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Tax increases proposed to close £3.5bn social care funding gap

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A wide-ranging social care green paper, including proposals on how to stabilise the current system and ensure vulnerable people receive the care they need in the future, has been published by the Local Government Association.

The document, released today, warns an estimated social care funding gap of £3.56bn by 2025 must be addressed “as a matter of urgency” to prevent further increases in the numbers of people not receiving the care they need, providers suffering financial failure and continued reductions in investment in prevention.

In a bid to influence the government’s delayed green paper, the autumn budget and next year’s spending review the LGA said “a failure to be bold today will impact on people, our communities, our hospitals and our economy tomorrow and for decades to come”.

Writing for LGC, LGA chief executive Mark Lloyd said “we need an honest, open debate about how we pay for care, and we need it now”. 

“It is an ambitious and wide-ranging public consultation which sets out how we can make the system better and more sustainable. It also highlights the sometimes radical options that need to be considered to tackle the funding crisis facing adult social care head-on,” he said.

The LGA’s green paper, which is backed by organisations including the Care Quality Commission, NHS Providers, NHS Confederation, the Institute for Fiscal Studies and Public Health England, has estimated the current and future costs of meeting both existing requirements and reforms to extend entitlements.

Paying providers a “fair price” for care to stabilise the market will cost £1.44bn this year and in 2024-25, according to the LGA. Ensuring there is enough funding to pay for rising demand on services and inflation is estimated to cost £2.12bn by 2024-25.

The green paper said the cost of meeting the unmet needs of people who require help with three or more essential daily activities would cost £2.4bn this year, based on the estimated 164,217 people who currently fit in to this category. This rises to 3.6bn in 2024-25.

To provide care for working age people, the LGA said £1.2bn would be needed this year and £1.4bn in 2024-25.

In terms of reforms to the system, the LGA has estimated the cost of introducing a £75,000 cap and a £100,000 floor on care costs, as proposed in the 2017 Conservative party manifesto, as £4.7bn by 2024-25.

Providing free social care would cost £6bn by 2024-25.

Options for how these changes could be funded include increasing income tax for all taxpayers, with a 1p increase on the basic rate generating £4.4bn in 2024-25. A 1p increase on national insurance could raise £10bn and applying the rise to over-40s and working pensioners as a ‘social care premium’ could generate £1bn, equating to a cost of £33.40 per-person affected.

Means testing universal benefits such as winter fuel allowance could raise £1.9bn in 2024-25, while allowing a further 1% council tax rise would generate £285m.

The green paper also made the case for social care to continue to be planned and delivered locally, rather than nationally.

It described the view that national systems would address variations in the quality of care across the country as “flawed” and “could exacerbate inequalities which only a highly localised response can address”.

The green paper added: “Within the NHS for instance, there is still very significant variation in access, quality and outcomes, including delayed transfers of care attributable to the NHS, continuing healthcare eligibility, the rate of patient safety incidents and the availability of IVF treatments.”

Izzi Seccombe

Izzi Seccombe

Izzi Seccombe

Chair of the LGA’s community wellbeing board Izzi Seccombe (Con) said social care services are “at breaking point” due to the failures of successive governments to tackle the issue.

She added: “Adult social care and support matters. We must fund it for the long-term so that people of all ages can be supported to live the life they want to live. Building a better society means ensuring that everyone receives the care they need to lead a good life: well, independent and at home for as long as possible. This process must start now.”

The green paper consultation will run for eight weeks and the LGA is due to publish a response in the autumn.

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Readers' comments (1)

  • How about taxing big corporations properly such as amazon, google and the privatised utilities? No thought not, our 'masters' want the ordinary struggling working classes to foot the bill again. People will only take so much.

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