A “severe mismatch” between local funding of adult social care and local needs is being risked through the absence of a well-functioning local government finance system, according to the Institute for Fiscal Studies (IFS).
A new report into potential future developments in the adult social care system in England has called for the government to “commit to implementing, and keeping up to date, new formulas for assessing councils’ spending needs”, as a minimum requirement.
Existing funding is largely based on formulas last updated in 2013, the IFS pointed out, while “rather ridiculously” data from as far back as 2001 is being used in some cases.
The future of adult social care will depend on political priorities and economic trade-offs, according to the report, with short-term decisions at both central and local government levels likely to soon reveal the relative priority given to adult social care compared to other public services.
A decision on how much to provide to local authorities at the one-year Spending Review this autumn and the multi-year Spending Review next spring will be key, the IFS added.
The report also revealed that the decision not to go ahead with the previous government’s adult social care reforms, which would have seen the introduction of a lifetime cap on adult social care costs and a “more generous” financial means test, abandons significant potential future savings.
“The reforms were scored as saving £1.1bn in 2025/26, a considerably smaller sum than the eventual long-term savings, which are estimated to amount to £4–£5bn a year by the end of the parliament,” the IFS said. This means that the so-called ‘insurance problem’ in social care “remains unresolved”.
The IFS also pointed to growing pressure on social care services for younger adults, in addition to the “more commonly discussed” pressures from an ageing population. The organisation found that the number of new requests for support from individuals aged 18–64 grew by 18% between 2014/15 and 2022/23, which is more than three times faster than population growth for that age group, alongside “sharp increases” in disability benefit claims.
The Office for Budget Responsibility projects that UK-wide public spending on adult social care would need to increase by 3.1% per year in real terms over the next decade. After adjusting for savings from the scrapping of charging reforms, the IFS reported that spending would rise from 1.3% of national income in 2023/24 to around 1.5% in 2033/34, and then to 1.9% in 2053/54 and 2.2% of national income in 2073/74.
Finally, challenges in maintaining the adult social care workforce will also need to be addressed, with immigration policies having a significant impact.
The IFS said that if there is a decrease in the number of migrants entering the care sector as a result of government policy, Labour “must be prepared either to accept a smaller workforce (i.e. a deterioration in care quality and/or coverage) or to boost the funding allocated to local authorities to raise wages and attract more domestic workers”.
LGA calls on government to address social care workforce ‘crisis’
The IFS report comes as the Local Government Association (LGA) has called on the government to “take immediate and decisive action” to tackle what it is calling an “adult social care workforce crisis”.
The LGA has released a report based on a survey of councils that shows an estimated 63,370 full-time equivalent adult social care staff are working in local councils, but there are 10,060 vacant posts. This amounts to a vacancy rate of 16%.
The LGA’s survey, based on a response rate of 41% from an online survey of 153 directors of adult social services or equivalent, also found that an estimated £292m is set to be spent on agency staff in 2023/24, up from £277m the previous year.
Some 55% of councils stated that low wages were the primary reason staff were leaving, while 87% of councils reported recruitment difficulties in filling roles for qualified social workers in mental health services, the LGA said.
David Fothergill, chair of the LGA’s Community Wellbeing Board, said the combined factors of vacancies, turnover and low pay were pushing the sector to “breaking point”.
He added: “Without urgent intervention, councils will struggle to meet their legal duties to people who draw on care. We are calling on the government to work quickly and closely with councils on a fair pay agreement for care workers to attract and retain skilled professionals, implementing a fully funded workforce strategy for the sector, and providing councils with the resources they need to reduce their reliance on costly agency staff.”
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