All councils are under significant pressure to meet their budgetary obligations. They have a legal duty to balance their budget but, with funding shortfalls, it is leading them to make difficult decisions.
Hampshire County Council must meet a funding shortfall of £98m by April 2017. Of that, £43.1m must be met from the Council’s Adult Services budget. This year, it took the opportunity to increase Council Tax by the full 3.99% permissible without public referendum. That increase included the 2% social care precept. The Council calculates the precept will bring in approximately £10.2m per year. However, this isn’t sufficient and still leaves the Council needing to find significant savings.
Research published by the Association of Directors of Adult Social Services (ADASS) in July found that the precept will generate less than two thirds of the more than £600m local authorities need to cover the costs of the National Living Wage this year; let alone address the huge funding shortfall councils face from increasing demand.
In light of this and the pressure to make increased savings, Hampshire County Council is consulting on changes to its paying for care policy.
In its consultation document, the Council explained its situation. ‘The amount of funding the County Council receives from central Government has more than halved in recent years. With public sector budgets expected to remain under pressure in the future, it is no longer feasible to deliver the same services, and in the same way. Therefore, the County Council is faced with having to make some difficult decisions to be able to deliver a balanced budget – as it is legally required to do – and provide vital public services to the people of Hampshire.’
The Council considered a number of options alongside those that it is consulting on. These were ruled out, however they included:
- Do nothing.
- Charge unpaid carers for services that meet their eligible needs as a carer in their own right.
- Charge for early intervention and prevention services.
The Council has put forward four areas where it is proposing to change its paying for care policy. It states that the changes may affect the amount some people contribute towards the cost of their care. However, it asserts that no-one will be asked to pay towards the cost of their care, if they have been assessed as not being able to do so.
Proposal one is charging new applicants for the cost of two care workers, where they are assessed as needing, and being able to pay for, two care workers at the same time to meet their care and support needs. Hampshire County Council currently has a ‘second-carer waiver’, which means that if the Council is organising the care, people can ask the Council to meet the cost of the second care worker, even though they have been assessed as being able to afford the full cost of their care.
The Council calculates that this currently costs £1.34m per year. It says that with increased demand, the second-carer waiver, if not closed to new clients, would make the subsidy unsustainable in the future.
Proposal two is considering 100% of an individual’s disposable income in their financial assessment. At present, the Council considers 95% of a person’s disposable income in their financial assessment.
The Council cites neighbouring authorities, including Portsmouth, Southampton and West Sussex that already take into account 100% of a person’s disposable income in the financial assessment. It proposes that this change, if agreed, will affect around 4,000 clients who would pay on average £2.22 extra per week towards their care. It’s calculated to raise additional income of around £420,000 per year.
Proposal three relates to charging clients that are in Council-run care homes and care homes with nursing if they are away from the home. This would bring policy in-line with the independent sector, which charges clients whilst they are in hospital or away from the home. The council says that this has the potential to affect 891 people who live in council-run homes. It is estimated that it could save around £160,000 per year.
The fourth proposal focuses on rental income in Deferred Payment financial assessments. At present, during a financial assessment, the Council only takes into account someone’s rental income from their property that is subject to a Deferred Payment Agreement if the individual requests it. The Care Act allowed councils to take rental income into account when assessing a client’s contribution towards their care costs. The consultation document says that on average, other authorities take into account 80% to 90% of rental income in the financial assessment. Hampshire County Council proposes to introduce this for new clients. It states that in 2015/16, it arranged three to four new Deferred Payment Agreements per month, so the change would not affect large numbers of people. It would also mean that the debt and interest charges people had to pay when their property was eventually sold would be lower.
The consultation opened in June and closes on 26th August, with a decision due in October 2016. The Council encouraged views from clients, their families, residents and other stakeholders to inform its decision-making process.
Over to the experts…
Hampshire County Council is consulting on a number of changes to its policies, many of which are already in place in other areas or in the independent sector. Is this the future for local authorities to help meet their budget shortfalls? Are these proposals the most ideal for Hampshire? What other savings can be or are being made by authorities across the country?
Faced with difficult decisions
As a very emotive, life critical service, councils will not increase social care charges with no good reason. County authorities are responsible for 47% of the total spend on adult social care in the whole country, some £6.6bn in 2015/16, virtually half their budgets.
Faced with having to make unprecedented efficiencies, a mixture of historic Government underfunding and rising demand, county authorities have been faced with difficult decisions, such as the one Hampshire is consulting on.
Indeed, County Councils Network (CCN) member councils will see their over-65 population grow by 2% per year until 2020, faster than any other local authority type. To compound this, the Local Government Finance Settlement did not pinpoint funding to the areas with the most pressing need. Over the last two years, adult social care funding for county authorities has declined by 22%.
As the recent ADASS survey pointed out, the Better Care Fund (BCF) and social care precept do not even cover the extra costs of the new National Living Wage. The King’s Fund estimates that there will be a funding gap of £2.8bn by the end of this Parliament, while CCN’s analysis with LaingBuisson last year revealed how unstable this market currently is. That’s why CCN has argued for more sustainable funding, with the BCF being frontloaded now.
The Government’s needs-based review of local authority funding, plus the move towards full business rate retention, needs to ensure that funding follows need and addresses the shortfalls in areas with the greatest demand.
Until then, local authorities could be faced with more difficult decisions to ensure that public services continue to deliver for our most vulnerable residents.
Cllr Colin Noble Spokesman for Health and Social Care, County Councils Network and Leader, Suffolk County Council
The real solution is central Government funding
I’m not at all surprised that Hampshire County Council has had to consider other ways to address its huge budget shortfall as detailed in this article.
Unfortunately, this is a situation which I fear will be repeated in many local authorities across the country who are struggling to balance the books.
Even with the additional income from the Council Tax precept, the reality is that there is insufficient funding for social care at a national level – and this desperately needs to be addressed. If we do not address it quickly, it is elderly and disabled people who will the pay the price.
It is good that Hampshire County Council is consulting on the changes before they’re implemented them. However, what strikes me about these proposals is that even if the residents of Hampshire agree to every one, they will not save the council anywhere near the required £43m. Clearly, significant questions remain over how Hampshire will meet its Care Act duties and make these savings.
It is important to also remember the people who will now be contributing more to their care costs as a result of the need to address this budget shortfall.
The social care means-test is not generous, and the policies that Hampshire is now abandoning have helped maintain the standard of life for some of the poorest people, with the highest needs, in the country.
However, the real solution to these problems is more central Government funding for social care and more integration with the NHS.
That’s why we’re calling for a commission on health and social care to address these challenging issues and benefit the lives of older people.
Janet Morrison, Chief Executive, Independent Age
Hampshire has some particular challenges
Hampshire’s consultation reflects one of a range of possible options to reduce pressure on increasingly stretched budgets. It is still news to many that social care is means-tested and it is deeply regrettable that central Government has largely avoided informing the public that, over time, even people of moderate financial means will increasingly need to fund their own care.
Three particular issues are pressing heavily on the minds of councils’ social care services: meeting the needs of an ageing population; the significant impact of the National Living Wage on providers; and the additional costs of the Care Act (in England). Hampshire has some particular, if not unique, challenges: care worker recruitment is difficult, especially in rural parts; the local homecare market is increasingly fragile (to my knowledge, at least three of the 11 lead providers in the council’s main homecare contract have already served notice); and delayed transfers from hospital have rocketed, with an 82% increase in the number of people experiencing a delay in 2015-16, according to NHS England data.
Hampshire’s proposals for increasing fees to people using care and support are, therefore, just one part of the task facing them and many other councils. A radical rethink about how to manage the increasing demand for services is also needed.
Outcome-Based Commissioning (OBC) is likely to have a more significant impact than moderate fee increases to users’ contributions. OBC uses ‘payment-by-results’ to incentivise providers to deliver short-term intensive support and reablement. Hampshire is beginning to engage with its provider market on its future plans; my recommendation is that they actively explore OBC, and continue talking to those councils who are the early adopters.
Colin Angel, Policy Director, United Kingdom Homecare Association