The government’s decision to allow a 3% rise in council tax precept next year to deal with social care pressures offers councils an average of £1.4m extra, LGC analysis shows.
The local government financial settlement tomorrow is set to include the announcement of an extension to the social care precept from 2% above the referendum threshold to 3% in each of the next two years. However, councils which take the full option in both 2017-18 and 2018-19 cannot apply a precept in the final year of this parliament.
Analysis of Department for Communities & Local Government data on council tax receipts and councils’ social care budgets this year shows a 3% increase in the precept would generate an additional £205.8m nationally next year, above that which could be raised through the existing 2% precept.
The Local Government Association has previously estimated the size of the social care funding gap as being £1.3bn, rising to £2.6bn by the end of this parliament.
The top three cash beneficiaries of the precept rise would be Surrey, Kent and Essex CCs.
Surrey would raise an extra £6.2m next year under the new arrangement, which equates to 1.7% of the council’s social care budget this year.
Only five top-tier councils, excluding the Isles of Scilly and the City of London, would gain the equivalent of 2% of this year’s budget through the additionla precentage point.
These are Rutland CC, Bromley LBC, Wokingham BC, Central Bedfordshire Council and West Berkshire Council.
A total of 12 councils would benefit by less than 1% of their social care budgets, with eight of the 10 lowest beneficiaries being inner London boroughs or metropolitan districts.
Wandsworth LBC would raise a further £508,000 from the new precept, which equates to 0.6% of the council’s social care budget – the lowest percentage in the country.
Three of the core cities are also in the bottom 10.
Manchester City Council would receive an extra £1.3m to add to a social care budget of £128.7m, while Liverpool City Council could raise £1.5m to add to a budget of £147m.
Newcastle City Council could generate an extra £911,000 with a 3% precept to add to a budget this year of £91m.
Outer London boroughs, counties and unitaries on average would be able to raise social care budgets by around 1.5%.
Regionally, councils in the south east would on average be the biggest beneficiaries of an increased precept, both in cash terms and relative to budgets.
Councils in the region could collectively raise £38.6m, which is 1.61% of social care budgets this year.
London, the north east and the north west would benefit the least on average, with all councils able to generate about 1.3% of budgets.
At prime minister’s questions today Theresa May said measures to tackle the “immediate pressures” in social care would be announced in the local government settlement, which is expected tomorrow.
She added that the problem was not “just about money” and said health and social care should be better integrated across the country.
Geoff Winterbottom, principal research officer for the Special Interest Group of Metropolitan Authorities, told LGC as with the existing precept, members’ low council tax bases would mean they could not raise large amounts through the additional percentage point.
“For our members there’s is several percentage points difference between the council tax raised by this and the additional costs we are facing,” he said.
“It’s not joy unbounded for us.”
He also stressed it was not “a given that all councils will automatically choose to add on the additional percentage”. “They don’t have a great deal of time to decide,” he added.
John Wilderspin, a former NHS manager who until recently worked on the Birmingham and Solihull area’s sustainability and transformation plan, said there were signs the scale of the crisis in social care was being “understood” at national level.
But he added: “I am not sure people outside local government understand this would have a disproportionate impact and is likely to benefit better off areas.
“Given that social care funding is means tested, it is designed to support those who are less well off. It seems to be a contradictory way of addressing the problem.”