Press release

Dedicated adult social care funding forms key part of continued long-term funding certainty for councils

Councils will continue to benefit from long-term financial certainty, while having extra flexibilities to deliver adult social care services.

town hall
  • a £240 million dedicated social care grant for councils next year
  • greater flexibility for local authorities over the Council Tax social care precept
  • continued certainty with the historic 4-year funding settlement

Councils across England will continue to benefit from the long-term financial certainty of the historic 4-year funding settlement, while at the same time having extra flexibilities to deliver adult social care services.

To help town halls plan ahead, Communities Secretary Sajid Javid pledged to stick to the individual allocations that were published just 12 months ago, as the second year of the 4-year plan.

It means over the 4 years of the settlement, councils will receive almost £200 billion in government funding – ensuring they can deliver the frontline services people value, while at the same time cutting waste.

And to support their most vulnerable residents, Mr Javid announced plans for councils to be able to raise an additional £208 million for social care, by having the flexibility to increase the dedicated social care precept by up to 3% next year if they choose – equivalent to just £1 a month on an average Band D Council Tax bill.

This comes on top of a £240 million social care grant for councils next year.

Communities Secretary Sajid Javid said:

For years councils have worked well delivering the services local communities need – we’re determined to help that continue. The historic 4-year funding settlement gives authorities the certainty they need to plan ahead, with almost £200 billion available over the Parliament.

This government is committed to making sure this is a country that works for everyone and that our most vulnerable in society get the support they need. Today’s additional funding and flexibility will mean councils will have £7.6 billion in total dedicated social care funding over the 4 years of the settlement to do just that.

Speaking in Parliament he said this all adds up to a positive funding settlement for working people who work hard and pay their Council Tax.

What the financial settlement includes:

Long term funding certainty for councils

For decades, councils have been calling for greater financial certainty and independence, and in February 2016, ministers published details of the historic 4-year settlement – transforming the relationship between central and local government.

The settlement is broadly flat in cash terms, with local authorities having almost £200 billion over the lifetime of this Parliament to spend on delivering key local services. In return for greater certainty councils were required to publish their efficiency plans online – providing greater transparency for residents.

In total, 97% of councils took up this offer and in doing so accepted the 4-year settlement. Those that rejected this certainty will have to wait for their allocations to be confirmed each year.

Adult social care

The Spending Review last year gave councils the opportunity to raise funds to provide dedicated care for the growing elderly population through a social care precept on Council Tax.

Today, the Communities Secretary confirmed that he will bring forward flexibility over the social care precept, so councils can choose to raise it by 3%, rather than the 2% originally planning – meaning they will have the ability to raise an additional £208 million next year.

This comes on top of a new adult social care grant, worth £240 million next year, and an improved Better Care Fund worth up to £1.5 billion so councils can work more closely with the NHS.

It brings total dedicated social care funding to £7.6 billion over the settlement period, with councils receiving almost £200 billion over the Parliament.

But Mr Javid made clear that more money is not the only answer, and highlighted the importance of better integrating health and social care.

Where this is already happening, it is making a real difference to people’s lives: for example, in Oxfordshire this has led to a 40% fall in delayed discharges in just 6 months; and in Northumberland, work between the council and the local health trust has reduced demand for residential care by 12%.

At the same time the government will develop long-term reforms that will provide a sustainable system for everyone who needs social care, in order to finish the job of integrating health and social care systems.

Incentives for growth

By 2020, councils as a whole will be able to spend locally what they raise locally, including through 100% business rates retention. In the 2015 Budget, it was announced that London, Manchester and Liverpool would pilot this approach.

Today (15 December 2016), the government confirmed that the devolution deal areas of the West of England, Cornwall and the West Midlands will also begin these pilots in the 2017 to 2018 financial year.

The New Homes Bonus will also be retained, and reformed. This includes a new threshold after which payments would begin, and councils receiving bonus payments for 5 years in 2017 to 2018 and 4 years from 2018 to 2019 on each new additional home built – with councils free to spend those funds as they see fit to meet local priorities.

The New Homes Bonus was introduced in 2011, to ensure communities see the benefit of housing growth in their area, it is unringfenced.

With the number of new homes at an 8-year high, it means councils have received more than £6 billion since the scheme’s launch.

The changes announced today will save an additional £240 million next year – which will be allocated as the new Adult Social Care grant to local authorities.

Further information

Councils that accepted a 4 year settlement have longer term planning and will be guaranteed a minimum level of funding for the remaining settlement period for the following funds:

  • Rural Services Grant
  • Transition Grant
  • Rural Services Delivery Grant
  • business rate top ups and tariffs

The 10 local authorities that rejected the certainty of the 4-year settlement have also had their provisional funding allocations announced today.

View the provisional 2017 to 2018 local government finance settlement.

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Published 15 December 2016