Martin Ford 04 September 2019

Spending Round 2019: Chancellor pledges £1.5bn 'down payment' for social care

Councils will have access to £1.5bn of new funding for social care next year, the chancellor has announced.

The increase is the largest in local government spending since 2010, Sajid Javid said as part of the Treasury’s Spending Round.

The Government will provide £1bn through a grant and consult on a 2% social care precept to provide £500m.

The funds will add to existing social care grants totalling £2.5bn and an increase in business rate baseline funding levels to match inflation.

Mr Javid said the increase was a ‘down payment’ for more extensive reforms to ‘fix’ adult social care in the autumn, as promised by the Prime Minister, Boris Johnson.

Announcing that the Government was ‘turning the page on austerity’ to enter a ‘decade of renewal’, Mr Javid also pledged £54m of new funding to reduce homelessness, a £10m boost to the integration area fund, a £24m increase for the building safety programme and £241m towards the regeneration of town centres through the towns fund in 2020/21.

He also confirmed a £700m increase in support for children with special educational needs (SEN), as announced last week, and committed to continued funding for the troubled families programme, Northern Powerhouse and Midlands Engine, and a real-terms increase in the public health grant.

The departmental expenditure limit remains at £1.6bn for the Ministry of Housing, Communities and Local Government as a whole, with a £1.1bn increase for local government.

Local Government Core spending power will increase from £46.2bn in 2019/20 to £49.1bn in 2020/21.

The County Councils Network called the new funding 'hugely significant' and said the extra funding will provide 'real breathing space over the next 18 months'

Cllr David Williams, chairman-elect of the County Councils Network, said: 'Although this short-term funding is extremely welcome, the long-term challenge remains considerable. As our research shows, councils will face a funding gap of around £7bn by 2024/25 and there remains uncertainty over the future of the Fair Funding Review. We will seek to work with ministers and build on this year’s funding settlement to secure medium term financial certainty, a long-term funding solution to social care, and crucially, a cast-iron commitment to the implementation of the Fair Funding Review in 2021/22.'

CIPFA warned the extra money fails to put funding for public services on a 'sustainable footing for the long-term'.

Don Peebles, head of CIPFA policy & technical UK, said: 'This review has been announced without the OBR’s fiscal forecasts and commentary making it difficult to evaluate these spending commitments within a proper fiscal context and with outdated economic forecasts.

Localis chief executive, Jonathan Werran, said: 'The well-rehearsed social care funding announcement, offering councils access to £1.5bn, and it’s framing as a down-payment for future reforms will come as some measure of relief to local government, but comes in the absence of any further solid determinations on long-term funding reform.

'A genuine solid financial foundation for local government would entail more than attempts to clawback some of the trajectory of spending reviews since 2010, and point to a longer-term move towards fiscal devolution in recognition that council tax and business rates revenues will not suffice to meet further care and local service demands.'

Labour’s shadow chancellor, John McDonnell, commented: 'After years of slash and burn, today’s announcements add up to less than one third of the £47bn of cuts this government has voted through since 2010. And the chancellor offered nothing for social security where more cuts are still to come.

'The Tories have voted for austerity time and time again, you cannot trust them to end it.'

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