Cost of adult social care ‘will mean huge cuts to services’

COUNCILS will have to spend up to 60 per cent of their revenues on adult social care by 2034, with huge cuts to other services, unless they are bailed out by the Government, the Institute of Fiscal Studies (IFS) has warned.

The IFS said overall spending on services by English councils has already fallen by 21 per cent since 2017-18.

It has left local authorities caught between rising demand from the growing numbers of elderly and disabled and a legal cap on council tax increases of three per cent – unless they call a referendum.

The IFS said this means the proportion of tax revenues needed for adult social care could rise from 38 per cent now to 60 per cent within 15 years.

“Without additional funding, this would mean cuts to other services, many of which have already seen cuts of 40-plus per cent,” said the IFS, in a report published today.

It argues that even if council tax was increased by 4.7 per cent a year – the average rise this year, including extra money ring-fenced for social care – adult social care could still amount to 50 per cent of local tax revenues.

The IFS said: “Either councils have to be provided with additional revenues to enable them to continue providing existing service or government and society must accept that councils can afford to provide fewer or lower quality services than currently.”

The IFS also warned of trade-offs between how much was allocated centrally by the Government against the amount levied locally.

If ministers allowed more money to be raised locally, it could give councils strong incentives to grow local tax bases and economies, but it could lead to big divergencies in the range and quality of services in different areas.

David Phillips, one of the report’s authors, said: “Current plans for councils to rely on council tax and business rates for the vast bulk of their funding don’t look compatible with our expectations of what they should provide.

“A proper national debate on how much we are willing to pay and what we expect of councils is therefore needed.”