The adult social care spending gap

“Adult social care faces a funding gap of £1.3 billion by the end of the decade”.

Local Government Association, 2 November 2016

"The Local Government Association estimates there will be a £2.6 billion funding gap in providing adult social care in England by 2020.”

BBC News, 6 January 2017

You might have heard that adult social care in England is facing a ‘funding gap’. You might also have seen a few different figures for how big that gap is.

The basic spending gap is the difference between the amount of money that experts think will need to be spent on publicly-funded adult social care and the money it is expected to receive.

There are slight differences in some of the estimates, some just take account of increasing population, others look at the size of the spending gap if the existing level of service was expanded to include a larger proportion of people.

There is no single figure for this

There isn’t a single estimate for the size of the adult social care spending gap in England. Different experts factor in different things when looking at the gap and calculate it differently.

Estimates for the size of the gap this year range from around £600 million to around £1.6 billion depending on how and when they’re calculated. Estimates for the size of the gap by 2019/20 range from around £1 billion to £2.6 billion. A committee of MPs has asked the National Audit Office to look into the size of the gap.

Even then, these estimates could easily be wrong.

It’s hard to predict the future. We don’t know how many people will need publicly-funded social care in the coming years. The population, particularly the proportion of older people, is increasing. But it’s unclear how many of them will need to use publicly-funded care or qualify for it under the current means test.

The cost of providing adult social care is also uncertain, though it’s likely to increase. This is partly as a result of the National Living Wage increasing –which will affect many carers–and partly as a result of Brexit which could have an impact on staffing and salary levels.

Councils’ ability to raise money and their spending power depends on how the economy as a whole is performing. It also depends on how councils choose to prioritise services. Most of the money spent on adult social care isn’t ring-fenced so councils could choose to spend money on other services if they felt they needed the money more.

Unless otherwise stated, the figures here are in 2017/18 prices.

Think tanks estimate it will be around £600 million this year

Around £16.8 billion was spent in total by councils across England on adult social care in 2015/16. It’s expected to be around £16.5 billion in in 2016/17, although we don’t have the final figures yet.

The Health Foundation think tank, together with the Nuffield Trust and King’s Fund, has estimated the spending gap in adult social care will be around £600 million in 2017/18, rising to £2.1 billion by 2019/20.

This estimate followed an announcement by the government last December that councils could increase the amount of money they get through council taxes to pay for adult social care and provided a one-off grant. This would increase the amount of money available for adult social care by around £280 million in 2017/18, according to the Institute for Fiscal Studies (IFS) in 2016/17 prices.

The IFS has described this as a “relabeling of money councils were going to receive anyway” as it comes from a reduction in money councils are going to get to build new homes.

In the March 2017 budget the government also announced that it would be spending around £2 billion on adult social care in England over the next three years, including £1 billion this year.

Following this announcement the King’s Fund said “these resources will go some way towards stabilising social care, even though they fall short of the sums independent commentators have argued are needed to bridge the expected funding gap by the end of this parliament.”

There are some conditions attached to this money. Although it will be paid directly to councils by the government, it must be spent according to plans agreed with the NHS.

You may have seen other estimates made before the government’s announcements

In 2016 the Local Government Association estimated that adult social care needed £1.3 billion immediately which would “stabilise the provider market and put it on a sustainable footing” followed by another £1.3 billion by 2019/20. That's a gap of £2.6 billion by the end of the decade.

Similarly the Association of Directors of Adult Social Care (ADASS) estimated that the gap would be £1.6 billion in 2017/18, decreasing to £1.1 billion by 2019/20. The figures are based on a survey of all Directors of Adult Social Care working in councils in England. We’ve asked ADASS for more information about how the survey is conducted.

Both of these estimates were produced before either of the government’s announcements.

Meanwhile Age UK looked specifically at the spending gap for care to people over the age of 65. It estimated that  councils would need to spend £1.7 billion more a year by 2020/21 to keep up with increasing costs and numbers of older people (in 2015/16 prices).

This estimate was made after the announcement of new money for adult social care in December 2016, but before the March 2017 budget.

What does that mean for adult social care?

The IFS has said that local authorities in England could have around £5 billion in ring-fenced money to spend on adult social care by 2019/20. This could mean that they have nearly £19 billion to spend on services altogether, but only if they keep spending the same proportion of their non-ring-fenced budget on adult social care and all of the ring-fenced money available.

Although this means that overall spending on adult social care could go up under this scenario, it will go down once you factor in population increases by almost 5%.