The clock is ticking on implementation of the social care reforms. Ewan Dewar writes that many uncertainties remain to be resolved.
The much lauded social care reforms were announced in September with a new £86,000 cap on the amount anyone in England will have to spend on personal social care over their lifetime. What does this, and the £5.4bn of additional resources pledged for adult social care over three years, mean in financial terms for local government and those who access these services?
Whilst the cap itself may be the most important element this is unlikely to be the case from a financial impact perspective for the first three years of operation to which the £5.4bn relates.
The example provided considers a self-funder who pays £700 per week and takes three years and four months to hit the cap (October 2023 to February 2027), taking them outside the time-frame of the £5.4bn funding announced.
The paper remains silent on how many people are expected to reach the cap and when, or what, funding will be available in future to manage the impact of people when they do hit the cap.
Sadly, but realistically, a large number of people will not live long enough to benefit from the cap, but with the promise of protecting assets and inheritances, the demand for assessments to take place will still be there.
Allocation
The plethora of grants over the last few years have had a multitude of allocation methods including versions of adult social care relative needs formulae, bed numbers, and service users supported.
The number of components that make up the reform impacts are based on numerous drivers that, at local authority level, will be heavily influenced by individual service users.
Given the additional burdens that the reforms will place on local authorities it is safe to say that at best there will be winners and losers from the resulting allocation system or, potentially, just losers when considering the match between actual cost and funding.
The health and social care levy is not an increase in national insurance but rather a 1.25% charge based on the NI system and with a similar ringfence. The supporting documents provide impact analysis focusing on the people who won’t be impacted, the high earners that will and a typical basic rate taxpayer.
Webcast Special
6 October, 2021
Room151 & Arlingclose host a special programme on the new Prudential and Treasury Codes
Local government finance officers register here.
Impact
It fails to mention, however, that some low-level earners will still be impacted. Someone working full time on the national living wage, at 37 hours a week, could be contributing 0.5% of their pay to the levy or, in practical terms, having a pay cut.
This is where some of the more indirect impacts for local government start. The lowest paid jobs, including care staff, are already difficult positions to fill and this will only get harder with what is in effect a pay cut.
At the same time those same employers will face increased fees from externally procured services that are themselves facing the employer levy cost impact. The cost of every staff-based service a council pays for will increase in the market over and above underlying inflation and national living wage increases.
While there will be compensation for the costs of contributions to the levy by public sector organisations which is outside of the £5.4bn, the paper is silent on the increase in care costs the levy creates (even without care staff demanding more pay just to stand still). Though not increasing spending power, this extra cost will still have to be paid for somehow.
Assessments
Local government social care departments will face other additional costs. To start contributing to their cap, self-funders who may not have been previously assessed will have had to receive a care needs assessment and the local authority will have had to calculate the cost of meeting that assessed need. Once that is complete, a financial assessment will also be required to identify how much they will be contributing to the cap.
While there will also be an increase in ongoing assessments from self-funders the local authority may have previously never seen, the greatest impact will come from the one-off existing self-funders all needing to be assessed by October 2023 if they want to maximise the benefit of the cap. This is alongside the necessary changes to care systems to manage the cap and training of staff in new processes and monitoring requirements once known.
One of the biggest potential financial impacts with the least amount of detail relates to self-funders being able to ask their local authority to arrange their care. This will inevitably push up the price of local authority placements.
Though initial central government guidance indicates that funding will cover “moving towards paying a fair rate of care“ there is no detail to support what this means in practice or funding terms.
Even where people don’t yet hit the cap, the changes in charging thresholds will reduce existing council income streams almost immediately. With a maximum charge cap on assets (not income) for those with assets between £20,000 and £100,000 this will increase the number of service users entitled to financial support.
In conclusion, with the clock already ticking down to October 2023 implementation and a significant level of unknowns still to be clarified, the future financial uncertainty that the reforms are due to address still seem far from resolved.
Ewan Dewar, finance manager, Coventry City Council.
—————
FREE monthly newsletters
Subscribe to Room151 Newsletters
Room151 Linkedin Community
Join here
Monthly Online Treasury Briefing
Sign up here with a .gov.uk email address
Room151 Webinars
Visit the Room151 channel
