Council tax precept and New Homes Bonus deployed to stem social care crisis

15 Dec 16
Sajid Javid has announced a £240m transfer from the New Homes Bonus to adult social care funding and confirmed that councils would also be able to raise the council tax precept for care by 3% in the next two years.

In his statement to MPs on the local government funding settlement, Javid announced the changes would provide an additional nearly £900m to fund the social care system in the next two years.

This would be made up of a £240m transfer from the New Homes Bonus, which would reflect changes to ensure that councils only received money from the scheme for homes built above a 0.4% national housing growth baseline.

Around £208m extra will be raised by increasing the social care precept from 2% to 3% in 2017-18 and £444m in 2018-19. However, Javid’s statement confirmed that the net increase of the social care precept would need to remain at 6% over the next three financial years, meaning if councils chose to levy 3% in both 2017-18 and in 2018-19, they would not be able to raise a precept in 2019-20.

He told MPs that the government would soon publish best practice guidance on the operation of the Better Care Fund based on the operation of schemes so far.
The statement also confirmed that almost all councils in England had accepted the government’s offer a four-year funding settlement, which would apply to the end of 2019-20. Authorities had to agree to the proposal, which had been set out by Javid’s predecessor Greg Clark, as well as submit efficiency plans. Javid said that all but 10 councils had submitted plans to the department.

This means that today’s settlement confirmed spending allocations first set out in 2015, as well as the allocations for the ten councils who did not agree to the deal.
In total, £4.9bn of revenue support grant will be available in 2017/18 and for those who accepted the four year offer, the allocations and business  rates  tariff  and  top  up  payments  which  will  not  change  for reasons  relating  to  the  relative  needs  of  local  authorities,

According to figures in the settlement, core spending power for local authorities across England (the government’s preferred measure of council finance) will fall from £43.6bn in 2016-17 to £43.1bn in 2017-18.

Pilots of plans to fully localise business rates revenue to local government will begin next year, with Cornwall and the West of England and West Midlands combined authorities set to join pilot schemes that already include the Liverpool city region, Greater Manchester, the Greater London Authority and Cambridge.

Responding to the settlement, Sean Nolan, CIPFA’s head of local government, said allowing councils with social care responsibilities to front load the maximum allowed precept increase would be cautiously welcomed as a short-term boost to spending.

However, this would be “a short-term sticking plaster” and, as most councils were already planning to use the existing freedom to increase the social care precept by 2% in the next financial year, it would only amount to a real-terms boost of 1% for 2017-18.

Although the change to the New Homes Bonus will be a blow, mainly to districts, Nolan added that the resources are to be welcomed for addressing the distributional inequalities that would otherwise have been caused by using the social care precept alone.

Ray James, immediate past president of the Association of Directors of Adult Social Services, said the funding brought forward for social care in 2017/18 was “woefully inadequate”.

He added: “It is over £1bn less than all leading sector experts (King’s Fund, LGA and Nuffield Trust) say is needed to fund adult social care next year and the precept raises less in areas with the greatest need.

“There is no extra money for councils during this Parliament and ADASS would welcome sight of how government have satisfied themselves about the adequacy of this settlement for 2017/18 given the widely acknowledged increases in the demand for and cost of social care.”

Jonathan Carr-West, chief executive of the Local Government Information Unit, said the statement illustrated exactly what is wrong with England’s over-centralised political system as the secretary of state shuffled funding from one silo to another.
“Council tax rises cannot be the answer to the crisis in adult social care funding as many of the councils with the most pressing care needs have the lowest council tax base,” he added.

“In the end, this problem cannot be addressed while we continue to treat health and social care as separate systems and to protect the NHS at the expense of social care. After a decade of public debate all we have is a sticking plaster of increased council tax and no long term solution for the greatest public policy question of our age.”

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