The Chancellor’s Autumn Statement was underwhelming for adult social care (ASC) providers and its self-funded residents. We heard how the planned reforms to level-up funding between those who fund their own care and those funded by their local authority, will be delayed for two years. The lifetime cap on care would have seen no individual pay more than £86,000 towards their care costs and the enhanced means test was set to increase from £23,250 to £100,000 along with Section 18(3) of the Care Act. This would permit those funding their own care to request that their local authority arranges care to meet eligible needs, in the same way as those who are supported by the means test. However, plans have stalled.
Funding breakdown
The Chancellor has said that the funding for these reforms will be used to help fund social care and announced:
- £2.8bn in 2023/24 made up of £1.8bn provided by way of a Social Care Grant (split between adults and children). £1bn to adult social care split: £600m for hospital discharges and £400m ringfenced for ASC.
- £4.7bn in 2024/25 made up of £3bn provisioned by way of a Social Care Grant (split between adults and children). £1.7bn to adult social care: £1bn for hospital discharges and £700m ringfenced ASC.
Part of the funding is to be raised by increases of up to 2% for Council Tax, which some councils will be reluctant to do given local elections and the lead into a general election. Councils have also said that children’s social care is also in need of funding and expects 50% of the Social Care Grant to be afforded to them accordingly.
The ASC sector will see an increase of 92p per hour in the National Living Wage from April 2023, a welcome rise of 9.7% for our care workers. The Chancellor shared that the Office for Budget Responsibility (OBR) forecast for inflation in 2023 is 7.4%. This will collectively require councils to pay over 9% to providers in fee uplifts just to stand still, which totals around £2bn for the sector.
This prompts us to question the Chancellor’s Autumn Statement award because ASC is likely to see less than the £2bn necessary to fund inflation and demographic change alone, before addressing the hospital discharge challenge. Any shortfall will need to be funded from efficiencies by councils who will no doubt look to ASC to contribute.
Hospital discharge funding
In respect of the hospital discharge challenge, we know that the £500m for 2022-23 pertaining to hospital discharges is split £300m to ICBs to improve bed capacity and £200m is given to local authorities to bolster the social care workforce. In its November 2022 press release, relating to the £500m for 2022-23, the Department of Health and Social Care (DHSC) said, that ‘Local areas will be free to spend this money on initiatives which will have the greatest impact in their area on reducing discharges into social care, which in most areas will mean prioritising home care’ and in the same press release, the Minister of State for Care, Helen Whatley, said, ‘People should be cared for in the best place for them’ thus not ruling out care homes as a destination.
A further £200m fund to support ICBs was then announced on the 13th January 2023 titled ‘Discharge funding for step down care’, which is aimed at freeing up hospital beds up to the 31st March 2023 and states that this funding should be used to purchase ‘bedded step-down capacity, plus associated clinical support for patients with no criteria to reside but who cannot be discharged with the capacity available through existing funding routes or the ASC £500m Discharge Fund announced previously.’ Detailed plans for the 2023-24 £600m and 2024-15 £1bn discharge funding are yet to be announced.
Data remains critical
The DHSC awarded £162m to councils in 2022 to move toward the Fair Cost of Care (FCoC). Thousands of care homes contributed to the FCoC exercise in the summer of 2022. Whilst councils are not obligated to share their findings from this exercise until February and their Market Sustainability Plans in March 2023, a small number have been open and shared their findings with care providers already.
Care England acknowledges and supports providers who have written to local authorities asking for this information to be shared in advance of February and March 2023. Care England has also requested data by way of Freedom of Information Requests aimed at helping providers to understand critical information. It is hoped that this data would help providers plan for winter, as costs increase significantly beyond the levels of inflation paid by councils in 2022. Providers can use this data to consider changes to their business models, including the number of underfunded local authority residents they are able to offer care to.
The FCoC data is critical for care providers to understand the gap between the current rates paid by councils and the FCoC – it’s what the remaining reforms targeted and what funded councils seek to move toward. Councils were due to receive a further £600m in 2023-24 and again in 2024-25. However, the Chancellor has now removed this committed funding from the table and leaves just £162m for the two years to help councils move toward the FCoC. Some councils have sought to pay one-off funding to care providers, thus not increasing fees to move closer toward the actual FCoC. Councils argue that the funding is not recurrent despite the DHSC stating to the contrary.
Your voice matters
Care England encourages care providers to request engagement between now and February/March 2023 to help councils understand the workforce challenges locally and financial pressures on providers. It will also help to reach a more common understanding of the data from the FCoC exercise. Councils are under Care Act obligations to consider the data they have access to and to determine the sustainability of the local market. This is not a once-a-year obligation but an ongoing requirement. Although it is acknowledged that insufficient funding has been awarded to councils in recent years to pay the FCoC, the DHSC has been clear that care providers need to initially work with their local authorities if they experience financial hardship. It is not yet clear what the DHSC is going to do with the information it also holds in respect of the FCoC.
Clearly, additional funding is necessary to avoid widespread collapse of the sector. This is despite repeated narrative from DHSC citing that £7bn has been injected into social care over the next two years. After considering the risk of Council Tax not being increased nationally to the full 2%, the pressures on older people, child and learning disability provision, workforce pressures driven by over 165,000 vacancies and 30%+ attrition levels, on top of rising agency costs, hospital discharge requirements and the Chancellor’s comment citing 200,000 more individual care packages – there is simply not enough funding to combat inflation at its current and predicted levels as well.
A new year reality
Looking forward to this new year ahead of us – what can social care providers expect? I asked Professor Martin Green OBE, Chief Executive of Care England, to offer his analysis. He said, ‘Pretty dismal if nothing changes would be the most accurate summary. Councils require around £2bn next year just to stand still for ASC, based on the announced 2023 National Living Wage (NLW) uplift and the Office for Budget Responsibility (OBR) inflation forecast. The Chancellor has offered £2.8bn, which we know around £900m will go to child social care and £600m will go toward hospital discharges. We also know that councils are not all likely to increase Council Tax by the full amount, which leaves no more than £1.3bn to address inflation and demography, over £700m short of what is needed on top of the remaining unfunded gap left in 2022. This gap saw council fee uplifts based on September 2021 forecasts for inflation of sub 4%, which were a far cry from the 11.1% we saw in November 2022.’
Martin Green OBE concludes, ‘The Local Government Financial Settlement falls short of addressing inflation for 2023 and as such, ASC will again start 2023 in a deficit position on already fragile foundations closer to its tipping point that any other time in history due to the cost of living crisis, energy uncertainty and a strained workforce, working on fumes, covering over 165,000 vacancies, up 52% in 2022, whilst the economy is seeing a 38 year low in unemployment, leaving little by way of positivity for 2023 and the challenges ahead for adult social care providers.’
On the point about the energy uncertainty – to keep 2023 renewal costs sustainable, accessing the best possible advice will again be key and to maximise energy supplier interest and ensure offers are keenly priced whilst minimising excessive risk premiums. Care England intends to offer care providers the opportunity to combine energy volumes, to maximise significant economies of scale, and is issuing an exclusive Care England tender for 2023-24 Gas and Electricity renewals and is looking to launch further opportunities for care providers to reduce operational costs during what we know to be challenging months ahead. I urge all providers to stay united, share best practice and keep up to date with support packages and opportunities to engage in the coming months. In the meantime, I’ll be closely watching what this Government does next and await the significant support this sector so desperately needs.