House of Commons Library

Local government and social care funding

Published Wednesday, April 24, 2019

Background material for the Opposition Day debate on local government and social care funding on Wednesday 24 April 2019.

This material has been compiled ahead of the Opposition Day debate on local government and social care funding on Wednesday 24 April 2019. The subject of the debate has been selected by the Leader of the Opposition.

On Wednesday 24 April, the House of Commons will debate this motion:

“That this House notes that despite the Prime Minister announcing austerity is over, under this Government local authorities’ spending power per household is on course to fall by an average of 23 per cent by 2020 and that nine of the 10 most deprived council areas in this country have seen reductions that are almost three times the average of any other council; recognises that this has resulted in social care budgets in England losing £7 billion; further notes that at the last General Election Labour committed to a fully costed plan to invest an additional £8 billion over this Parliament in social care; and calls on the Government to ensure that local authorities and social care are properly and sustainably funded.”

The following material includes links to: Commons Library briefings; updates on the Fair Funding Review; reports on local government funding from the National Audit Office and the independent Institute for Fiscal Studies; the most recent annual local government finance settlement; and a funding dashboard maintained by the Commons Library.

Local government is devolved to Scotland, Wales and Northern Ireland. The publications listed below address local government in England unless otherwise specified. Reductions to local authority funding in Scotland, Wales and Northern Ireland have been smaller than in England since 2010.

Local government funding

Reports on local government funding pressures

National Audit Office, Pressure on children’s social care, January 2019

National Audit Office, Financial sustainability of local authorities 2018, July 2018

This report discusses funding pressures faced by local authorities, local authority and Government responses. It includes summary figures for England.

David Innes and Gemma Tetlow, Central cuts, local decision-making: changes in local government spending and revenues in England, 2009-10 to 2014-15, Institute for Fiscal Studies, 2015

This report provides figures for reductions in funding in England between 2010 and 2015. The link goes to the report summary: the full report can be accessed from the same page

Institute for Fiscal Studies, The local vantage: how views of local government finance vary across councils, September 2017

This report analyses a survey of councillor / officer views on local government responses to funding reductions and future prognosis for the sector.

Funding settlements and statistics

The Library’s finance dashboard provides annual funding and spending power data for all local authorities in England from 2016 to 2020.

Government documents detailing the most recent local government finance settlement, and a summary from the BBC, are also available. The Library produced an explanation of the finance settlement process in December 2018.

Planned changes to local government finance

The Library briefing paper Reviewing and reforming local government finance provides an explanation of recent plans to reform local government funding, including extending business rate retention and the current Fair Funding Review.

The most recent consultations on business rate retention and the Fair Funding Review were published in December 2018.

The Housing, Communities and Local Government Committee published a report on Business rate retention in 2018

Analysis of the regional impact of funding reductions

Mia Gray and Anna Barford, “The depths of the cuts: the uneven geography of local government austerity”, Cambridge Journal of Regions, Economy and Society, Volume 11, Issue 3, November 2018, Pages 541–563

BBC, “Council cuts have 'hit cities and north hardest’”, 28 January 2019

The IFS have published an analysis of options for fiscal devolution in England: “Taking control: which taxes could be devolved to English local government?”, March 2019  

The effects of the replacement of council tax benefit by council tax support have been analysed by the IFS: “The impacts of localised council tax support schemes”, January 2019. This policy applies in Scotland and Wales as well as England, though the Scottish and Welsh governments are able to mitigate its impact through their responsibility for local government funding.

Centre for Cities, Cities Outlook 2019, January 2019. Large cities, including London, have seen the largest reductions in Government funding per head for local government since 2010. Data provided for individual city areas.

Dominic Brady, “Austerity hits prevention funding”, Public Finance, January 2019: funding reductions have led to a focus on statutory local government services at the expense of funding preventative services

Parliamentary debates

Local government funding, Westminster Hall, 27 Mar 2019

Local government funding, Westminster Hall, 15 Jan 2019

Local government funding, MHCLG oral questions, 10 Dec 2018

Local government funding: Merseyside, Westminster Hall, 27 Oct 2018

Local government funding, MHCLG oral questions, 30 Apr 2018

Local government funding, Opposition Day debate, 28 Mar 2018

Social care

The House of Commons Library has published a number of briefing papers relating to the issue of adult social care funding in England.

The Library paper Adult Social Care Funding (England) examines the key funding pressures facing adult social care services in England and evidence of the impacts of these pressures on social care and health services. The paper explains the additional short-term, ring-fenced funding that has been committed to adult social care between 2016/17 and 2019/20, and outlines concerns about a social care funding gap and financial uncertainty post 2020.

For information on the current social care means-test for individuals, see Social care: paying for care home places and domiciliary care (England). In summary, care home residents with assets less than £23,250, are eligible for local authority funding support for their residential care (care home) (although they are expected to contribute their income towards the cost); those with assets over £23,250 are expected to pay for their care in full. Local authorities have discretion to set a more generous means-tests for those in receipt of domiciliary care. The value of someone's home is only included in the means test for care home residents, subject to some exemptions.  Plans to introduce a cap on life-time social care costs (originally set at £72,000) and a more generous means-test were indefinitely postponed in December 2017.

The Government has committed to publish a Green Paper on Social Care setting out proposals to “ensure that the care and support system is sustainable in the long term”. Given pledges made during the 2017 General Election campaign by the Conservative Party, it is expected that the Green Paper for older people will include proposals for a cap on an individual’s life-time social care spending and changes to the means-testing for social care to make it more generous. What we know so far about the topics likely to be covered by the paper is set out in the Library paper Social care: forthcoming Green Paper (England). Publication of the Green Paper has been delayed several times; the Government has said that it intends to publish it “at the earliest opportunity”.

The following Library briefing papers look at other proposals made by Conservative, Coalition and Labour Governments in recent years:

The Library paper Social care: care home market – structure, issues, and cross-subsidisation (England) discusses some of the wider issues and pressures faced by the care home sector.

Scotland, Wales and Northern Ireland

Social care policy is devolved. For more information about the system elsewhere in the UK, see:

 Parliamentary debates

 Social Care Funding, HC deb 17 October 2018, volume 647, cc725-753

Further reading

The state of health care and adult social care in England 2017/18, Care Quality Commission, October 2018

The lives we want to lead: The LGA green paper for adult social care and wellbeing, Local Government Association, July 2018

Adult social care at a glance, National Audit Office, July 2018

Unpaid Care, Parliamentary Office of Science and Technology, July 2018

Better Health and Care For All: A 10-Point Plan For The 2020s, IPPR, June 2018

Long term funding of adult social care joint inquiry, Housing, Communities and Local Government Committee and Health Committee, report published 27 June 2018

A fork in the road: Next steps for social care funding reform, King’s Fund, May 2018

Behind the Headlines: the battle to get care at home, Age UK, May 2018

The state of adult social care services, Care Quality Commission, April 2018

Approaches to social care funding, King's Fund, February 2018

The adult social care workforce in England, National Audit Office, February 2018

Carers, House of Commons Library, November 2017

Commons Debate packs CDP-2019-0097

Authors: Mark Sandford; Hannah Cromarty

Topics: Children's social services, Community care, Local government, Public expenditure

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