UK Government Allocates £500 Million Extra for Social Care in 2024-25

The Government has allocated an additional £500 million to social care for the financial year 2024-25, in response to urgent appeals from ministers to alleviate the financial strains faced by local councils.

Michael Gove, the Secretary for Levelling Up, announced this supplementary funding as part of the planned local government settlement for the upcoming year, addressing Parliament on this matter.

This financial boost will enhance the existing social care grant, which local authorities can allocate to either children’s or adults’ services. While historically, adult social care received approximately 60% of this grant, Gove emphasised the specific challenges confronting children’s services as a compelling reason for this increase.

The initial settlement, unveiled in December 2023, had been hailed by the Government as a favourable arrangement for councils, entailing an almost £3.9 billion rise in spending power for authorities. This represented a 6.5% increase in cash terms, equivalent to 4.7% in real terms. However, council leaders and experts widely criticised the settlement as insufficient, mainly due to the substantial 9.8% increase in the national living wage (NLW) scheduled for April.

The Local Government Association estimated that this NLW hike would add £1.6 billion to adult social care expenses, as it necessitates funding commissioned providers to pay their staff the NLW. Concurrently, concerns were raised about the mounting pressures on children’s social care, driven primarily by escalating costs related to looked-after children and a shortage of suitable placements.

Councils had originally budgeted for an 11% real-term increase (£1.2 billion) in children’s social care spending to reach £12.7 billion in 2023-24. However, a survey by the County Councils Network projected that 41 county authorities alone would overspend their children’s social care budgets by £319 million during the year.

In response to more than 40 MPs, predominantly from the Conservative Party, advocating for additional funding for authorities, Gove acknowledged that social care pressures, especially for children, have significantly intensified. He encouraged councils to invest in areas that would enhance the financial stability of children’s social care services while being mindful of adult social care provision.

The finalised settlement translates into a £4.5 billion increase in spending power for English authorities, representing a 7.5% rise in cash terms or 5.7% in real terms.

In summary, the government’s injection of an extra £500 million into social care for 2024-25 is a response to mounting pressures on local councils, especially in children’s services. While welcomed by councils and social care leaders, many believe it falls short of meeting the increasing demands and challenges in the sector, urging the need for a more substantial and long-term funding solution.