Distribution of funding to support the reform of the adult social care charging system in 2023 to 2024

The Local Government Association (LGA) is the national voice of local government. We are a politically led, cross party membership organisation, representing councils from England and Wales.

Our role is to support, promote and improve local government, and raise national awareness of the work of councils. Our ultimate ambition is to support councils to deliver local solutions to national problems.

This response has been cleared by the lead members of the LGA’s Resources Board and we are happy for it to be made public.

Although the funding of all element of social care reform are beyond the scope of this consultation the LGA would like to point to the widespread concern that the costs of Charging Reform including the implementation of Section 18(3) of the Care Act, will cost significantly more than Government assumptions. 

The perilous state of adult social care funding, and its serious consequences for people who draw on social care (or may need to do so in the near future), is unquestionable. Recent survey work by the Association of Directors of Adult Social Services (ADASS) shows that just 12 per cent of directors are confident that they have the resources required to deliver all of their statutory duties. The survey also reveals directors’ concerns about growing demand, the position and experience of unpaid carers, the fragility of the provider market, and reductions in quality and choice within local care markets. Serious concerns about the difficulty of recruiting and retaining care workers is a further concern shared by many across the sector. In August 2022, ADASS reported that nearly 300,000 people are now waiting for an assessment of their needs, with 600 people a day joining the waiting list. Additionally, more than 37,000 people are currently waiting for a package of care to commence and just over 210,000 people are waiting for a review of their care. These are staggering numbers and each represents a person who is not living an equal life.”

Alongside the pressures in social care, councils are facing significant additional cost pressures which are impacting on all services.  In November 2021, when councils were setting their budgets, the OBR forecast was that the consumer price index (CPI) would be 4.4 per cent in 2022/23. Since then, energy prices, spiralling inflation, and National Living Wage pressures are set to add further costs to councils’ budgets. At the point when CPI was expected to be 8 per cent in 2022/23, our analysis showed this led to £2.4 billion in extra cost pressures this year alone, and a funding gap of £3.6 billion in 2023/24 rising to £4.5 billion in 2024/25 based on inflation coming down to much lower levels in future years. Inflation figures published since then show that inflation in July 2022 was 10.1 per cent and the Bank of England predicts inflation will be 13 per cent in the autumn 2022. 

In this context we call on the Government to:

• Provide adequate, certain, sustainable and long-term funding for local government including urgently injecting additional funding to protect councils from immediate cost pressures. 
• Ensure social care reforms are properly funded - the social care reforms are likely to cost £5 billion a year in the longer term, almost three times the additional annual funding currently allocated over the next three years, according to the Institute for Fiscal Studies.
• Defer by months the implementation of the care cost cap, changes to the financial means test thresholds, and Section 18(3) of the Care Act to April 2024 in order to allow time to learn from the Trailblazers and adjust policy and/or funding accordingly. We also call for a delay of at least 12 months to the rollout of the new adult social care assurance regime, due to commence in April 2023. This would allow more time to: ensure the proposed regime is fit for purpose; better consider how to align sector-led support and improvement with the proposed national improvement offer from the Department; ensure that councils can collect and submit the data that CQC will require; and better identify and understand the sorts of issues that assurance is likely to surface and how they would need to be addressed.

If the reforms go ahead as currently planned, we welcome the Government acknowledging the need to balance the principles of funding certainty, transparency, robustness and fairness on the distribution of funding to support the delivery of adult social care charging reform.  The LGA was pleased to see that the consultation and associated documents provided details of how the different options are calculated and exemplifications of these different proposals.  We would press the Government to provide certainty on the allocations as soon as possible to provide councils with the information they need to be able to plan their budgets for 2023/24 and 2024/25 beyond.

However, to achieve certainty in the funding of adult social care, the Government also needs to provide a multi-year local government finance settlement soon as possible and provide clarity on other areas of funding uncertainty such as the Fair Funding Review, business rates reset, the New Homes Bonus and the distribution of other grants.

The Government recognises the difficulty in assessing the costs that will arise due to the reforms by noting that over time more information will become available on the impact of the reforms and the Government’s understanding of distribution will develop before and after implementation. It states that the Government will continue to monitor new data sources and consider whether modifications are required to distribution mechanisms in future.  The LGA believes that distribution of all funding should be based on appropriate and up to date data.

We also note that the allocations under the options for funding for the means test and cap for adults under the age of 65 years can vary significantly for individual authorities. Under the three options, the difference between an authority’s allocation on the different options can be six-fold, with 12 per cent receiving twice as much funding on one of the options compared to another.  Similarly, the options for allocating funding for implementation and additional assessments also vary.  One authority’s allocation would be 13 times higher under one of the options compared to another and 23 authorities could receive twice as much under one option.  This demonstrates the difficulty in assessing where the costs will arise. Therefore, the LGA would recommend that where evidence suggests that councils have been underfunded for the reforms this is addressed with additional funding in those cases.  In doing this consideration needs to be given to the certainty needed to provide services and therefore this should be achieved with additional funding from Central Government.

The LGA would refer the Government responses from individual councils on the questions posed in the consultation paper.

Nicola Morton, Head of Local Government Finance

Email: [email protected]