Estimates day debate: Adult social care by the Department for Levelling Up, Housing and Communities

The topic for the debate was proposed by the Backbench Business Committee, on application from Clive Betts MP, Chair of the Levelling Up, Housing and Communities Committee.

The government published its final plans for financial year 2022/23 spending in HM Treasury’s Supplementary Estimates 2022/23 on 22 February 2022. These will be put to Parliament for approval following the Estimates Day debates.

There is no national government budget for adult social care in England. Instead, publicly funded social care is mostly financed through local government revenue. This revenue comes from central government funding from the local government finance settlement and locally raised revenue from business rates, council tax and income from fees and charges. Individual local authorities then determine how much is allocated to social care.

However, in recent years, the Government has provided additional ring-fenced funding to local authorities for social care. This is currently mainly in the form of the social care grant for adult and children’s social care from the Department for Levelling Up, Housing and Communities (DLUHC).

There are several factors which contribute to funding pressures in adult social care, including:

• Demographic pressures: the number of older people (the group most likely to need social care) is rising faster than the population as a whole. There is also increased demand for care from working age adults.
• Pressures on local government finances: the National Audit Office has estimated local government spending power (government funding, council tax and business rates) reduced by 29% in real-terms between 2010/11 and 2021/22.
• Increases in the National Living Wage: The Association of Directors of Adult Social Services (ADASS) has estimated the increase in the national Living Wage from April 2022 will cost councils around £977 million.
• Local authorities report concerns about the increasing costs of care (PDF)and the price of care packages to support people with increasingly complex care needs.

Estimates of the size of the social care ‘funding gap’ vary. In an October 2020 report (590KB, PDF), the Health and Social Care Committee said an additional £7bn per year was required by 2023/24, which it described as a “starting point”. The Health Foundation has suggested that an additional £14.4 billion a year would be required by 2030/31 to meet future demand, improve access to care, and pay more for care.

In its August 2022 report on the long-term funding of adult social care, the Levelling Up, Housing and Communities Committee described these estimates as “credible” and recommended the Government “urgently needs to allocate more funding to adult social care in the order of several billions each year, at least £7 billion.”

Significant additional funding has been provided to the adult social care sector since 2016/17, often in the form of short-term ring-fenced grants. Money has also been given through the improved Better Care Fund and local authorities have been given the power to raise additional revenue locally though council tax (the social care precept).

Concerns have been raised, however, that the short-term nature of the funding makes it hard for local authorities to plan and forecast.

In September 2021, the Government announced plans to use £5.4 billion of revenue from a new Health and Social Care Levy to fund adult social care reform in England between 2022/23 and 2024/25. Of this, £3.6 billion was to be used to reform how people pay for adult social care (charging reforms).

In September 2022, the Government announced the cancellation of the Health and Social Care Levy. At the Autumn Statement 2022, delivered on 17 November, the Chancellor announced that implementation of the charging reforms, originally planned for October 2023, would be delayed by two years. He added that the funding allocated for the reforms would be maintained within local government.

At the Autumn Statement 2022, the Government said it would make available up to £2.8 billion in 2023/24 and £4.7 billion in 2024/25 to help support adult social care and hospital discharge. This included:

• £1 billion of new grant funding in 2023/24 and £1.7 billion in 2024/25, comprising:

• £600 million in 2023/24 and £1 billion in 2024/25 to help get people out of hospital and into care settings. The funding will be pooled as part of the Better Care Fund.
• £400 million in 2023/24 and £680 million in 2024/25 which will be distributed through a grant ringfenced for adult social care (The Adult Social Care Market Sustainability and Improvement Fund).

• Allocating funding for the now-delayed charging reforms through the Social Care Grant for adult and children’s social care (£1.3 billion in 2023/24 and £1.9 billion in 2024/25). The Social Care Grant will be worth £3.85 billion in total in 2023/24.
• Allowing local authorities to increase the adult social care precept by up to 2% per year in 2023/24 and 2024/25.

The additional funding was welcomed by stakeholders but some concerns were raised that it was insufficient to address the issues in the sector.