Social care warning

In its settlement for health and social care, the government said adult social care will receive £5.4bn over the next three years. This would support the introduction of a higher threshold for means-testing (from October 2023, those with assets up to £100,000 will be eligible for some support), a lifetime cap on costs people may have to pay for private care (£86,000), and a new right for those paying privately to ask their local authority to organise their care, so they pay the lower rates councils have negotiated with providers.

However, in a pre-released chapter of its green budget, the IFS said that by the second half of this decade changes in social care could require an additional £5bn every year.

The report said the demands on the funding, which averages £1.8bn a year, is ‘a big ask’ – the new funding amounts to 11% of councils’ net spend on adult social care in 2019/20. Some reports suggested the more generous means-test threshold could cost £2.5bn up to the end of 2024/25 – reducing the funding for the other elements of the package to less than £1bn a year.

A further £1.34bn would be needed if local authorities made up the shortfall between what they pay now for social care and the amount the industry says would allow for full cost recovery and an ‘appropriate’ profit, the IFS added.

And this does not include the costs of increasing the pay of care workers and rising demand, which are likely to cost billions of pounds a year, the independent think-tank said. The Health Foundation has previously estimated that increasing the lifetime cap to a similar amount, and raising the means-test threshold, would cost an additional £2bn a year.

Taken together, the average £1.8bn a year promised by the government, the potential increased payments to providers, and the impact of the reforms could push costs 'towards £5bn a year, almost three times the average annual funding planned over the next three years’, the IFS added.

David Phillips (pictured), an associate director at IFS and an author of the chapter, said: ‘The recently announced social care reforms pose major challenges for councils across England. The funding announced by government so far is unlikely to be enough to meet all of its objectives, in either the short or longer term.

‘Without sufficient funding, councils may find themselves having to tighten the care needs assessments further to pay for the care cost cap and more generous means-testing arrangements.’

Mark Franks, director of welfare at the Nuffield Foundation, which funded the chapter in partnership with Citi, said even significant council tax increases may not be enough to meet future demand or address staffing issues.

He added: ‘Currently, many existing adult social care workers only receive minimum wage and zero-hours contracts are common, which has contributed to staff shortages in the sector. Until sustainable funding is in place to address these issues, disabled and older people are at risk of being unable to access the care they need.’