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Social Care and the Spring Budget

The announcement that the Spring budget will provide social care with an additional £2bn for the next three years, with £1bn available in 2017-8 has been met with an understandably mixed response: while welcome, it has been felt to be a short-term fix and to fall short of the resources needed. The announcement goes against Philip Hammond’s rejection of calls for additional funding for social care ahead of his 2016 Autumn statement, but as highlighted by the Local Government Association at the end of last year, the previous funding arrangements of a ‘flat cash’ settlement for local authorities for social care did not take into account inflation, increasing demand for care services due to population change or pressures arising from changes to pension arrangements and the National Living wage. The end of 2016 also saw pressure from local authorities, requesting more funding or proposals to raise their council tax rates to bridge the gap in social care funding. Though the additional £2bn may help with some of these issues in the short-term, and a Green Paper later this year will clarify the Government’s long-term plans for social care, there are still concerns in the sector about a number of issues.

First, in terms of adequacy, the £1bn allocated to 2017-18 has been argued to fall short of the £1.5bn the Communities and Local Government Committee have suggested is required by social care for that year. Professor Bob Hudson (Centre for Public Policy and Health at Durham University) has argued that much of this additional funding will be swallowed up in paying staff the National Living Wage which will increase in April – a good thing in an industry characterised by poor pay and insecure working conditions – but also will potentially result in higher dividends and salaries for firms owners and chief executives. Commentators have also argued that two-thirds of other sources of finance, including social care precept (£543 million) and the possibility of raising council tax by 3% will be needed to cover the costs of the National Living Wage. As such, this additional funding could ease pressure on the sector, but we have also seen what happens when there are insufficient incentives for private companies to remain in the sector: Mitie recently sold two homecare businesses for £1 each with an agreement that they would provide £10m for future losses.

We are also facing a recruitment crisis in social care, and whether the payment National Living Wage will do much to alter this issue remains to be seen. In the past few months, we have seen care providers returning council contracts, the closure of wards in care home and that some residents have providing care for each due to staff shortages. Even with better pay and working conditions, the supply of care is unlikely to increase enough to provide adequate levels of support for an ageing population. Pre-Brexit, Independent Age and the International Longevity Centre estimated there would be a shortfall of 200,000 care workers because failure to attract British workers but also because of restrictions on immigration, leaving 1 in 20 positions vacant. At that time, 1 in 5 of the adult social care workforce (18.4%) in England were born outside of the UK, with regional variation (e.g. Greater London 3 in 5 care workers were born abroad). Post-Brexit, ILC revisited this issue and estimated that in a zero net migration scenario, the social care workforce ‘gap’ could reach as high as 1.1 million workers by 2037. This gap is 100,000 workers larger than ILC’s worst predictions pre-EU referendum, increasing the ratio of care worker to care recipient from 1:7 to 1:13.5.

The additional funding could help reduce in the short-term the spate of returned local authority care contracts and provider failure, which if the trend is allowed to continue, could tip many local authorities into crisis (in 2016, almost two-thirds of local authorities reported that they had experienced care provider failure in the previous six months). Adequate funding for social care is only half the story: we also need to secure the supply of care workers and with Article 50 set to be triggered next week, the future of the care sector looks uncertain.

About the Author:

Dr Kate Hamblin is a Senior Research Fellow at the Oxford Institute of Population Ageing. Kate is currently working on a follow-on project examining self-employment for older workers as well as a further collaboration with CIRCLE on a piece of research commissioned by SENSE (the deaf-blind charity) to explore telecare use by individuals with dual-sensory impairment. She is also engaged in a John Fell Fund project exploring the outcomes of the Museum of Oxford’s reminiscence programme and a study examining the work and retirement aspirations of older self-employed people.

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