Local authority funding for social services is derived from a variety of sources both from within central Government and also determined locally (via council tax, fees and charges).
It is for individual local authorities to manage and direct their own resources in accordance with local priorities and the needs of the communities to which they are accountable.
Central funding for adult social care is via formula grant (via Department for Communities and Local Government) which is not hypothecated and specific grants from the Department.
Formula grant is allocated using relative needs formulae (RNF) which include a factor for the number of older people. The RNF are mathematical formulae that include information on population, social structure and other characteristics of each authority. For social care, there are separate formulae for older people (aged 65 and over) and younger adults (aged 18 to 65). The older people’s formula also includes an age top-up for those aged 90 and over (as a proportion of the older people population), which takes into account the higher needs of those of very advanced age This age top-up is calculated as part of the econometric analysis carried out in an academic research project in 2005. There is, however, no set proportion of older people which leads to ‘additional funding’.
The Government (in consultation with local government) have developed separate formulae to cover the major service areas, because there are different factors influencing each service area. The funding blocks for service areas are; children’s services, adults’ personal services, police, fire, highway maintenance and environmental, protective and cultural services. These formulae apply to all local authorities providing particular services.
The formula for each specific service area is built on a basic amount per client, plus additional top ups to reflect local circumstances. The top ups take account of a number of local factors that affect service costs, but the biggest factors are deprivation and area costs.
Relative needs are designed to reflect the relative needs of individual authorities in providing services. They are not intended to measure the actual amount needed by any authority to provide local services but simply to recognise the various factors which affect local authorities’ costs locally.
The arrangements for allocating specific grants vary, some schemes use formulae grant; others allocate funds on the basis of appraisal of bids.