Social care spending: worrying trends

Spending on adult social care in England fell 8 per cent between 2009–10 and 2016–17. Voices from across the political spectrum have argued that services are underfunded and under pressure—especially as the population is ageing.

The current government has responded with planned increases in funding for social care which could enable councils to undo these cuts by 2019–20 if they choose to. But several parties may, in their manifestos, promise further money for social care in England. (Indeed, a leaked version of Labour's manifesto, which came to light yesterday, promises just that.) After determining where this money will come from and how much it amounts to, ask how it will be targeted at social care and how it will be distributed across the country.

The second complication is that central government can give additional funding to councils, but it cannot determine what is ultimately spent on social care. That is for individual councils to decide. Enforcing spending levels from the centre would take away much of the flexibility councils currently enjoy over the allocation of their budgets.

Funding ring-fences are an attempt to influence councils’ spending, but they are difficult to enforce if they don’t fully fund a service. In such circumstances, local authorities are required to say that they have used all the additional resources that have been promised to boost social care spending above what they would have otherwise spent. However, it is difficult to verify if this is really happening, or whether some of the funding is being channelled to other services, because we can never know what would have happened in the absence of the additional funding. We have to take councils’ word for it. The only way to be sure that councils spend what decision makers in Westminster want is to fully fund the service with a ring-fenced grant like we do for education with the dedicated schools grant.

Underlying all this is the tension between a desire for local discretion and accountability, on the one hand, and an expectation of national service standards on the other.

Managing and funding services at a local level can have benefits. Councils may be better able to tailor services to local needs and preferences and coordinate the work of different agencies operating in their areas. It can also provide an incentive to tackle underlying drivers of spending needs (and to boost local revenues) as long as councils don’t lose out on funding as a result of such efforts.

But it can also mean two people with the same needs in different parts of the country get different levels of support. This may be because funding levels don’t reflect local needs. Or it may be because councils make different choices when it comes to prioritising social care against other spending. Even if funding from central government perfectly followed need, access to social care could still vary around the country.

This tension is unresolved in current government policy.

On the one hand, planned reforms to the local government finance system are likely to contribute to greater variation in service provision around the country. In particular local retention of business rates and the abolition of general grants will reduce the extent to which funding is redistributed between councils as needs and local revenues change. The aim of this is to provide stronger fiscal incentives to councils, but it also increases the risk of big divergences in councils’ spending power and the demand for local services.

On the other hand recent movements in social care policy seem to be pushing in the other direction. National minimum criteria have been introduced to determine eligibility for publicly funded care. The pot of funding for local government which comes with a social care ring-fence is growing: it could be more than £5bn in 2019–20, although it is unclear whether these ring-fences will continue beyond that point. And a lifetime cap on the care costs individuals themselves can be asked to pay (currently scheduled for implementation from 2020) is planned to be set at the same level everywhere in England.

So as if the whole issue of how to fund social care weren’t complicated and controversial enough in itself, there is actually another huge issue at stake: the role of local government and the whole structure of local government finance. Once all the parties have published their manifestos, try to find the details—as far as there are any. They could tell us as much about the future of local government finance as they do about the future of social care.