Feature: 10% council tax hike needed to maintain social care

Council tax would have to rise by an average 10% next year, costing an average band D household up to £180 more a year, to allow social care just to ‘stand still’, analysis by Age UK has found.

Age UK warns that the government’s plan to increase council tax to fund social care will lead to hugely inflated council tax bills in some areas without giving care services the assurance of enough money to function properly.

The charity said it would be much better for the government to provide the extra funds social care needs from central government coffers,  rather than depending on the ability and willingness of local authorities to raise council tax even higher than it already is.   

On September 7 as part of his plan to ‘fix social care’, the prime minister announced a 1.5% rise in National Insurance to help fund the NHS and social care.

It is believed that the government intends 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 19% in the past four years. The Age UK analysis found that council tax would need to go up by another 10% next year, just to raise £3.3 billion, 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 more a year in council tax than previously, but the amount of cash it would generate would be highly unequal across the country.

The social care postcode lottery

The Institute for Fiscal Studies (IFS) estimates that council tax increases in the richest ten councils could generate 45% more per person than in the poorest tenth.  It said 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.    

Kate Ogden, research economist at IFS, said: ‘The government has stepped up with billions in additional funding for councils to support them through the last 18 months. It is likely to have to find billions more for councils over the next couple of years if they are to avoid cutting back on services, even if they increase council tax by 4% a year or more.

‘The coming financial year is likely to be especially tough, with the likelihood of at least some ongoing Covid-19-related pressures, and a particularly tight overall spending envelope pencilled in.

‘At the same time, the government needs urgently to deal with a local government funding system which is becoming hopelessly out of date, being based on population levels and characteristics in 2013. This results in manifest unfairnesses in the distribution of resources between councils.’

Age UK is calling on Rishi Sunak to give local authorities the extra funding they need in his Spending Review, but from central government funds, not a Council Tax hike. It believes that Mr Sunak holds the future of social care, and the lives of millions of people in his hands.

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.

‘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 to Rishi Sunak, 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 standstill 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 care funding black hole

UNISON senior national officer for social care Gavin Edwards has also warned that the proposed council tax hike could push many low earners below the poverty line.

‘These figures are a clear indication why social care needs immediate help from central government. Hiking council tax bills to plug the care-funding black hole is unworkable and deeply unfair.

‘Not only would ​this deepen existing inequalities, with those from wealthier postcodes having bigger funding pots, but it could also push many low earners below the poverty line.

‘The care crisis is a national problem requiring a national solution. The chancellor must commit to serious investment in the sector and tackle the staffing crisis head-on, with an immediate pay rise for care staff and a long-term plan for its future.’

The Department for Levelling Up, Housing and Communities has been contacted for comment.

Photo Credit – National Cancer Institute and Colin Watts