Autumn Statement: Biggest ever boost to adult social care funding announced

Chancellor of the Exchequer Jeremy Hunt has announced the biggest ever increase to adult social care funding as part of his Autumn Statement, aiming for “stability, growth, and public services”.

Specifically, there will be additional funding for adult social care of £1 billion next year and up to £1.7 billion the year after, providing 200,000 new care packages.

As well as this, an additional £3.3 billion in 2023-24 and again in 2024-25 will be allocated to the NHS.

Pledging to calm the economic “storm” engulfing the UK amidst soaring inflation – which sits at a 41-year-high of 11.1% – Hunt’s budget is aiming to raise around £54 billion over the next two years in order to plug the current hole in UK finances in order to better support public services.

Other announcements made by Hunt include:

• The threshold at which the 45p tax rate is paid will be reduced from £150,000 to £125,140
• Annual exemption rate from Capital Gains Tax to be reduced from £12,300 to £6,000 next year, and £3,000 from April 2024
• Increase to public spending limited to 1% from 2025 – 2028, down from previous plans of 3.7%
• Income tax personal allowance and national insurance frozen until 2028
• Energy industry to receive expanded windfall tax from 25% to 35%
• Tax-free dividend allowance reduced to £1,000 in 2023-24, then £500 in 2024-45
• A £13.6 billion package of business rates support
• Triple-lock on pensions to remain
• Energy price guarantee to remain in place beyond April, though the cap will be raised from £2,500 to £3,000
• Government’s review of state pension age to be published in early 2023
• Stamp duty cuts to remain in place until 31st March 2025 to support the housing market and those working within it, after which changes to nil-rate thresholds will be reversed
• Introduction of the Organisation for Economic Co-operation and Development’s “historic” global tax reforms to ensure multinational corporations pay the right tax in the countries they operate
• Energy price guarantee to remain in place, though at a higher level of £3,000. The most vulnerable will receive up to £900 to help offset this
• Cap on increase in social rents to a maximum of 7% in 2024 – a £200 saving for the average tenant
• National Living Wage to rise to £10.42 per hour next year

Commenting on the increased adult social care funding, the Local Government Association said:

“Councils have always supported the principle of adult social care reforms and want to deliver them effectively but have warned that underfunded reforms would have exacerbated significant ongoing financial and workforce pressures. The Government needs to use the delay announced today to ensure that funding and support is in place for councils and providers so they can be implemented successfully. We are pleased that government will provide extra funding for adult social care and accepted our ask for funding allocated towards reforms to still be available to address inflationary pressures for both councils and social care providers.”

The House of Lords Adult Social Care Committee was more sceptical of the announcement, suggesting the policy “lacks strategy and vision”. Chair of the Committee Baroness Andrews said:

“Whilst we welcome the additional £4.7 billion that has been unlocked for social care in the next three years, this falls short of what was recommended to our committee by Mr Hunt himself only a few months ago, when he pointed to the estimate produced by the Health and Social Care Committee, which he Chaired at the time, and indicated the need to provide an additional £7 billion in funding for adult social care in 2023/24.

Moreover, freezing one area of adult social care policy, much needed and long promised, to pay for other aspects of the service which are underfunded and understaffed, is not the coherent, realistic long term national plan for adult social care which is so urgently needed.”