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by GK Strategy 31st March, 2017

Local Authorities Turn to Taxes for Social Care

As widely trailed in the media earlier this week, council tax across the country is increasing. Between 2010 and 2015, central government funding to local authorities was reduced by 50% – this funding dynamic is set to continue. This has left local authorities struggling to fund services, with adult social care particularly feeling the brunt of this pressure.

GK has been analysing council tax levels for the 152 local authorities across England who are eligible to use the adult social care precept – initially introduced in the 2015 Spending Review by former Chancellor George Osborne as an option for local authorities to raise council tax by up to 2% above the existing threshold to spend exclusively on adult social care.

Increasing political pressure on the Government meant that further concessions had to be made to fund the sector. In an underwhelming move, Communities and Local Government Secretary, Sajid Javid, announced in the Local Government Finance Settlement this year that local authorities could increase the precept by up to 3% in 2017/18 and 2018/19, essentially front-loading the money so that councils who opt for this cannot use the precept at all in 2019/20.

Whilst the extra money is, of course, welcome and will alleviate some pressures on the sector, it is not sufficient and the amount raised will vary across the country – often raising the most in areas that have the least need.

Initial analysis shows that the majority of councils are utilising the full 3%, and this is unsurprising. Overall, 107 councils (70.4%) are utilising the full 3%, 40 (26.3%) are using 2% and just 5 (3.3%) are not levying the precept at all. Interestingly, delving into the data set shows us that 77% of Labour-controlled councils are using the full 3% while only 60% of Conservative-controlled councils are using the full 3%. Of those not using the levy at all, 2 are Labour, 2 Conservative, and 1 independent.

The most interesting analysis would be to assess how much each area will get from the increases in council tax, and compare against the Government’s funding allocations for the £2bn announced in the Spring Budget this year. As devolution moves forward to encompass more areas of health and social care policy, the impact of spending decisions taken by local authorities will only grow, particularly for those organisations and companies who work for the public sector.

If you are interested in this analysis or require support on how to engage with local authorities on this then please get in touch via ella@gkstrategy.com

GK’s latest White Paper, ‘Devolution Disconnected: political priority, public apathy’, explores the impact of devolution on public funding streams and service commissioning, how the public is reacting, and how businesses should respond. For further details please contact: info@gkstrategy.com

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