Council tax will rise by 6% over two years to fund social care - but will it be a postcode lottery?

Communities Secretary Sajid Javid
Communities Secretary Sajid Javid
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LOCAL authorities in England are to be allowed to hike council tax by 3% for each of the next two years to help pay for social care, Communities Secretary Sajid Javid has announced.

The move will add around £90 to the annual tax on an average Band D property, which currently stands at £1,530. But Mr Javid said it would go towards an additional £900 million funding for social care over the next two years.

Unions warned that it would create a “social care postcode lottery” as richer councils would be able to raise more cash from higher bills than those in disadvantaged areas where needs are greater.

Liberal Democrats denounced it as a “gutless stealth tax rise” which will leave councils to “shake down the poorest in society for more cash” while failing to address the “national crisis” in social care.

Former chancellor George Osborne last year announced that councils would be permitted to add a 2% “social care precept” onto bills for four years to raise £2 billion for cash-strapped care services. Most councils have taken advantage of the voluntary option.

Now Mr Javid has said town halls can bring forward rises for the final three years of the scheme, so that bills increase by 3% in 2017/18 and 2018/19 but there is no additional precept in 2019/20.

This could raise an additional £208 million in 2017/18 and £444 million in 2018/19 while leaving overall bills unchanged by the end of the scheme, he said. Coupled with a new £240 million support grant from central government, this will raise around £900 million to help plug a spending gap which councils warn could reach £2.6 billion by 2020.

The president of the Society of Local Authority Chief Executives (Solace), Jo Miller, said that the extra money would not provide a long-term solution to problems in the £14 billion adult social care system.

“Whilst increasing the social care precept will give short-term relief to a few local authorities, ultimately relying on a regressive taxation system is not a long-term solution to tackling the long-term sustainability challenge our health and social care system faces,” said Ms Miller, the chief executive of Doncaster Council.

“Simply robbing Peter to pay Paul will not tackle a systemic funding problem. This needs a long-term national solution that does not simply exacerbate existing imbalances.”

Rehana Azam, of the GMB union, which represents many workers in the care sector, said that “council tax is no way to plug the vast social care funding black hole”.

“Our members are already underpaid - many don’t even get living wage,” she said. “Morale is at an all-time low and this half-baked response from Government will apply more crushing pressure to their already difficult roles in caring for the elderly and the most vulnerable in society.

“Now we will all pay the price for this social care postcode lottery - today’s announcement is a disaster and the Prime Minister needs to step up and address this.”

Lib Dem health spokesman Norman Lamb said: “This social care tax rise is a gutless stealth tax rise that has been created by the Government but left to councils to shake down the poorest in society for more cash.”

“Letting councils put up taxes will raise some money in some areas - but we face a national crisis. This isn’t about councils’ being able to supplement essential care, it is about providing it and that needs proper funding from central government.”

Labour’s shadow communities secretary Teresa Pearce described Mr Javid’s Local Government Finance Settlement as “all smoke and mirrors”, which would create a postcode lottery while failing to compensate for cuts in adult social care budgets totalling £4.6 billion since 2010.

“The council tax precept has already proven to be an inadequate and short-term sticking plaster for a problem which needs long-term answers,” said Ms Pearce. “This will simply not meet existing need.

“Winter is already here and there is not a penny more for the 1.2 million elderly people who are living without the care they need. What is clear is that the Government have no new ideas on how to fund social care, and are just passing the buck to overstretched local authorities and council tax payers.”

Figures from the International Longevity Centre UK (ILC-UK) suggested that the value of a 3% precept would vary wildly across the country, with those having small elderly populations benefiting the most.

The east London borough of Tower Hamlets, where only 6% of the population is over 65, could raise £160 for each elderly person, the thinktank found. But in West Somerset, which has a 32% elderly population, a 3% precept would raise only £53 for each over-65.

Overall, the ILC-UK calculated that the greatest benefit per head of elderly population would be felt in London boroughs like the City (16% over-65s, £162 per head), Richmond (15%, £143), Lambeth (8%, £143), Islington (9%, £141) and Kensington & Chelsea (14%, £133).

Meanwhile, the smallest increases per over-65 would come in rural council with large elderly populations like East Lindsey in Lincolnshire (28%, £45), Tendring in Essex (29%, £48) and Waveney in Suffolk (26%, £50).

ILC-UK head of economics Ben Franklin said: “Sadly, this announcement seems to be about spin not substance.

“Simply raising the precept will be nowhere near adequate to meeting the care needs of the UK’s ageing population and will exacerbate the extreme postcode lottery that already exists for people trying to access care services. The promise that local authorities can keep the new homes bonus is a sticking plaster on top of a sticking plaster.”

The deputy chief executive of disability charity Sense, Richard Kramer, said the social care sector was “on the brink of collapse” and the council tax increase “will not raise enough funds to deliver adequate and sustainable services to all those who need them across the country”.

And Janet Morrison, chief executive of older people’s charity Independent Age, said it would “do little to paper over the cracks in the social care system” as it was “neither sustainable nor equitable in the long-term”.