15 December 2016 | Care

Christie & Co: Government needs a social care funding solution "independent of local funding constraints"

The Government has released a statement saying that it will allow local authorities to increase council tax bills by 3% for each of the next two years in order to fund community social care. This represents a front loading of the 2% social care precept option for the years up to 2019/20, which was declared by George Osborne last year.

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Recent and impending National Living Wage increases and staff shortages continue to put substantial pressure on care home providers, which have been struggling under the austerity measures imposed by the Government. These issues were explored in Christie & Co’s report titled ‘Adult Social Care 2016: Funding, Staffing and the Bottom Line’ which highlighted the urgent need for the Government to take action.

Max Weidl, Director in Christie & Co’s Care Consultancy team comments, “In 2017, the sector will face a variety of substantial cost pressures. Christie & Co estimates that the increase in the National Living Wage alone is set to increase staff costs in elderly care by a minimum of 2.5-3.0% and 1.0-1.5% in specialist care. Furthermore, we expect costs for agency staff to continue to rise in 2017, while non-staff cost inflation is expected to be at 2.7%. 

“If the 3% increase in council tax was raised in full by each local authority and translated into fee uplifts for care providers, these increased funds could compensate for the expected increases in costs for existing care home residents.

“As our research has shown, however, many local authorities this year were not able to provide operators with adequate fee increases. This is either because their ability to raise adequate funds through council tax uplifts was limited, or the additional money was used to fund greater demand for care by the increasingly ageing population. Furthermore, specialist care operators were mostly neglected in the 2016 funding round.

“While the frontloading of the precept may therefore be a short term fix for some councils and care providers, many are likely to lose out again in the 2017 funding round.

“Christie & Co, who advises operators, investors and banks on the future of the care sector, believes that the Government needs to work towards a long term funding solution that encompasses health and social care, is independent of local funding constraints and is based on the population’s requirements.”