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Ministers blink first as Surrey’s council tax threat appears to pay off

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LGC’s essential daily briefing

Today’s news that Surrey CC has dropped proposals to hold a referendum on raising council tax by 15% tells a broader story about the stand-off between councils and Westminster on social care funding.

The county’s leader David Hodge (Con), who also leads the Conservative group in the Local Government Association, captured national attention when he blamed the government in its failure to properly fund care and for forcing his council to consider the tax hike.

Cllr Hodge said Surrey had put up with multiple years of underfunding, but that a proposed cut to the learning disability grant of £32m for the next financial year was the “straw that broke the camel’s back”.

In doing so he highlighted how even ‘rich’ councils were struggling to cope with demand.

In LGC the arguments over which particular councils lose out the most from the current funding system are well-worn, but the focus on Surrey’s referendum plan made one thing clear to the public at large: that the pot is too small, whichever way you divide it, and social care costs account for most of the problem.

Had the council approved the referendum plan, the question was whether Surrey’s residents, wealthy as they are, would vote to increase their own tax bills.

As LGC’s acting editor Sarah Calkin pointed out, it might have been better for Surrey if the referendum had gone ahead and residents had voted ‘no’, for this, she argued, would have sent a strong message that councils do not have any tools left at their disposal to cope with social care costs.

The proposal to poll Surrey voters on such a dramatic rise was a threat from local to central government: help us, or go down in history as the government that forced councils to tax residents to the limit.

In this particular stand-off, it seems the government might have blinked first.

Last week, communities secretary Sajid Javid hinted that further funding for social care would be forthcoming, seeing as the announcement in December’s finance settlement to divert money from the new homes bonus to social care and change the profile of the care precept went down like the proverbial lead balloon.

In Surrey’s full council meeting today, Cllr Hodge hinted he had confirmation from central government that something more significant was in the offing. He said “the government now understands [the care] crisis” and that Surrey “believes there is now a solution”.

Cllr Hodge has implied that his threat has worked and the government is minded to shell out more money. But with the Association of Directors of Adult Social Services now estimating that it will take an immediate £1bn injection just to stabilise the system, the question is whether the government will come up with enough this time.

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