Social Care Funding (EAC Report)

Lord Shipley Excerpts

Thursday 28th January 2021 Grand Committee

[Lord Shipley (LD) [V]]

My Lords, I should remind the House that I am a vice-president of the Local Government Association.

This is an impressive report and I congratulate the committee on its work in addressing the key issues so effectively and on trying to encourage some urgency in government thinking. I want to talk about resources and, in particular, the funding issues identified by the committee in paragraphs 156 and 157. I agree with the committee’s conclusion:

“Social care funding should not be reliant on locally raised revenue which has little connection to local demand for social care.”


I also agree with this:

“The additional funding needed for adult social care should be provided as a government grant, distributed directly to local authorities according to an appropriate national funding formula which takes into account differences between local authorities in demand for care and ability to raise funds from local taxation.”


That is the right approach. I just wish the Government would share the committee’s view that social care funding should not be as reliant on locally raised revenue as it is now.

Unfortunately, there has been a deliberate government policy to force up council tax well above the rate of inflation to help to pay for social care by means of the social care precept that the Government introduced in 2016. This has resulted in council tax payers being required to pay up to 15% more over the last five years. Presumably, in the absence of any solution to the funding crisis, council tax will go on being increased in this way through the life of this Parliament. This approach means that councils able to generate higher receipts from their council tax base can raise more money for social care than poorer councils, when it is often the poorer councils that have the greatest demand for social care.

At the general election in December 2019, the Conservative Party manifesto guaranteed not to increase income tax, national insurance or VAT in this Parliament. These three taxes bring in almost two-thirds of UK tax revenues, so the decision not to increase them means that the Government intend other taxes to bear the burden. Council tax is one of those, so, for a sixth year now, council tax is increasing well above the rate of inflation. Up to 5% is permitted from April, of which a maximum 3% increase is for the adult social care precept. We should be very concerned about this and the fact that this constant rise in council tax forced on councils impacts most of all on poorer families who are already facing greater financial pressures from the pandemic.