A major new Institute for Fiscal Studies (IFS) report has highlighted the ‘unresolved’ issues in social care funding and reform.

The report assesses the difficult choices faced by Chancellor Rachel Reeves as she prepares for her Autumn Budget.

Mark Franks, director of Welfare at the Nuffield Foundation, said: ‘As this report shows, future public sector pay settlements could fundamentally shape the quality and availability of the public services we all rely on. Adult social care is used by some of the most vulnerable members of our society, yet current funding is fragmented and unsustainable, leading to unequal and inadequate outcomes that need to be addressed.’

The report notes the Government’s decision to abandon the previous administration’s plans to impose a lifetime care on social care costs and a more generous financial means test, while highlighting demand for services from people 18–64 grew by 18% between 2014–15 and 2022–23.

The Office for Budget Responsibility projects that UK-wide public spending on adult social care would need to increase by 3.1% per year in real terms over the next decade to meet demand.

Noting adult social care has increasingly been funded by local council tax revenues since 2010, the report says the Government should commit to implementing, and keeping up to date, new formulas for assessing councils’ spending needs.

Monthly applications for Health and Care Worker visas have plummeted from an estimated 18,300 in August 2023 to 2,300 in August 2024, the report also highlights.

The IFS adds that Fair Cost of Care reforms and the new Fair Pay Agreement for social care workers will likely necessitate additional funding from the Government but notes there is little detail of how this will be achieved.

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