Reversing course on business rates retention would provide the best solution for England’s adult social care funding crisis, according to the Institute for Fiscal Studies.
The abolition of central grant funding to councils means that social care spending could swallow up half of revenue from local taxes by 2035 — up from 30% today, according to a report by the thinktank.
It said that even if council revenues increase by double the rate of projected inflation each year, rising costs for adult social care services will leave councils with hard choices about service priorities.
David Phillips, associate director at IFS and an author of the report, said there is no easy way to square this circle without backtracking on reforms to local government finance and reintroducing general grant funding.
He said: “At the very least, the government will have to provide an increasingly large top-up via the Improved Better Care Fund or similar ring-fenced grants.
“Alternatively, it could decide to keep and, over time, increase the general grant funding for councils that it currently plans to abolish in 2020.
“More radically, it could devolve revenues from other more buoyant taxes, such as income tax, to councils to help fund local services.”
Polly Simpson, research economist at IFS and a co-author of the 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.”
Falling levels of redistribution between councils mean that delivering consistent access to quality social care across England could become increasingly difficult, the report said.
This could also lead to a reduction on spending on other services, including children’s services, public health, housing and refuse collection, the report found.
Earlier this week, health and social care secretary Jeremy Hunt outlined seven principles that will guide the government’s forthcoming social care green paper.
Hunt said one of seven principles running through the forthcoming green paper would be “the question of how we ensure a sustainable financial system for care, delivering a stable and vibrant market which delivers cost-effective, quality services for all, including the debate we need to have with the public on the challenges of sourcing additional social care funding.”
Changes could be tailored to different age groups, while technologyl solutions and new models for care will be looked at, Hunt said.
“A more vibrant and diverse market offer will give people greater choice and more effective support,” he said.
“But it is also vital because if we do nothing to support people’s needs more creatively or efficiently, the cost of simply delivering these services today will double in a decade.”
Responding to the Hunt’s speech, Margaret Willcox, president of the Association of Directors of Adult Social Services, said: “Whilst the moves announced today are key steps in that direction, only adequately resourcing care teams across the country, effective communication and support for both provider and recipients will ensure that they provide the person-centred care that we need.
“With a social care funding shortfall of over £2bn by 2020, we must work towards a long-term, sustainable funding solution to make sure that social care goes from being something we don’t like to think about needing to something that we actively plan for.”
