Local government finance reform alone cannot solve the long-term funding crisis within social care, according to a report by MPs.
MPs on two House of Commons committees said in a joint report that the government should also scrap plans to give councils extra responsibilities as a result of the forthcoming 75% business rates retention plans.
The report added that in addition to other local government finance reforms, a new social care premium should be collected at a national level to support the sector.
The report said: “Local government funding will only ever be one part of the solution for social care, and it is clear that extra revenue will also need to be raised nationally.”
The report, drafted by the health and social care committee along with the housing, communities and local government committee, said that the government should also reform and update council tax valuation bands.
On business rates retention, it said: “There should be a continuation for the foreseeable future of the existing local government revenue streams.
“In 2020, these funding streams should be enhanced through 75% business rates retention.
“This should be used to fund social care rather than the replacement of grants the government is proposing to introduce.”
A social care premium, the report said, should be payable by all citizens over the age of 40, including pensioners.
It also called for social care money to be raised using an increase in inheritance tax.
However, the report concluded that there is a “strong case” for the delivery of social care at a local level due to the “benefits of links with housing and other local services, as well as local accountability”.
Before any further reform of the system, however, the MPs said the funding gap for social care — expected to rise to £2.5bn by 2019–20 — must be closed.
Upfront funding will also be needed for transformation issues, it added.
In a 2018 budget survey published earlier this month, the Association of Directors of Adult Social Care (ADASS) calculated that the national living wage and national minimum wage will cost councils an additional £466m in 2018–19, up from its estimate of £333m in last year’s report.
The committees also criticised the government, saying its work on reforms to local government finance and the forthcoming green paper on social care “do not appear to be linked”.
Responding to the report, Izzi Seccombe, chairman of the Local Government Association’s community wellbeing board, said: “Properly funding social care, and prevention measures, not only helps councils with overly-stretched budgets offer the vital support that older and disabled people need, it also helps to prevent crises and cost pressures in the NHS by reducing the number of people who are admitted to hospital.
“It is now time for government to plug immediate sector pressures and then go on to deliver a sustainable long-term solution to funding adult social care through its forthcoming green paper for the benefit of everyone in society.”
David Williams, spokesman for health and social care at the County Councils Network, and leader of Hertfordshire County Council, said: “Importantly, MPs on this committee argue there is a ‘strong case’ to keep social care a local service within the remit of local authorities.
“As they highlight, the local delivery of social care brings the ‘important benefits’ of linking with housing and other local services.”
Alex Khaldi, partner and head of social care insights at audit firm Grant Thornton, said the proposal for a social care premium “is one of the more sensible options being put forward.”
He added: “It would create a substantial financial pool at a national level and help to ensure that those in need in council areas, with lower tax bases, are not disadvantaged.”
But Khaldi said the public should be aware that the tax would need to increase along with the expected rise in demand for adult social care.
