Last week, The Telegraph reported that the Institute of Fiscal Studies and Age UK are claiming that George Osborne’s proposals to give local councils permission to raise an adult social care levy of two per cent will lead to a postcode lottery.
This analysis is worryingly inept for a charity and a think tank as influential as Age UK and the IFS.
How is social care funded?
Councils are responsible for providing social care services. Councils are funded by a blend of some direct grants (for services such as schools) and council tax. Councillors decide each year whether to raise or cut council tax to fund local services. Since 2010, any rise of two per cent or greater must be supported by a local referendum—a mechanism introduced by the coalition government to slow (or halt) the escalation of council tax, which has risen by more than twice the rate of inflation in many local areas over the past twenty years.
With the exception of direct, hypothecated grants, councils have autonomy over the distribution of all of this money—including how much to spend on adult social care. Of course, they will have pressures and demands forcing their decisions, but it is a matter of political judgment whether a council favours the demands for greater spending on roads, parks, schools, children’s social services or adult’s social services. This creates, by definition, a postcode lottery. Or put another way: local accountability.
So what’s new?
This is the key question here. George Osborne has tweaked the referendum clause in council funding, to allow an additional two per cent—to be hypothecated to adult social care—to be levied locally. This hasn’t fundamentally altered the nature of council funding, nor social care funding; it has simply loosened the constraint on councils’ power to raise tax levels.
So is it a postcode lottery? Well, yes. Of course. That’s democracy.