loved ones but is proven to alleviate pressure on the NHS.

“Plugging the immediate funding gap facing adult social care and finding a genuine long-term funding solution must therefore be an urgent priority for the Government.”

Alex Khaldi, Partner and Head of Social Care Insights, Grant Thornton UK LLP, said: “Our recent analysis on social care tax options with Independent Age supports the LGA’s findings and shows that there are no easy answers. Funding options, such as increasing business rates or council tax, fall far short of addressing the gap. This means that taxes at a national level need to be considered if we are to have a hope of managing the increasing levels of demand.

“We found that if all rates of income tax were raised by just 1% it would generate an extra £6.14bin in 2020/21 or, if raised by 2.11%, would be able to provide free personal care for all in 2030/31.

“Opinions vary about if and when we will see a Green Paper on social care, but if we do, it will be unlikely to be bold enough about the funding issues. The upcoming Spending Review is an opportunity for government to provide a long-term sustainable funding solution so that councils can continue to provide much needed support for the most vulnerable in our society.”

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The author Lee Peart

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