Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 4
4
Acknowledged
Paragraph: 38
The Rt Hon Boris Johnson MP said as Prime Minister that he would fix the...
Conclusion
The Rt Hon Boris Johnson MP said as Prime Minister that he would fix the crisis in social care once and for all. We commend the Government for attempting to prevent unpredictable and catastrophic care costs for people and introducing reforms to the sector where previous Governments failed to act. But it should be under no illusions that it has come close to rescuing social care, and needs to be open with the public that there is a long way to go. Ultimately, all our lines of inquiry returned to the same fundamental point: there is a large funding gap in adult social care that needs filling. This is not new information. In October 2020, the Health and Social Care Long-term funding of adult social care 73 Committee estimated a funding gap of £7 billion to cover demographic changes, uplift staff pay in line with the National Minimum Wage, and to protect people who face catastrophic social care costs. We have not yet received an updated estimate of the funding gap to take into account immediate pressures and the Government’s various policy reforms. £7 billion was just a starting point and would not address the growing problem of unmet need nor improve access to care, with the full cost of adequate funding likely to run to tens of billions of pounds.
Government Response Summary
The government acknowledged the concerns around the impact of charging reforms and stated they have provided funding for charging reforms, but do not address the concerns that they have underestimated the combined cost of introducing a new cap and more generous means test, commencing Section 18(3) of the Care Act 2014 in respect of residential care, and the fair cost of care.
Paragraph Reference:
38
Government Response
Acknowledged
HM Government
Acknowledged
At the 2021 Spending Review, the government made the decision to fund departments and other public sector employers to cover the increased cost of National Insurance Contributions (NICs), as a result of the Health and Social Care Levy (HSCL). Whether an organisation received funding for the increased cost of NICs depended on its classification. Employees who were employed by the public sector were included, but not, for example, where services were contracted out. Any other approach would have resulted in differential treatment between private and public sector employers. The September 2022 announcement repealing the 1.25% increase in NICs from 6 November means that employers are no longer faced with the additional pressure of employer NICs, and their budgets have been adjusted to remove this compensation. This means we are revising the additional grant funding for councils, announced as part of the 2021 Spending Review by approximately £200 million in each of 2023–24 and 2024– 25. There will be no change to budgets in 2022–23, as funding has already been allocated. The 2023–24 Local Government Finance Settlement (LGFS) provides an increase in Core Spending Power for local authorities of around 9%, making available almost £5 billion in additional funding. Government response 11 Charging reforms Conclusion 8 and 9 – re-evaluate the impact of charging reforms Conclusion 8 - While the Government has provided funding for its charging reforms, we received many concerns that it has underestimated the combined cost of introducing a new cap and more generous means test, commencing Section 18(3) of the Care Act 2014 in respect of residential care, and the fair cost of care. It has since expressed its intention to stagger the rollout of Section 18(3), which may help to avert the worst-case scenario in terms of local authority capacity pressures and market sustainability. Conclusion 9 - It is nevertheless disappointing that people currently living in and paying for residential care, whose payments before October 2023 will not count towards the cap, will now not be able to access local authority rates until 18 months later than they were originally told.