Adult Social Care Funding (England)

Scope of briefing paper

This briefing focuses on local authority funding for adult social care in England. Information on the funding that people may be able to get to help with social care costs is available in a separate Library briefing: Paying for adult social care in England. (to be put on landing page).

How social care is funded

There is no national government budget for adult social care in England. Instead, publicly funded social care is mainly financed through local government revenue.

Net local authority expenditure on adult social care in 2021/22 was £19 billion. It was also planned that £2.6 billion from the Better Care Fund would be spent on social care services in 2021/22.

Funding pressures

Adult social care funding has been under pressure for several years. Factors which have contributed to this include:

• Demographic pressures: the number of older people (the group most likely to need social care) is rising faster than the population as a whole. There is also increased demand for care from working age adults.
• Pressures on local government finances: the National Audit Office has estimated local government spending power (government funding, council tax and business rates) reduced by 29% in real-terms between 2010/11 and 2021/22.
• Increases in the National Living Wage: The Association of Directors of Adult Social Services (ADASS) has estimated the increase in the national Living Wage from April 2022 will cost councils around £977 million.
• Local authorities report concerns about the increasing costs of care (PDF)and the price of care packages to support people with increasingly complex care needs.

Estimates of the social care funding gap

Estimates of the size of the social care ‘funding gap’ vary. In an October 2020 report (590KB, PDF), the Health and Social Care Committee said an additional £7bn per year was required by 2023/24, which it described as a “starting point”. The Health Foundation has suggested that an additional £14.4 billion a year would be required by 2030/31 to meet future demand, improve access to care, and pay more for care.

In its August 2022 report on the long-term funding of adult social care, the Levelling Up, Housing and Communities Committee described these estimates as “credible” and recommended the Government “urgently needs to allocate more funding to adult social care in the order of several billions each year, at least £7 billion.”

Issues in the sector

It is suggested the funding pressures in adult social care contribute to a range of issues in the sector, including:

• High levels of unmet or under-met care needs. There is no agreement about the overall level of unmet need but Age UK estimated prior to the Covid-19 pandemic that 1.5 million people aged 65 and over in England has some form of unmet or under-met care need.
• Delays in accessing support. The Association of Directors of Adult Social Services (ADASS) estimated, for example, that around 246,000 people were waiting for a care assessment in August 2022 (PDF).
• “Catastrophic” care costs: the Government estimates around one in seven adults aged 65 face lifetime care costs of over £100,000.
• High levels of unpaid care, with carers not always getting the support they need.
• The financial sustainability of care providers. In July 2022, ADASS reported that 65% of Directors of Adult Social Services said the level of quality and choice in their local care market had reduced compared to before the Covid-19 pandemic.
• Workforce pressures. In 2021/22 there were an estimated 165,000 vacancies and the number of vacant posts increased by 52% between 2020/21 and 2021/22.

Issues in social care can also impact on health services, leading to unnecessary emergency hospital admissions and delaying hospital discharge. Analysis published by the Nuffield Trust in October 2022 suggested the biggest reason patients face delays being discharged from hospital is because they are waiting for availability of a service in the community.

Additional funding since 2016/17

Significant additional funding has been provided to the adult social care sector since 2016/17, often in the form of short-term ring-fenced grants. Money has also been given through the improved Better Care Fund and local authorities have been given the power to raise additional revenue locally though council tax (the social care precept).

Concerns have been raised, however, that the short-term nature of the funding makes it hard for local authorities to plan and forecast.

Health and Social Care Levy and funding for reform

In September 2021, the Government announced plans to use £5.4 billion of revenue from a new Health and Social Care Levy to fund adult social care reform in England between 2022/23 and 2024/25. Of this, £3.6 billion was to be used to reform how people pay for adult social care (charging reforms).

In September 2022, the Government announced the cancellation of the Health and Social Care Levy. At the Autumn Statement 2022, delivered on 17 November, the Chancellor announced that implementation of the charging reforms, originally planned for October 2023, would be delayed by two years. He added that the funding allocated for the reforms would be maintained within local government.

Funding from 2023/24

At the Autumn Statement 2022, the Government said it would make available up to £2.8 billion in 2023/24 and £4.7 billion in 2024/25 to help support adult social care and hospital discharge. This included:

• £1 billion of new grant funding in 2023/24 and £1.7 billion in 2024/25, comprising:
  • £600 million in 2023/24 and £1 billion in 2024/25 to help get people out of hospital and into care settings. The funding will be pooled as part of the Better Care Fund.
  • £400 million in 2023/24 and £680 million in 2024/25 which will be distributed through a grant ringfenced for adult social care (The Adult Social Care Market Sustainability and Improvement Fund).
• Allocating funding for the now-delayed charging reforms through the Social Care Grant for adult and children’s social care (£1.3 billion in 2023/24 and £1.9 billion in 2024/25). The Social Care Grant will be worth £3.85 billion in total in 2023/24.
• Allowing local authorities to increase the adult social care precept by up to 2% per year in 2023/24 and 2024/25.

The additional funding was welcomed by stakeholders but concerns were raised that it was insufficient to address the issues in the sector.

Funding for hospital discharge

In September 2022, the Government announced it would create a £500 million Adult Social Care Discharge Fund to “support discharge from hospital into the community and bolster the social care workforce, to free up beds for patients who need them.” The funding will be divided between integrated care boards and local authorities and pooled into the Better Care Fund. Allocations of the funding were published in November 2022.

On 9 January 2023, the Government announced it would provide an additional £200 million – on top of the £500 million Adult Social Care Discharge Fund – to allow the NHS to immediately buy short term care placements in care homes or other settings to speed up hospital discharge. The funding will pay for a maximum of four weeks of care per patient until the end of March 2023.