Councils may have to borrow to fund Tory social care plans, says CIPFA chief

22 May 17

A Conservative government could have to legislate to allow councils to borrow money to fund social services, the head of CIPFA has said.

Chief executive Rob Whiteman stated councils would have to know who would bear the administration and financing costs of the plan.

This comes as Conservative leader Theresa May clarified today there would be a cap on the amount people were expected to pay for their social care.

Whiteman explained: “Because social care is the single largest controllable cost to upper tier councils, deferring much of the income to cover these services will make a material difference to councils' balance sheets. 

“Whilst many councils will fund the services now and receive income in future years through using their balances and reserves, the government may need to legislate to allow for councils to borrow to fund services that will be paid for at a later date.”

It is currently illegal for councils to borrow to provide services – they can only borrow for capital investment purposes.

The Conservative plan would allow people to pay from their estate after they died.

Whiteman added: “Councils will need to know whether the administration and financing costs will be recovered as a charge to social care users or borne by council taxpayers.”

May today said she wanted to “clarify” her flagship social care funding policy, which was unveiled in the Conservative manifesto last Thursday, and denied this was a U-turn on the policy.

The plan would see older people pay for their social care if they had assets worth more than £100,000. No cap was mentioned in the manifesto but there has since been reports it would mean people would have to sell the family home.

"We will make sure there's an absolute limit on what people need to pay. And you will never have to go below £100,000 of your savings,” she said today launching the Welsh Conservative manifesto.

She said where the cap was set would be a matter for the consultation. But a briefing note said the party believed its policy was “fairer and more equitable than the current system and the cap [of around £35,000] recommended by the Dilnot report”.

Chris Ham, chief executive of the charity The King’s Fund, said the consultation should be a “coherent and considered review of all the options”.  

“Raising some of the revenues required by tapping into wealth in people’s property should be part of a new approach to funding," he said.

Nigel Edwards, chief executive of the Nuffield Trust, said: “This goes some way to addressing one of the big problems with the social care system, which is that the neediest can pay a very disproportionate amount for their care."

Edwards said it was crucial to learn what level the cap will be set at and whether it will be backed by the additional funding needed to make it work.

Tim Farron said: “As Theresa May has made clear herself, nothing has changed and her heartless dementia tax remains in place."

Labour’s election co-orindator, Andrew Gwynne, said: “By failing to put a figure for a cap on social care costs, she has only added to the uncertainty for millions of older people and their families.”

An ex-Lib Dem minister Sir Steve Webb has criticised May’s social care policy for the deferred payment element, saying it was building a policy on “very shaky foundations”.

People in residential care can already ask a local their local authority to defer their payment until after their death but Webb said councils did not take a consistent approach to this.

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