Council tax hike being considered to cover social care costs

Ministers are looking at increasing council tax to pay for social care but have been warned that it will not tackle funding problems which are “out of control”.

Experts, including the former Tory health secretary Stephen Dorrell, have warned of a growing cash crisis hitting local government and the NHS.

The government is preparing to allow tax precepts to be increased so local councils, which have suffered reductions in government grants totalling more than 40% since 2010, can claw in extra cash to cover the spiralling social care costs.

Izzi Seccombe, the Conservative chair of the Local Goverment Association’s community wellbeing board, confirmed that the idea of an increase in the precept was being considered.

“We have had some dialogue with ministers about this,” she told BBC Radio 4’s Today programme on Monday.

But she said the money raised from such a move would not be enough. Seccombe pointed out a 2% increase in precept imposed by most councils last year raised only £380m, which was not enough to pay the £600m needed to cover increased staff costs under the “national living wage”.

She also warned that a rise in council tax would create a postcode lottery in services because richer areas could raise more than poorer areas where the need is greatest.

Seccombe called for emergency funding. “We need an injection now of £1.3bn because there is a shortfall by the end of 2020 of £2.6bn.”

Dorrell, who is now the chair of the NHS Confederation, said the shortfall in social care was spilling over into the NHS because discharged hospital patients had nowhere else to go.

He said: “What we are talking about is a cash shortage that is threatening the stability not just of local government but of the National Health Service. Unless we address this seriously, we will simply see a failure of service across the range of local public services and people will suffer as a consequence.

“It comes when people find they can’t have access to care homes, so they end up in A&E and GP surgeries. They can’t be discharged from hospital when they are fit and ready to go.”

Dorrell said he would welcome giving councils the flexibility to raise council tax for social care, but he called for a more “fundamental” rethink of both health and social care funding.

Martin Green, the chief executive of Care England, which represents care home providers, said hundreds of providers were on the brink of financial ruin.

He said: “Research recently showed 40% of care services will no longer be viable in the medium term so this is a huge number of care services that will be lost.

“The government needs to have a clear strategy on social care and if they don’t there will be a crisis right across both health and social care.”

Andrea Sutcliffe, the chief inspector for adult social care, told the Times: “The system is approaching a tipping point. We’ve got increased demand and potentially a restriction on capacity.

“Unless we really get to grips with some of these problems … we will get to an absolute crisis.”

Labour peer David Lipsey, who was involved in a royal commission on elderly care funding in the 1990s, added: “There could be mass closures of care homes.

“There’s a danger that poor people in poor areas will end up without care, living a squalid life. There could be care blackspots because the homes that are reliant on state funding will become unsustainable,” said Lord Lipsey.

The Lib Dem shadow secretary of state for health, Norman Lamb, said: “This is dreadful crisis management from the Conservatives.

“They are lurching from crisis to crisis and this is yet another desperate sticking plaster solution which falls short of what is needed. Making councils bear all the burden will increase the postcode lottery which already exists.

“It will mean that wealthy parts of the country will find it easier to meet rising demand whilst those areas where council tax raises less money will be left struggling.

“The government must be held to account for the consequences of leaving more and more people without the care they desperately need.”

Barbara Keeley, the shadow minister for social care, commenting on reports of proposed council tax rises to fund social care, said: “Asking taxpayers and councils to pick up the bill for the Tories’ failure is no substitute for a proper plan.

“It is time for Tory ministers to deal with the crisis they have created in funding social care and to develop a sustainable way of funding the social care on which vulnerable and frail older people depend.”

Council tax hike being considered to cover social care costs