Cost of social care reforms in England over next decade will cost at least £25.5bn

Recruiting enough staff to implement and effectively deliver new adult social care reforms in England will be an ‘impossible’ task, as a new report reveals that the cost of implementing the UK Government’s proposals could be significantly underestimated.

Released today by the County Councils Network (CCN) and Newton, the analysis provides the first independent analysis of the government’s adult social care reforms. These reforms include a more generous means-test, a cap on care costs of £86,000, a move towards a ‘fair’ cost of care, and the ability for people who arrange and fund their own care to ask their local authority to do it on their behalf.

While many local councils that CCN surveyed support the reform proposals, the report estimates that the costs of reforms in the nine years from when they are introduced to 2032 could be a minimum of £10 billion higher than currently estimated.

The analysis warns that this could create a further workforce crisis in social care, with over 5,000 extra staff projected to be required to carry out extra care and financial assessments for those seeking to benefit from the reforms.

Cllr Martin Tett, Adult Social Care Spokesperson for the County Councils Network, said: “There is clear support from local government for the government’s package of social reforms, which will make the system fairer and ensure that more people do not face catastrophic care costs.

“However, today’s report shows there is a significant financial and operational cost to these reforms, which are likely to be significantly more than the government’s estimates. We urge ministers to clearly examine these findings, which show costs are likely to be higher than the government is forecasting, and potentially devastatingly so in some regions.

“Local authorities are also facing a mountain of extra assessments required for the thousands of people who will approach their local authority to benefit from the reforms and it will be almost impossible to recruit the extra staff required.

“Therefore, the government must fully fund these reforms, incorporating the substantial extra cost they are likely to generate for councils so we are able to set balanced budgets in the future. Importantly, instead of a big bang introduction to the reforms, today’s report calls for them to be phased to give local authorities enough time to mitigate the challenges and give them enough time to transform and prepare for such a momentous change.”

The report, ‘Preparing for Reform’, can be downloaded here.

A costly reform

The cost of the care reforms, including the cap and means-test for over 65s, new ‘fair cost of care’ and administrative overheads in England will cost a minimum of £25.5 billion over the next decade, the report indicates.

This compares to the government estimate of £15.6 billion for the same elements of the reforms. The analysis suggests more people will benefit from some financial support under the means test and cap, meaning the cost of this element alone is £2.5 billion higher than government projections.

A separate survey of CCN councils for the report found that almost two-thirds of councils felt that they were ‘not well prepared’ for the reforms due to funding shortfalls and a tight timescale of implementing them from October 2023.

Major staffing issues

An additional 4,300 social work staff will be required to carry out the additional Care Act assessments, reviews, and case management, on top of a current vacancy rate of 1,782. Moreover, an extra 700 financial assessors will be needed to carry out additional financial assessments if no changes to existing ways of working are made, the analysis suggests.

The report projects an extra 200,000 care and financial assessments will be required annually, which determine the level of support an individual receives, at a cost of £1.9 billion to councils over the next decade. Some 3,000 additional new social workers and financial assessors will be required in county and rural areas, 60 percent of all new recruitment.

From CCN’s survey, just over three quarters said that they would be unable to allocate any more resources from other service areas to pay for any financial shortfall, while nine in ten said they were ‘very concerned’ they will be unable to recruit enough staff.

Councils say recruitment on this scale will be ‘impossible’ and they will need more funding to attract more staff, alongside extra time to implement the reforms by transforming their working practices, including greater digitisation of assessments to streamline the process.

CCN is now calling on the UK Government to urgently invest in a national recruitment and workforce development campaign for local authorities and providers.

Regional variations

There is a significant regional variation in the costs of implementing the reforms, with councils in county and rural areas disproportionately impacted.

County and rural areas – which are predominately in the south, east, and west of England – account for 64 percent of the total cost of the means test and cap on care costs over the next decade.

As a result, county and rural areas could face a minimum funding deficit of £7.6 billion unless the government provides more funding and changes the way it allocates resources between councils, CCN warns. The South East faces a potential minimum funding shortfall of £3.8 billion, the East of England £1.7 billion, the North West £1.6 billion, and the South West £1.3 billion.

Funding required

In order to properly fund these reforms, the UK Government could potentially need to spend half of the Health and Social Care Levy by 2032 on these proposals alone, irrespective of other social care pressures in the system.

The report estimates that the total costs of the reforms could be between £5.6 billion and £6.2 billion a year by 2031/32. The levy will generate an extra £12 billion in annual revenue earmarked for both the health service and social care, but only £1.2 billion in each of the next three years has been committed to these social care reforms so far.

More time needed

Facing a funding shortfall, and a workforce crisis next year, two-thirds of councils support delaying key aspects of the reforms beyond next autumn, rather than a ‘big bang’ of introducing all of them at the same time.

This would give councils more time to transform their services in anticipation of the extra assessments required, including greater use of technology.

Failure to do so could result in individuals facing even longer waits to get a care package, CCN informs. Presently, there are over 500,000 people waiting for an assessment – and councils will face further administrative pressures from the reforms from next October.

Councils will also face significant unfunded cost pressures, particularly those in counties. The report calls on government to fully fund these reforms based on its financial projections and to re-examine its funding formula which will distribute funding for the reforms.

CCN is calling for this formula to be overhauled to account for county areas being particularly exposed to the costs of reforms.