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26 May 2022updated 16 Jun 2022 3:38pm

Levelling-up minister on social care gap: Councils “cannot rely on government funding forever”

Kemi Badenoch MP told a select committee that the government is investing the "right amount".

By Harry Clarke-Ezzidio

As rising inflation continues to affect the operations of many services, a levelling-up minister has warned councils that they “cannot always rely on central funding forever” to cover emergency social care costs.

Despite inflation currently sitting at 7.8 per cent (with it potentially reaching 10 per cent by the end of the year), Minister of State for Levelling Up, Kemi Badenoch MP, told the levelling up, housing and communities committee (LUHC) this week that, despite many in the sector suggesting there is a funding gap for care, the government is providing enough support “as far as we can see”. 

Monday’s LUHC meeting was the final evidence session in its inquiry into the long-term funding of adult social care, with a particular focus on how any gap in funding within the sector should be resolved. 

“We do accept that funding is difficult across the board,” said Badenoch when asked about a shortage of funding. “[But] when it comes to social care, we’ve worked with the Treasury and with DHSC [Department of Health and Social Care]… we think that the funding is at the right amount.”

What support do councils have?

Last autumn, the government announced the Health and Social Care Levy, which is designed to increase funding and improve services across the NHS and care settings. However, only £5.4bn of the £39bn that the new tax – which came into effect in April – generates will go to social care (spread across three years), while the rest of the funds will go to the health service.

Many civil society groups have labelled the amount on offer for social care as inadequate. Local councils, which are allocated money to spend on social care – and all other services – by central government, will not see any benefits until at least 2023, Gillian Keegan MP, Minister of State for Care and Mental Health, told the committee.

When the levy was announced last year, it came tied to a white paper that outlined how the government intends to restructure social care over the next ten years. The current funding ratio between the NHS and social care of the money generated by the levy will last for three years, and Keegan told the committee expects a “bigger proportion” of cash will go to care when allocations for the next three-year cycle is decided. “But within this [current] three years, quite a lot of that time we’re taking up to make sure we put the foundations in place [for] the reform,” said Keegan.

She went on to sidestep a question about whether councils would receive compensation if the care cost models outlined in the reforms prove to be wrong. “What we will be looking at is making sure that we help [councils] make sure it’s a sustainable market… [But the] real test is, are there enough people providing spaces for the demand that we have?” 

Is there any inflation-induced support? 

Both Keegan and Badenoch pointed to the £54.1bn 2023/23 Local Government Finance Settlement – a cash increase of £3.7bn from the year before – as evidence of the government offering additional funds for councils to provide care services. However, a Commons report notes that, when adjusted for inflation, this year’s budget is a 1.8 per cent decrease on the previous year.

In exceptional cases, emergency cash is available to councils struggling to provide care – but it should not be taken for granted, Badenoch told the committee. “That option is always there if [the case] meets the criteria, but we do expect councils to be able to look at their own income-generating capacity as well. [They] cannot always rely on central government funding forever,” she said.

How will any funding gaps affect the levelling-up agenda?

Central government is currently conducting a “fair funding review”, which will change the amount of cash given to councils based on an assessment of their relative needs and resources. (Concern is rife among councils about which ones will be among the winners and losers.)

Council funding structures have not been updated in a decade. LUHC member Ben Everitt MP told Keegan and Badenoch that whatever happens in the review “[it] will not be perceived as fair by some authorities”. 

“I was a councillor before I was a member of parliament – we all knew that the system was broken and that needs weren’t being recognised in the allocation of central funding,” he said. 

When asked whether her department could be trusted to go to the Treasury to stand up for social care and ask for more money, Badenoch asserted that people “can be convinced” they would be able to, and pointed to the cash increase in the Local Government Finance Settlement. ”I think we are doing relatively well in terms of funding adult social care,” she added.

Responding to Badenoch, Clive Betts MP, chair of the LUHC, implied that the government could do more: “The word [you used] there was that you ‘are’ doing rather than you ‘can’ do – and some might argue that there has to be a bit more emphasis on the ‘can’.”

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