The LGA perspective

This article forms part of the LGA think piece series 'Towards a sustainable adult social care and support system'.


Funding the present as a down-payment for the future

The LGA estimates that between 2010 and 2020, English councils will have managed reductions to their core funding from national government totalling £16 billion. To put that into perspective, budget expenditure for adult social care in 2017/18 was £15.6 billion. By comparison, over the same period, we estimate that NHS spending will have increased by just over £20 billion.

Councils have worked hard to protect adult social care spending. The ADASS budget survey shows that adult social care accounts for a growing total of councils’ total budgets, increasing from 35.6 per cent in 2016/17 to 36.9 per cent in 2017/18 and to 37.8 per cent in 2018/19. However, given this proportion, it is impossible for adult social care to be immune from having to make its own significant contribution to councils’ overall savings. Therefore, social care has had to close a funding gap of £6 billion since 2010. Councils have achieved this by making savings and reductions within social care and by making more than proportionate reductions to other council services.

Looking forward, the LGA estimates that local government faces an overall funding gap of over £5 billion by 2020. The gap for adult social care stands at £2.2 billion. This includes £900 million just to cover the unavoidable core cost pressures of demography, inflation and the National Living Wage, and an immediate and annually recurring minimum of £1.3 billion to stabilise the provider market; the difference between what providers say they need and councils currently pay. This funding gap does not include any costs associated with provision for existing unmet or under-met need, nor other known pressures, such as the historic, current and future costs associated with ‘sleep-ins’ payments.

The consequences of underfunding are all too familiar. We are seeing an ever more fragile provider market, growing unmet and under-met need, further strain on informal carers, less investment in prevention, continued pressure on an already over-stretched care workforce, and a decreased ability of social care to help mitigate demand pressures on the NHS.

Any reforms emanating from the green paper that bring in significant additional funding will inevitably take time to deliver. The Government must therefore use the forthcoming Spending Review to make a down-payment on the green paper reforms, injecting much-needed funding to secure the short-term sustainability of our social care system. Without such funding, we risk implementing funding reforms onto a system that is further destabilised by financial pressures.

Funding reform, not system reform

We do not need wholesale reform of our care and support system – the Care Act is strong piece of legislation that enjoys widespread support across the sector. We need the funding to turn the Care Act vision into reality. Any solution or solutions to tackle the long-term funding challenges facing adult social care and support must be:

  • Sustainably funded for the short, medium, and long term. Funding should be sufficient to meet all existing and future cost pressures, any new structural changes to the care system, and all duties under the Care Act, including a stable and diverse provider market offering quality services. Funding must also be sufficient to address the needs of both older people and working age adults. Local government must be consulted on any changes to funding that is ring-fenced for social care and funding decisions must not significantly disadvantage any one authority or type of authority.
  • Affordable and progressive, striking the right balance of roles and responsibilities between state and citizen. National risk sharing must feature within this ‘contract’, supported by a mix of different solutions that work for/can incentivise people of all ages, with different conditions, and across different generations. People should be supported and encouraged throughout their life to plan for their potential future care and health needs.
  • Simple to understand with a clear emphasis on prevention. People should be supported and empowered to stay well and healthy through a clear service offer that links all relevant local services/agencies together in a way that is intuitive and easily navigable.
  • Based on place. ‘Local’ matters and no one part of the wider wellbeing sector should have primacy over another. In particular, any changes to adult social care (and connected changes to the NHS locally) must only be advanced if they support the broader ambition of bringing care and health together to help improve people’s outcomes.
  • Supported across the political spectrum. Establishing political consensus is crucial as previous attempts to reform care funding have been derailed, at least in part, by national party politics.

Principles for funding solutions

The state of adult social care funding is so serious that (in addition to the measures already put in place), all funding options should be considered. This needs to generate substantial new additional national funding to stabilise the existing system and to take pressure off the NHS. Local council tax payers should not be expected to pay to fix a national funding problem.

Any new national funding should also be distributed according to need and link to new fair funding arrangements. It must also go directly to councils to avoid the risk of any such funding going through the NHS, as this would likely then be used to respond to urgent and short-term needs in the acute sector, rather than building essential preventative support in social, community and primary care.

Councils have an excellent track record in delivering improvements, including changes which support the NHS such as reducing delayed transfers of care attributable to social care. There is much more potential to reduce pressure on the NHS through falls prevention and other activities which help keep people out of hospital. There is also much the NHS could learn from local authorities’ excellent track record on managing spending efficiently and within tight budgets.

Funding changes (whether to national taxation, charging, benefits and entitlements) should be considered alongside reforms which help to manage and share risk over people's lifetimes. And funding arrangements should not be confused with decisions about how health and care systems are organised in terms of governance and accountability. For instance, should the Government propose a new ‘health and care tax’, this could easily be used to fund social care through existing mechanisms and would not require structural changes.