Prospects for funding of adult social care Gemma Tetlow ADASS Spring Seminar, 15 April 2015 Yarnfield Park Conference Centre, Staffordshire © Institute for Fiscal Studies

Overview What has happened to spending over this parliament? –Public services –Local government –Social care What are the prospects for spending in the next parliament? –Agreement over 2015–16 spending plans –Significant differences between the parties thereafter? –Implications for spending on public services and local authorities © Institute for Fiscal Studies

The changing size of the state (coalition plans) © Institute for Fiscal Studies TME in at % GDP

The changing size of the state (coalition plans) © Institute for Fiscal Studies Public services spending in at % GDP

The changing size of the state (coalition plans) © Institute for Fiscal Studies Public services spending per person back to 2003–04 levels in real terms

Local government spending: 2009–10 to 2014–15 Looking at a consistent measure of spending by local authorities –Excludes education, public health, Learning Disability and Health Reform Grant –Excludes police and fire and rescue services Between 2009–10 and 2015–16, local authority spending cut by –20% in real terms: same as avg across other ‘unprotected’ depts –23% per person in real terms But cuts were not evenly distributed Largest average cuts in London and North East –London: £279 per person, 27% (non-transport spending) –North East: £261 per person, 27% (non-transport spending) Smallest average cuts in South East –£112 per person, 16% (non-transport spending) © Institute for Fiscal Studies

Most deprived areas have seen largest cuts © Institute for Fiscal Studies Notes: Authors’ calculations using DCLG data. For further details see Innes and Tetlow (2015), Deprivation defined using the Index of Multiple Deprivation.

Virtually all authorities chose relatively to protect social care spending Size of cuts varied across service areas –On average cuts largest to: planning and development, regulation and safety Different areas appear to have prioritised some services differently –E.g. Large cuts to net service spending on housing in many areas, but increases in others (notably some London boroughs) But social care was relatively protected in virtually all areas Cuts to social care spending –Median cut to per person spending was 17% –Half of authorities cut by between 9% and 21% © Institute for Fiscal Studies

What do we know about the next parliament? (1) All main political parties seem to be committed to delivering coalition’s existing spending plans for 2015–16 © Institute for Fiscal Studies

Further cuts for local authorities in 2015–16: same areas set to see largest cuts again © Institute for Fiscal Studies Notes: Authors’ calculations using DCLG data. For further details see Innes and Tetlow (2015), Deprivation defined using the Index of Multiple Deprivation.

What do we know about the next parliament? (2) All main political parties seem to be committed to delivering coalition’s existing spending plans for 2015–16 From 2016–17 onwards it depends who is in government –Coalition government plans: imply 7% cut to departmental spending, 16% cut to unprotected departments, by 2019–20 © Institute for Fiscal Studies

What do we know about the next parliament? (3) Conservatives: surplus on the overall budget (i.e. no borrowing) –Have suggested would spend around £4bn more than coalition plans by 2019–20 –Plan to cut welfare spending by £12 billion (although full details not yet given) Labour: surplus on current budget (i.e. borrow to invest) –Could borrow up to £36bn more than coalition plans by 2019–20 –Net tax/benefit takeaway of £1.2 billion (mansion tax) Liberal Democrats: will borrow only to ‘invest in the things that will help our economy grow’ –Somewhere between Labour and Conservative spending levels? Uncertainty about how quickly Labour want to achieve objective © Institute for Fiscal Studies

Timing matters: if want to cut borrowing quickly, cuts to 2017–18 could be significant © Institute for Fiscal Studies -£39.5bn -£26.0bn +£9bn -£9bn Notes and sources: see S. Keynes, Public Services Spending, presentation at IFS post-Budget briefing, 19 March 2015,

Cuts might be concentrated on many of the same local authorities again New settlement funding assessment means all areas see same % cut to main elements of central government grant –Means authorities that have less local revenue raising capacity see largest cuts to spending power... –...and they have less scope to offset this by raising council tax rates New settlement funding assessment also not updated to account for changing ‘needs’ –Areas that see fastest population growth will see spending per head squeezed more –8 fastest growing boroughs are all in London: City of London, Tower Hamlets, Barking and Dagenham, Redbridge, Barnet, Islington, Kingston, Newham –Many of these also saw large population increase over last 5 years © Institute for Fiscal Studies

Summary Over this parliament there have been significant cuts to public service spending –Particularly outside ‘protected’ areas –Local government cut by same as average cut to ‘unprotected’ areas Size of cuts has varied significantly across local authorities –On average, more deprived areas have seen larger cuts Social care has been relatively protected by most local authorities –Seen smaller cut than the overall cut to each area’s spending power –But still significant cuts to per person spending Next parliament –Size of cuts likely to depend on who forms the government –Whether cuts required also depends on how quickly borrowing reduced –Any cuts might well be concentrated on the same local areas again © Institute for Fiscal Studies

References This presentation draws on a number of pieces of IFS research –Crawford and Keynes, Options for Further Departmental Spending Cuts, IFS Green Budget 2015, –Innes and Tetlow, Central Cuts and Local Decision-Making, Election Briefing Note, BN166, –Keynes, Public services spending, presentation at IFS post-Budget briefing, 19 March 2015, Further analysis of issues around the 2015 general election can be found at: election2015.ifs.org.ukelection2015.ifs.org.uk © Institute for Fiscal Studies

Prospects for funding of adult social care Gemma Tetlow ADASS Spring Seminar, 15 April 2015 Yarnfield Park Conference Centre, Staffordshire © Institute for Fiscal Studies

Cuts to departmental spending, 2010–11 to 2014–15 © Institute for Fiscal Studies Notes and sources: see Figure 2 at