Adult social care likely to remain ‘financial headache’ for councils

Adult social care could require an additional £5bn every year by the second half of the decade, as government reforms are ‘unlikely to be sufficient to deliver’ on ambitions, the Institute for Fiscal Studies (IFS) has said.

The £5.4bn provided for the sector over three years to help roll out government reforms will not address concerns including low pay levels for social care workers and needs assessments, which contributed to large falls in the numbers deemed to need services in the 2010s.

‘Addressing these issues too would cost billions more per year, and adult social care is likely to remain a financial headache for councils and the chancellor for years to come,’ its green budget chapter document said.

The Local Government Association estimates addressing all unmet care needs could cost £6bn per year. However, without sufficient funding, councils could respond to the costs of more generous means-testing, outlined in government reforms, by further tightening needs tests, the IFS said.

Using projections, the authors predict demand for adult social care to grow by 2.2% a year and believe English councils will need to spend £10.2bn more in 2024–25 than they did in 2019–20 to maintain service provision levels.

They said without further increases in central government funding to pay for the reforms, councils would have to choose between ‘very large’ tax increases, cuts to other services, and failure to improve adult social care provision in the way the government and the electorate will expect.

Chancellor Rishi Sunak hopes revenues from the health and social care levy will be available for social care from 2025–26 onwards, the chapter pointed out, ‘but experience suggests shifting funding from the NHS may be difficult to achieve,’ it said.

It added adult social care services were likely to remain a headache unless ‘substantial additional funding’ was found in the upcoming spending review.

‘The recently announced social care reforms pose major challenges for councils across England. The funding announced by government so far is unlikely to be enough to meet all of its objectives, in either the short or longer term,’ said David Phillips, an associate director at IFS and an author of the chapter.

‘Without sufficient funding, councils may find themselves having to tighten the care needs assessments further in order to pay for the care cost cap and more generous means-testing arrangements. That would see some poorer people who would now be eligible losing access to council-funded care, so that coverage can be extended to other, typically financially better-off, people.’

Mark Franks, director of welfare at the Nuffield Foundation, said: ‘Currently, many existing adult social care workers only receive minimum wage and zero-hours contracts are common, which has contributed to staff shortages in the sector.

‘Until sustainable funding is in place to address these issues, disabled and older people are at risk of being unable to access the care they need.’

The government is planning to publish an adult social care white paper this autumn.