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Council Tax Would Have to Rise by 10% Next Year to Allow Social Care Just to ‘Stand Still’ Reveals Analysis

Amid consistent media reports that a rise in Council Tax is the Chancellor’s chosen mechanism for increasing funding for social care, Age UK warns that this approach will lead to hugely inflated Council Tax bills in some areas and yet will still not give care services the assurance of enough money to function properly. It would be much better for the Government to provide the extra funds social care needs from central Government coffers, the Charity says, rather than depending on the ability and willingness of local authorities to raise Council Tax even higher than it already is.

The Charity is supporting a Day of Action on Friday 15th October organised by the Care and Support Alliance, to persuade the Chancellor, Rishi Sunak MP, to give local authorities the extra funding they need in his Spending Review – but from central Government funds, not a Council Tax hike. The Alliance believes that Mr Sunak holds the future of social care, and the lives of millions of people in his hands, and that he could be a hero or a villain, depending on the spending decision he makes. In the presence of a group of older and disabled people, Age UK staged a ‘pretend fight’ between ‘Hero Rishi’ and ‘Villain Rishi’ outside the Treasury earlier this week, to dramatise the crucial choice the Chancellor has to make. The Charity sincerely hopes that when he announces the outcomes of the Spending Review, ‘Hero Rishi’ is the politician we all see.

On September 7th , as part of his plan to ‘fix social care’, the Prime Minister announced a one and half per cent rise in National Insurance, to help fund the NHS and social care. However, the proceeds go almost exclusively to support the NHS over the next two years, while meanwhile social care is desperately short of the funds required to provide older and disabled people with care and support. These millions of people cannot wait – for many of them two years will simply be too late.

The Government has made it clear that social care’s short and medium term funding requirements will be decided as part of the Treasury’s Spending Review, the outcomes of which the Chancellor, Rishi Sunak MP, will announce in about two weeks’ time. It would be hard to exaggerate how important the decisions Mr Sunak makes are to the future of social care services and the lives of the millions of older and disabled people who depend on them, the Charity says. A host of recent reports have evidenced the fragility of local care services; the lack of sufficient care staff; and the difficulties of local authorities in making insufficient funding ‘stretch’ to meet the needs of the increasing numbers of older and disabled people who are coming forward requiring help in their areas.[i][i] [ii][ii]

On the question of how much extra funding social care needs from the Spending Review, Age UK supports the view of the Health and Social Care Select Committee, which said recently that: “the starting point must be an increase in annual funding of £3.9bn by 2023–24 to meet demographic changes and planned increases in the National Living Wage. However, such an increase alone will not address shortfalls in the quality of care currently provided, reverse the decline in access or stop the market retreating to providing only for self-payers. Further funding to address these issues is therefore also required as a matter of urgency.” [iii][iii]

It is widely reported that the Treasury wants to use a Council Tax rise to help fill the yawning gaps in local authorities’ social care budgets over the Spending Review period. Specifically, it is believed that their intention is to raise the ceiling on how high local authorities can set their ‘social care precept’, or local tax, without the need to call a local referendum in order to gain public approval for the measure.

However, this is against a context of Council Tax having already risen by a massive 19% in the past four years[iv][iv] and now, new Age UK analysis has found that Council Tax would need to go up by another 10% next year, just to raise £3.3 billion[v][v] – a figure that gets close to but still doesn’t reach the starting point suggested by the Health and Social Care Select Committee.

This in turn would mean an average ‘band d’ household in England could be paying up to £180[vi][vi] more a year in Council Tax than previously, but the amount of cash it would generate would be highly unequal across the country. The Institute for Fiscal Studies estimates that council tax increases in the richest ten councils could generate 45% more per person than in the poorest tenth[vii][vii].  The Charity says that this would be extremely unfair and would also intensify the postcode lottery that already afflicts social care, leaving older people in some areas seriously disadvantaged if they need care and support.

Caroline Abrahams, Charity Director of Age UK and Co-Chair of the Care and Support Alliance said:

“For the sake of millions of older and disabled people, social care needs a big injection of extra funding now and over the next few years – but it should come from central Government, not by massively hiking Council Tax. Social care’s problems are national, as the Prime Minister recognised with his promise to ‘fix them once and for all’, so it’s not fair for Ministers to try to shift the responsibility onto local areas to stump up the cash.

“Our new analysis shows that even if you make local people pay a whopping additional 10% in Council Tax – on top of the 19% average rise we’ve seen in recent years – it still won’t give social care all the money it needs, and meanwhile this intensifies the postcode lottery which means older people have much more chance of getting a decent care service in some places, compared to others. Social care provision is too important to too many people for its fate to depend on local politics and local tax bases.

“It’s down the Chancellor now, Rishi Sunak MP, to decide how much funding to give social care over the next few years, and from which sources, in his Spending Review. The stakes could not be higher: his decisions will determine whether social care services continue to wither and die, just about stand still or, more optimistically, get stronger over the next three years.

“It was the Prime Minister who made the promise to give older people dignity in later life through his social care reforms – a fantastic goal – but it’s the Chancellor now, above all, who will determine whether we make progress towards it, or not. We are looking to him to do the right thing by supporting these vital services on which so many older people depend. The truth is that when it comes to social care Rishi Sunak could be a hero or a villain come Spending Review day – we just all so hope that it’s ‘the good guy’ we see.”

Cllr David Fothergill, Chairman of the Local Government Association’s Community Wellbeing Board, said:

“Social care was facing an uncertain future even before the pandemic, which has exposed and exacerbated some fundamental weaknesses in how we continue to pay for and provide care and support.

“Council tax increases, including the social care precept, have always been a sticking plaster solution to a complex funding problem and should not be relied upon further.

“Increasing council tax to pay for social care is a double whammy for hard-pressed residents, who may feel they are shelling out twice for a service now that the Health and Social Care Levy is being introduced.

“The Government’s social care plan has some potential promise on how care is paid for and the contributions people themselves make, but the Spending Review should provide upfront, desperately needed new funding to meet immediate demands and pressures in our care system, so that people can live the lives they want to lead.”