Debate on the Economic Affairs Committee report into social care funding, House of Lords, 28 January 2021

Adult social care and support is a vital service in its own right. It helps people of all ages to live the life they want to lead. It binds our communities, helps sustain the NHS and provides essential economic value to our country. Too often health and social care are set on unequal footings, with the latter viewed (sometimes solely) in terms of the role it can play in supporting the former.


Key messages

  • The Economic Affairs Committee’s report supports many of our own calls for adult social care to be given a long-term, sustainable funding settlement for the benefit of the millions of people who use and work in these services.
  • COVID-19 has put adult social care firmly in the public, political and media spotlight. This emergency has begun to highlight the essential value of social care to the wider public and this interest needs to be harnessed in the debate about the future of care and support. Long-term reform is urgently needed and we are calling on the Government to set out its thinking at the earliest opportunity.
  • Adult social care and support is a vital service in its own right. It helps people of all ages to live the life they want to lead. It binds our communities, helps sustain the NHS and provides essential economic value to our country. Too often health and social care are set on unequal footings, with the latter viewed (sometimes solely) in terms of the role it can play in supporting the former.
  • Years of significant underfunding coupled with rising demand and costs for care and support have combined to push adult social care services to breaking point. Over the past decade, we estimate councils have had to bridge a gap within adult social care of £6 billion to keep funding the services. Councils were able to do so by making £4.2 billion of savings to adult social care and by diverting £1.8 billion from other council services, meaning these services were reduced by more than they otherwise would have been so that councils could fund adult social care. These pressures have been exacerbated by the response to COVID-19.
  • This underfunding puts the workforce and unpaid family carers under further strain, creating unmet and under-met need and impacting on social care’s ability to help mitigate demand pressures on the NHS.
  • The COVID-19 pandemic has clearly shown how important it is to have a highly skilled, well equipped, and supported care workforce which has parity of esteem with the NHS workforce. There needs to be tangible improvements in the pay of the adult social care workforce, potentially more in line with comparable roles in the NHS, as well as investment in training and workplace development and career progression. The LGA is calling on Government to establish an independent process to gather evidence and make recommendations as soon as possible so that planning for the future of pay and reward in adult social care can begin.
  • In our submission to the Comprehensive Spending Review (CSR), we called on Government to provide an additional £10.1 billion per year in core funding to councils in England by 2023/24. This additional funding would cover the funding gap facing councils, improve services and reduce inequalities.

Economic Affairs Committee report: Social Care funding - Time to end a National scandal

Social Care funding - Time to end a National scandal

The Committee’s inquiry found that:

  • Publicly funded social care support is reducing, as smaller budgets have forced local authorities to limit the numbers of people who receive public funding. It has also meant that social care providers can face funding shortfalls.
  • Social care funding is unfair. People receive healthcare free at the point of use but are expected to make a substantial personal contribution towards their social care. In addition, national funding for social care is distributed unequally across local authorities.
  • To address unfairness in the system the Committee proposes bringing the entitlement for social care closer to the NHS by introducing free personal care, which would include help with washing, dressing or cooking.
  • Those in care homes would still pay for their accommodation and assistance with less critical needs like housework or shopping. Those receiving care in their own homes would not have to pay accommodation costs, which may encourage care users to seek essential help with personal care early. This model would cost £7 billion per year according to the Health Foundation and the King's Fund.
  • Additional funding for social care should come from national government which should raise the money largely from general taxation. The money should be distributed to local authorities according to a fair funding formula.

LGA response to the Committee

Responding to the report (in early July 2019), Cllr Ian Hudspeth, Chairman of the Local Government Association’s Community Wellbeing Board, said:

“This significant report echoes many of our own calls for adult social care to be given a long-term, sustainable funding settlement for the benefit of the millions of people who use and work in these services.

Adult social care faces a £3.6 billion funding gap by 2025. Councils are having to make incredibly difficult decisions within tightening budgets and cannot be expected to continue relying on one-off funding injections to keep services going. What we need is certainty for both the immediate and long-term.

That is why the Government needs to commit to meeting our 10-week deadline, before the party conferences start, to finally publish its much-delayed and long-awaited green paper outlining what the future funding options and possible solutions to this crisis are.

Local government stands ready to host cross-party talks to kick-start this process and make sure we get the answers and certainty we need, so that people can continue to receive essential care and support.”

Funding and long-term reform

Years of significant underfunding coupled with rising demand and costs for care and support, have combined to push adult social care services to breaking point. Over the past decade, we estimate councils have had to bridge a gap within adult social care of £6 billion to keep funding the services. Councils were able to do so by making £4.2 billion of savings to adult social care and by diverting £1.8 billion from other council services, meaning they were reduced by more than they otherwise would have been so that councils could fund adult social care.

Councils are also facing significant extra costs from the demands created by COVID-19 as well as a significant loss of income. Estimates by the Institute for Fiscal Studies (IFS) suggest that another £2 billion might be needed this year to meet all the pressures and non-tax income losses that councils have experienced and will experience as a result of COVID-19, but that this could rise to £3.1 billion depending on whether councils’ assumptions about the end of the pandemic are correct. In relation to adult social care, councils are supporting care providers who face additional costs in ensuring continuity of care for those who rely on their support, as well as seeking to protect staff and the people they support from infection by COVID-19, and then providing care to this who fall ill with the virus.

The 2020 ADASS Budget Survey shows that the onset of the pandemic, and the additional financial and demand pressures faced by local authorities as a consequence, has led to a significant change in the Directors’ confidence in meeting their statutory duties relating to adult social care. For the current financial year (2020/21) only 4 per cent of Directors are fully confident that their budget will be sufficient to meet their statutory duties; this compares to 35 per cent in 2019/20.

The LGA has used its submission to the Comprehensive Spending Review (CSR) to call on Government to provide an additional £10.1 billion per year in core funding to councils in England by 2023/24. This additional funding would:

  • Cover the funding gap facing councils in England of £5.3 billion by 2023/24. This funding gap figure is based on analysis we commissioned from the Institute for Fiscal Studies and is just to maintain services at today’s level – their upper estimate of the funding gap figure is as high as £9.8 billion.
  • £1.9 billion is for services struggling under increased demand, such as adult social care.
  • Finally, the LGA’s submission sets out how a further £2.9 billion could be used by councils to help improve services and reduce inequalities, such as investment in early intervention and prevention and reforming adult social care worker pay.

One of the only positives to come out of COVID-19 is that it has put adult social care firmly in the public, political and media spotlight. It has also shone an important light on the tireless work of our invaluable social care workforce who are providing care and support to all who need it in the most challenging of circumstances. This emergency has begun to highlight the essential value of social care in its own right to the wider public; this debate needs to be harnessed in thinking about the future of care and support.

The legacy of COVID-19 for social care – and most importantly the people who use social care services – must be a reset, not simply a restart. This impetus should spur our thinking around long-term reform of care and support, which we have always said should be built on cross-party cooperation. We are committed to working with Government and all parts of the social care world – particularly people with lived experience – on a way forward that is informed by the many valuable lessons from the response to COVID-19 on the role and value of social care in all our lives.

Our submission to the CSR called for action from Government on three fronts:

  • provide additional funding to shore up social care ahead of winter and a likely second wave of the virus, with a look to this continuing in future years;
  • provide additional funding for the medium term to help address the long-standing challenges that have faced social care, many of which have been exacerbated by the pandemic; and
  • use the above funding as a ‘down-payment on reform’ and to pave the way for changes that will finally put the funding of social care on a sustainable footing for the long-term.

Adult social care workforce pay and conditions

One of the LGA’s seven principles for adult social care reform is that the Government should commit to a new deal for the care workforce, comprising action on pay, training and development, career progression and professionalisation, and recognition.

There are ongoing recruitment and retention problems highlighted in high vacancy and turnover rates that affect service quality. In addition, many staff have uncertain incomes because of the prevalence of zero-hours contracts. The temporary shifts in these patterns due to COVID-19 have highlighted the need to deal with them permanently. A recent Skills for Care report on ‘the state of the social care market’ found:

  • The adult social care sector in England still needs to fill around 112,000 job vacancies on any given day.
  • The staff turnover rate of directly employed staff working in the adult social care sector was 30.4 per cent in 2019/20.

The market-based system of commissioning and provision is well-established and will continue, but it is fragile, with many providers operating at the limits of financial viability, so there is little scope for improving pay and conditions with the current funding structure. In addition, the post-Brexit immigration system has no transitional arrangements for social care and the health and care visa does not cover care workers so dependence on domestic labour will be accelerated and is likely to require higher pay.

The social care workforce must be developed in a manner equivalent to the NHS as part of a stable, sustainable solution to long-term funding problems and that this must involve “parity of esteem” for social care staff with their NHS colleagues. Any changes to pay and reward must be fully funded by central Government as there is no resource in the sector to meet the demands of this challenge.

It will be important to assess the best form of comparison with the NHS on basic pay and resulting costs as overall costs could be in the region of £1 billion. It is also the case that some research and deliberation will be needed on coordination of other terms and conditions and the introduction of an effective mechanism for implementation and uprating. To achieve those aims with a reasonable degree of consensus across the sector, we suggest that the Government commission an independent review to gather evidence and make recommendations as soon as possible so that planning for the future of pay and reward in adult social care can begin.

It is vital that we think and talk about adult social care as an economic opportunity rather an economic cost. Reforming pay and reward for those working in adult social care pay will attract people to work in the sector, fill existing vacancies and ultimately benefit local economies. Adult social care can play an important role in supporting the country and the economy as we seek to recover from the effects of the pandemic.