Funds for care budget means tax rates rise

Speculation is mounting the prime minister is set to announce plans to allow councils to increase tax to fund the ailing services.

Former chancellor George Osborne introduced a two per cent precept last year, which Wigan Council imposed but criticised for not going far enough.

Council leader Lord Smith last week confirmed the borough’s rates for next year will remain at the same level apart from whatever is permitted as part of the social care precept.

It now remains to be seen whether the government this time allows councils to go above the two per cent rate.

Local authorities are not allowed to impose rate hikes of two per cent or more without a referendum but that was waived as part of the so-called Osborne Tax.

Speaking to the Evening Post earlier this month, Lord Smith signalled the council’s intention to use the precept if offered.

He said local authority leaders were disappointed when extra funding for social care was not announced as part of chancellor Philip Hammond’s Autumn Statement despite suggestions it would.

Lord Smith added: “We don’t know what will happen, we think there may be another precept this year and if so it we will put that up.

“Last time the two per cent didn’t actually pay the increase in the national wage of the care givers. We’ll take it but it’s not enough due to the pressures of our aging population.”

Warnings have been sounded this week the social care system could “topple at any moment” and councils across the country have said, even with the funds from the extra levy, the service is facing huge budget deficits.

This echoes what town hall finance boss Paul McKevitt said last year in stating the £2m raised by the social care precept in Wigan would not cover the mounting cost caused by the borough’s aging population.

And there has also been recent criticism the percentage rise creates a postcode lottery and punishes areas with low tax bases.

Last year’s tax rise ended several years in which residents had been handed a rates freeze offered as part of the Wigan Deal.

Local Government Association (LGA) community and wellbeing board chair Izzi Seccombe said ministers have held dialogue about allowing tax precepts to be increased.

The Conservative councillor said: “We’ve had some dialogue with ministers about this and the concern for us is the ability for this to actually fill the gap that we have for long now said that there is in social care.

“We need an injection now, we need £1.3bn now because there is a shortfall by the end of 2020 of £2.6bn.”

Martin Green, chief executive of Care England, which represents care home providers said there were “serious problems” about how money raised from the precept reaches the frontline.

He said the care sector was now at a “tipping point”. He added: “We saw some research recently which said that about 40 per cent of care services will no longer be viable in the medium term, so this is a huge number of care services that will be lost.”

Asked if care companies will go bankrupt, he replied: “Oh definitely.”

Shadow social care minister Barbara Keeley said: “There is a crisis in the funding of social care caused by savage Tory cuts to the budgets of local councils - £4.6bn has been cut from adult social care since 2010, meaning 400,000 fewer people now have publicly funded care. The right solution would be for Theresa May to admit the Tories have got it wrong and deliver the needed funding for social care. Asking taxpayers and councils to pick up the bill for the Tories’ failure is no substitute for a proper plan.” Details of a precept are expected before the end of the month.