What did the Chancellor announce?

£1.5bn for social care next year

Is it enough?

It may be enough to stop the social care crisis from deteriorating further – provided councils are able to raise additional money through council tax – but it parks the fundamental reform of the system that is needed.

The Chancellor announced '£1.5bn for social care next year', however £1bn of this is a grant from central government covering adult and children’s social care, and the remaining £500m is not from central government but instead could be raised by councils increasing their social care precept – a ringfenced council tax for adult social care – by 2%. 

While there is no guarantee of new money for adult social care, the expectation is that the £1bn for adult and children’s social care is split around evenly between the two. This would mean around £500m extra for adult social care (with the other £500m for children’s social care), and a further £500m for adult social care if councils choose to increase their social care precept. More affluent councils are able to raise more from this precept and more deprived areas, where need is often greatest, may lag further behind. Research by the IFS shows that between 2015/16 and 2019/20 the amount councils could raise through 2% increases in the precept ranged between 4% and 18% of adult social care spending. This is partly addressed by the improved Better Care Fund.

So an extra £1bn could be spent on adult social care next year. The chancellor also announced that £2.5bn of existing grants – including the improved Better Care Fund (£1.8bn), the social care support grant (£410m), and the winter pressures grant (£240m) – will be available again next year. However, this £2.5bn of other grants for adult social care are not increasing in-line with inflation, and so will fall in value in real terms next year.

The result of all this is that, if this new money is spent on top of their current real terms budgets, then the new money next year is likely to meet demand pressures on the system – of 3.8% a year - but no more. This means that fundamental issues like pay and market instability cannot be addressed. If, however, councils choose not to raise the precept, the money will be only half that required just to meet pressures.

Even if it has been protected relative to other council spending, the adult social care system has faced cuts in funding this decade, meaning the number of older people receiving publicly funded care fell by 400,000 between 2009/10 and 2015/16. Many more go without the care they need. Around one in 10 people aged 65 face future lifetime care costs of over £100,000. 

The spending decisions mean that, provided councils can raise the precept through council tax, this situation should not deteriorate further. But it parks the fundamental reform of the system that is needed.

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