How much can councils raise to pay for social care?
19th Jan 2017
Increasing council tax to pay for social care is four times more useful in wealthy areas compared to more deprived ones.
There was roughly 3.5 times the difference between the council which could raise the most to pay for social care by increasing council tax and the council which would raise the least per over 65 year old.
“The [social care] precept is perhaps four times of more use in wealthier areas than it is in more deprived areas where they get less of their total spend from local council tax, but where need is also highest.”
Ray James, Immediate Past President of ADASS, BBC Radio 4 Today, 15 December 2016
Experts generally agree that wealthier councils are able to raise more money from council tax rises linked to social care. It is also the case that more deprived councils have a greater need for social care.
This particular figure is correct, based on analysis done by Localis, a think tank. It found that there was roughly 3.5 times the difference between the council which could raise the most by increasing council tax and the council which could raise the least. It does warn that the estimates aren’t precise.
What’s been happening?
The social care precept was introduced in the Spending Review 2015 and allows councils to increase their council tax by up to 2% to pay for social care in their area.
When it was first announced the government said that by 2019/20 these powers could raise £2 billion a year if all councils used it fully.
144 of the 152 councils in England responsible for social care (95%) used these powers raising an extra £382 million for adult social care in 2016/17.
In December the government announced that councils will be given powers to increase council tax by 3% in 2017/18 and then again in 2018/19. Councils won’t be allowed to raise any more money than they were already allowed to until 2020, they will just be allowed to introduce the increases more quickly and then they will level off in 2019/20.
The government has said that it expects these rises to provide £208 million for adult social care in 2017/18 and £444 million in 2018/19. Including other funding for social care provided over the next two years it says there will be up to £900 million available which wouldn’t have been otherwise.
The Institute for Fiscal Studies (IFS) has calculated this increase slightly differently and told us this was because it considered the impact of inflation on the rises. It also looked at the impact of changes to other grants and bonuses which affect how much councils pay for social care. They found that the increase in social care funding for councils over the next two years could be around £700 million.
The King’s Fund, a health think tank, has said that this money will be “nowhere near enough to address next year’s funding gap.” We’ve written about the funding gap before.
What did the analysis find?
Localis looked at which local authorities would be able to raise the most and the least by increasing council taxes, per person in their area over the age of 65. It compared the 2011 census figures for each local authority with the council tax collected in each over the course of 2015/16.
It found that City of London would be able to raise the most, £204 per person, if council tax went up by 3%. The council who would raise the least was Dudley near Birmingham at £58 per person.
That’s 3.5 times the difference.
It does describe this analysis as “very rough”, particularly as adult social care budgets are spent on all adults, not just the over 65s.
What else has been said?
The King’s Fund found that the ten least deprived councils in England will raise almost two and a half times as much as the ten most deprived.
The Health Foundation, another think tank, also found that in 2016/17 the 10 wealthiest local authorities will raise 50% more per head than the 10 least wealthy.
The King’s Fund has also said that income deprivation among older people is a good indicator of how much social care is needed in that area. The Health Foundation agrees that the more deprived older people are, the more they will need it, but by extension the less the council is likely to be able to raise in council taxes.
Health experts have said that adjustments to the Better Care Fund, currently used to redistribute money from the NHS to pay for social care, will cover some of the disparity between wealthier and less affluent councils. But they’ve also said that it is not clear how these changes will be made yet and that it won’t happen until at least 2017/18.
We’ve written more about social care funding here.