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Raise care precept above 2% cap and create new health taxation powers, leaders say

Similarly to the Greater Manchester model and building on sustainability and transformation plans (STPs), social care leaders across local authorities should make the case for total devolution of local health and care budgets – including by being able to implement a care precept above the 2% threshold, a think tank has argued in a groundbreaking report.

The Localis report, supported by KPMG and backed by London mayor Sadiq Khan, said full health devolution would allow local government and NHS leaders to gain control over their entire health and care budgets, with funding raised and controlled locally in order to support greater flexibilities.

Part of these flexibilities should include breaking the current cap on the relatively new social care precept, which the report argued “could mark a fundamental change in the culture of health and care services”.

The precept, which was welcomed by council leaders in theory but criticised as insufficient, currently “opens up a source of funding for a joined up health and care system and is a huge step forward in reintroducing local place voice into the health service”, as argued by a former minister.

But the amount raised through the precept “varies substantially” across local authorities, despite having the potential to develop into a “substantial stream of money”.

The report argued that this could mark “several real changes”, such as councillors’ roles changing as they become “increasingly held to account for the health and wellbeing of the population”. It also said the culture within councils would “shift further towards thinking about health and wellbeing”.

“Despite the introduction of the precept, the social care funding gap will still total between £2bn – £2.7bn in 2019-20. As such we recommend that when negotiating deals with the government, local areas should seek the freedom to alter the levy on council tax for social care,” the report said.

“The level that the levy is set at should then be strictly tied to local need, increasing or decreasing as necessary. Though councils will need to take political considerations into account, there is high support for adult and children services to be protected from any cuts.”

Other elements of health devolution floated by the report include greater flexibilities over implementing health taxes – such as local versions of the sugar tax suggested nationally.

“If a region is particularly affected by a particular disease, local leaders should be able to bring in the relevant health tax to raise revenue and provide disincentives behaviours that cause the problem,” Localis said.

“It will be hard to implement a tax on consumption at the regional level. But we think it should be part of the public discourse in the same way that devolving income tax and the social care precept are.”

The third major suggestion was rationalising all local NHS estates into one body, given that the estate is currently “vast but used inefficiently”, and changes to poor management aren’t happening “quickly enough” under programmes like One Public Estate.

“As in Sweden – and similarly to Crown Estates – this could be transferred to a holding company structure that is arm’s length of the state, which then works alongside local authorities and one or more private sector partners,” the report explained. “Alternatively it could be led by a network of providers and local authorities working across a sub-regional geography, as is the case in north London.”

Cross-party endorsement

Today’s report was hugely welcomed by a handful of political heavyweights, including London mayor Sadiq Khan and former care minister Norman Lamb MP.

Khan took the opportunity to strengthen the case for “crucial” health devolution in the capital – first proposed last year – by saying that London must “take back control” of its own destiny.

And Lamb, who is still an influential health spokesperson in the Lib Dem party, said the report sets out an “ambitious liberal vision” for the health and care service.

“The centralised structure of the NHS has too often stifled innovation, efficiency, and local accountability,” he argued. “Even though most people now agree that decisions should be made as close as possible to the people they affect, we haven’t done enough to apply this principle to our most treasured public service.

“The Greater Manchester agreement was a landmark achievement, but genuine devolution would place greater trust in local areas to raise additional revenues rather than simply devolving the management of Whitehall block grants.”

Dr Dan Poulter, MP for Central Suffolk and North Ipswich and former care quality minister, added that devolution presents great opportunities, but will require “longer term and more sustainable funding settlements and staffing structures”.

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