Combining social care and health in one department is not a cure-all

The fact that healthcare is free while social care is paid for by the state only if you pass a pretty severe means test is well known. The options for reform are well rehearsed. The fact that no government will ever be able to enact any sensible reform to social care funding seems to be one of the few remaining iron laws of politics.

There are two other big differences, though, which get rather less attention. One is simply the different priority we give to each. The other is the fact that social care is provided by local government, while healthcare is funded centrally.

You can see relative priorities simply by looking at cold, hard cash. Since 2010 public spending on health has gone up by 10 per cent. That is a small increase by historic standards, but it means that health spending has grown rapidly as a fraction of total public service spending. Spending on social care, by contrast, has fallen substantially in real terms — and this at a time of rapid population growth and ageing of the population. The risk, of course, is that this reduction in social care spending could itself be putting additional pressure on health budgets as care outside of hospital becomes harder to access.

One of the consequences of devolution is that the different constituent nations of the UK have been able to take rather different routes. In England the decision has been clear — more money for heath, less for social care. The Scots, the Welsh and Northern Irish, to differing degrees, have protected social care spending more and health spending less. The ability to take those sorts of decisions is precisely the point of devolution.

Yet responsibility for social care is also devolved to councils within England. They have had to make some big choices as they have suffered some very big cuts in their overall revenues, which, on average, have fallen by about a fifth since 2009. Given that adult social care accounts for more than a third of local authorities’ budgets, they have had little choice but to reduce spending on it. They have, though, reduced it by considerably less than they have reduced spending on other services. Within their highly constrained budgets, social care spending has received some relative protection.

However, different local authorities have suffered very different levels of budget cuts. One in ten reduced spending on adult social care by more than a quarter between 2010 and 2016, while one in seven managed to increase spending. These are huge differences driven by where overall cuts in spending have occurred much more than they have been driven by changes in need. In broad terms, councils that were more dependent on central government grants, generally in more deprived and more urban areas, have suffered the biggest funding cuts. And it is in these councils where social care spending has fallen the most.

Government policy now is to make each council more responsible for raising its own funding in future, with less equalisation of resources between councils with different tax bases and spending needs. Councils are due to become more dependent on how well their own business rates revenues perform. General grant funding is set to be abolished from 2020. The idea is to provide councils with stronger financial incentives to grow their local economies and hence their tax bases.

The problem is that this — perfectly reasonable — desire to increase local responsibility crashes headlong into an equally reasonable desire to ensure consistent standards of social care across the country. While devolving funding risk to a local level, the government has been busily telling local authorities exactly what needs and eligibility criteria they should apply in provision of social care.

This will create two problems: first, there is likely to be very little correlation between the growth in revenue that any local authority gets from its own tax base and the demands it has to meet for social care provision; second, revenues from council tax and business rates overall are likely to rise much less quickly than demands on social care budgets. Like health spending, social care spending is likely to have to increase quite rapidly over the next two decades simply to keep up with demand. Revenues from council tax and business rates will not rise anywhere near as fast.

These facts almost certainly will mean additional funding for social care from central government. How that funding is distributed to local authorities, and how much control central government retains over its use, will have fundamental consequences for social care provision. Given that providing social care is much the biggest thing that local government does, this choice also will have fundamental consequences for the future role and nature of local government as a whole.

Too often, both social care and local government are treated as Cinderella services by Whitehall. Let’s hope that the rechristening of the new Department of Health and Social Care signals a change to that.