Proposed government reforms to adult social care will place huge additional burdens on local authorities with significantly increased costs. Leigh Whitehouse discusses the forecast impact at Surrey County Council and calls for a pause in the implementation to review the policy.
One of the many great things about working in local government is that you never have to wait long for the next interesting challenge to emerge. At Surrey County Council (SCC), we recently concluded a “Safety Valve” agreement with the Department for Education to address the financial deficit on our Dedicated Schools Grant High Needs Block. This deficit arises directly out of policy changes in 2015 in relation to children with special educational needs and disabilities, which were not accompanied by requisite changes to funding levels. It is a financial challenge significant enough to have placed the ongoing financial sustainability of many authorities in question, and Surrey sits in an early wave of the problem that is being faced by more and more authorities.
It would be wrong to say that the Safety Valve agreement resolves the issue for us (let alone the sector), as it depends on the successful delivery of a five-year transformation plan, but it at least brings clarity. However, the role of a sector-destabilising policy change with insufficient funding attached, and a fog-like lack of clear information, has been quickly taken by the government’s plans in relation to adult social care.
Ever since the government published its proposals to change the way social care is to be funded, discussion has focused on the overall impacts. This equally applies to the great work that the County Councils Network and LangBuisson have undertaken and to which SCC contributed. In addition, we need to understand how the measures being introduced over the next year will affect individual council finances, and our team has been looking at the numbers since the reforms were unveiled.
The role of a sector-destabilising policy change with insufficient funding attached, and a fog-like lack of clear information, has been quickly taken by the government’s plans in relation to adult social care.
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Funding focuses on NHS
New funding through the 1.25% health and social care levy on national insurance contributions is on the face of it to be welcomed. However, just £5bn of the £39bn raised in the first three years will go to social care, and, even assuming that the current plans are sustained, the funds will not start to come through until 2025. Before then, the money will all go to helping the NHS clear the waiting list backlog that has developed as a result of the Covid-19 pandemic.
The social care reforms though will place huge additional burdens on local authorities with significantly increased costs due to a number of related reasons: taking public the funding of care for people who currently privately “self-fund”; a significant increase in workforce requirement to manage this care; and rises required to the rates local authorities pay as part of the government’s “Fair Cost of Care” policies.
Hampered by the lack of detail on the policy, and the broad range of assumptions therefore having to be applied, our team is still working hard to model the financial impacts, with the latest indicative results inevitably featuring a wide range of outcomes. Nonetheless, the materiality is inescapable. We currently estimate the additional costs to the council will range between £1.2bn and £3.2bn over the next 12 years. This represents an increased adult social care budget requirement of between 27% and 65% by 2027/28, rising to between 41% and 95% by 2033/34.
“Fair Cost of Care” proposals could fundamentally destabilise the provider market in Surrey where currently around 60% of the older people care market are “self-funders”. There are also risks that providers could be driven out of the sector entirely, reducing choice and competition, or that they may be required to raise their charges and increase costs for everyone.
Market destabilisation could also impact adversely on the NHS, which funds placements in care homes and home care services for people with continuing health care needs. The government’s current implementation timetable does not give sufficient time for these issues and potential impacts to be fully understood prior to the changes coming into effect.
We currently estimate the additional costs to the council will range between £1.2bn and £3.2bn over the next 12 years. This represents an increased adult social care budget requirement of between 27% and 65% by 2027/28, rising to between 41% and 95% by 2033/34.
Understanding the impact of the reforms
There cannot be any doubt that the way we pay for social care needs to change, to provide reassurance that services to help people live the lives they want will be there. As an authority, SCC strongly supports the government in its desire to tackle this long-term issue, but more time and consideration needs to be dedicated to the impact of these reforms. A pause in the planned October 2023 implementation would, therefore, be appropriate to understand the impacts, review the proposed policies and give sufficient time for their effective rollout.
This will enable government to gather more information from councils and care providers and allow for a robust assessment of the true cost and impact of the reforms on the cost of care and the market. It will also allow for the development and implementation of a clear workforce strategy that will understand the future needs of the sector and provide a plan to recruit and retain staff.
This is vital because the government’s proposals, as they currently stand, will require a huge number of extra adult social care workers across the whole country, which is not feasible in the proposed timeframe, particularly given the present challenges with recruitment and retention.
A pause in the planned October 2023 implementation would, therefore, be appropriate to understand the impacts, review the proposed policies and give sufficient time for their effective rollout.
Fair distribution of funding
We will be working closely with other county councils with similar characteristics to SCC to build the case and to ensure ministers and officials understand our concerns. At the same time, we will be continuing our work to model the data through more detailed analysis, incorporating the outcomes in our medium-term financial planning. We will then compare this with published government funding to identify the likely scale of the additional cost pressures on SCC, and work with ministers and officials to ensure a fair distribution of funding across authorities.
Reforming how we fund social care is one of the key domestic challenges of our time and has been postponed by governments of all stripes for too long. Clearly, the overall impact of the reforms on the system must be considered, but government has a responsibility to also take into account the specific circumstances of individual areas, help to mitigate them and provide sufficient funding to meet the cost of new burdens. We hope that over the coming months we will be able to make this point to Whitehall and ensure that no one is left behind.
The overall impact of the reforms on the system must be considered, but government has a responsibility to also take into account the specific circumstances of individual areas, help to mitigate them and provide sufficient funding to meet the cost of new burdens.
In the meantime, our implementation team is flagging the risk that it is increasingly difficult to get practitioners, who can see how perverse the impact of the policy will be, to believe that something like this could still come to pass when there are so many evident and obvious problems unresolved. Unfortunately, and to return to where I started, anyone with experience of tackling issues in relation to the High Needs Block deficit will appreciate that it is not just possible but likely.
Leigh Whitehouse is deputy chief executive and executive director of resources for Surrey County Council.
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