London hit hardest by government's 'flawed' social care funding

27/06/2008

Southwark Council warned today (27 June 2008) that millions of pounds of funding for social care could be taken out of London by flawed government funding mechanisms.

New research commissioned by the council shows that some areas could suffer more than others in the future provision of care unless the government recognises that its new method of distributing funds is flawed.

In April 2006 a new central government formula was introduced to measure the need for social services in council areas for vulnerable adults and children.  The full implementation of this new way of targeting social care was not carried out until this year.

Southwark Council has conducted research into the formula which shows that London will lose out to the North West, Yorkshire and North East as the new formula for targeting social care provision removes funding from London, the South East and East of England.

Relative Needs Formula      % reduction/increase from previous years' spending
London                          -16.62%
South East                      -15.39%
East                               -3.78%
South West                      + 2.26%
East Midlands                    +17.34%
West Midlands                   +16.98%
North East                        + 26.11%
North West                       + 26.04%
Yorkshire & Humber           + 20.52%

Under the new way of determining the need for children's social services, inner London is facing a loss of £125million.  This change was made in 2006/07 but only fully introduced in 2008/09.  Southwark council estimates it could lose £13million per year because of flaws in the way social care need is now estimated.

The total costs of social care for vulnerable adults (18-64 years old) provided by councils in London in 2005/6 was over £1billion which represents almost 20 percent of the England total. Southwark Council spent over £75m in 2005/6.

London Councils' projections based on client trends show that there will be an increased need for services in the future. A report by the consultants working for London Councils suggests that a total of £2.3 billion is currently spent by London boroughs on community care for adults and older people, and that even taking efficiency savings into account, this total is set to have reached £3 billion by 2010/11 (a £147 million a year increase - 5.5  percent ).

However, the new formula does not recognise this need and has implied a loss of inner London's funding of £150million according to the Department for Communities and Local Government projections of 2005. Southwark alone could lose as much as £13million per annum which is a massive 30 percent of vital funding for adult social services.  

Southwark - along with other London boroughs - has repeatedly argued that the changes made to the formula for social services were flawed.  

In the light of the Prime Minister's recent estimates that social care system could face a £6 billion shortfall within 20 years the council is calling for the government to look again at how it is distributing the money that is currently available for care provision around the country.

Cllr Nick Stanton, Leader of Southwark Council, said: "The government is right to identify social care funding as a major issue. However, the new formula used to determine social care need is simply not up to the job.

"For example, Southwark is the highest spending authority in the country for physical disability care but according to the government's Relative Needs Formula we have dropped to 24th of 148 councils in the ranking of need. This means the council would have to make savings of between £4.9m and £8.8m in spending on physical disabilities alone.

"We are very concerned that the government is distributing the money that is available for social care using a mechanism that simply does not acknowledge or meet the need in areas like mine."

The council is asking the government to look again at the formula it uses to distribute social care funding.