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Councils need 4bn a year to maintain care services

Councils in England will need billions in extra funding over the next parliament if they are to meet the rising costs of providing adult social care, according to a new report.

A new analysis out today (11 November) from the Institute for Fiscal Studies (IFS) warns that local authorities will need an extra £4 billion a year from central government just to maintain social care services at current levels and prevent further cutbacks to other services.

The IFS believe this figure could rise even further – to £18 billion a year by the mid-2030s.
Even with council tax going up by 4% a year every year – double the rate of inflation – councils may need an additional £1.6 billion a year in real-terms funding by 2024–25.

This would grow to £4.7 billion by 2029–30 and £8.7 billion by 2034–35.

The IFS analysis also warns that any new policies promised during the current General Election campaign would come on top of these budgetary pressures.

For example, according to the Health Foundation and The King’s Fund, the cost of Labour’s plan for free personal care for the over 65s would be £6 billion if introduced next year, increasing to £8 billion in real terms by 2030.

And such pledges would not restore adult social care services back to their 2010 levels – since when hundreds of thousands of people have lost support as a result of stricter eligibility criteria. That would cost something like a further £8 billion a year in 2020-21 and require even more in the longer term.

‘The additional funding announced for councils next year could be just a lull in the storm,’ said IFS associate director, David Phillips.

‘Detailed public spending plans for 2021–22 and beyond have not yet been published. But we do know that councils will rely on council tax and business rates for more of their funding going forwards.

‘And those revenues just don’t look like they will keep pace with the rising costs of services like adult social care – even with council tax bills going up at 4% a year, which is double the rate of inflation. That means finding billions more in funding to top up existing local tax revenues, even before thinking about new initiatives like free personal care.’

Photo Credit – Pixabay

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