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Councils need billions in extra funding to meet adult social care costs

Joanna Faith
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Joanna Faith

Councils in England need billions of pounds in extra funding over the next parliament to meet the rising costs of adult social care, a new report from the Institute for Fiscal Studies (IFS) warns.

Even with council tax rising in with inflation, councils will need an additional £4bn a year from the government to maintain social care services at current levels and stop further cutbacks on other services such as children’s social care, public health and housing.

A growing elderly population and an increase in the number of disabled adults means the figure will rise to £18bn a year by the mid-2030s, the report predicts.

An extra £1.3bn in government funding has already been allocated for the 2020-21 financial year and councils with social care responsibilities will be able to increase council tax by up to 4 per cent.

However, even if spent in full, this additional funding will only be enough to undo around one-fifth of the peak-to-trough fall in councils’ spending on services, the report said.

The IFS suggests the long-term funding gap could be closed by giving councils additional tax raising powers, such as a local income tax.

David Phillips, associate director at the IFS, said: “The additional funding announced for councils next year could be just a lull in the storm.

“Detailed public spending plans for 2021–22 and beyond have not yet been published. But we do know that councils will rely on council tax and business rates for more of their funding going forwards.

“And those revenues just don’t look like they will keep pace with the rising costs of services like adult social care – even with council tax bills going up at 4% a year, which is double the rate of inflation. That means finding billions more in funding to top up existing local tax revenues, even before thinking about new initiatives like free personal care.”

Steven Cameron, pensions director at Aegon, said: “Social care funding needs to be front and centre of domestic policy for any future Government of whatever persuasion. Increased life expectancy and the rising costs of providing care mean this is an issue that will just keep getting bigger unless tackled in a fair, transparent and sustainable way.

“To avoid individuals facing the prospect of having to use up all their hard earned savings should they need care, we believe there must be a cap on the overall amount anyone will have to pay themselves. For many, the key assurance they want is that they won’t have to use all of their lifetime savings or sell the family home to pay for social care should they need it.”