A national overhaul of the adult social care system will be trialled across North Yorkshire next year – but could leave authorities with a budget deficit stretching into the millions.

North Yorkshire County Council is one of five authorities signed up to be part of the pilot scheme from January, before it is rolled out across the country in October 2023.

It will see a cap of £86,000 placed on each individual’s spending on their care in their lifetime, after which the local authority will fund it for as long as needed.

The reforms will also allow people to retain up to £100,000 of their own assets and still qualify for funding for their care. The current limit is £23,250.

While the result will be a benefit to individuals who get to keep more of their own money and pass it on to their relatives, there is an obvious challenge facing local authorities.

NYCC believes the new system could cost it £45m per year more than it currently pays for adult social care, and it has yet to be told how much money it will be given for the pilot scheme, known as ‘trailblazers’.

Cllr Michael Harrison, executive member for health and adult care, told the Stray Ferret:

“It will benefit residents because no-one is going to pay more [for their care during their lifetime]. Most people are going to pay less, depending on how long they’re in the care system.

“It’s entirely positive for residents from a financial perspective. The rub is, who’s going to fund it?”

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At the same time as the changes to funding are introduced, reforms in care fees are being planned.

They will do away with the current two-tier system, which sees local authorities pay a lower rate than a private individual has to pay for the same care.

Cllr Harrison said it is not yet clear what the new fees would be, but it was inevitable that local authorities would end up paying more so care homes did not see a drop in funding.

“If you reduce their income, the viability of the market is threatened.

“Whatever we’re paying, when it comes down to what the individuals working in social care earn, most of them are either on minimum wage or not far off.”

Cllr Michael Harrison

While those two reforms to funding and charging are being planned, a third financial implication for local authorities will come in the form of overseeing an inevitable rise in the number of people accessing local authority funding towards their care.

“The sheer workload of assessment and brokerage and IT – there’s a huge weight of bureaucracy surrounding that because there’s just going to be more people in the system.

“We don’t know how many people are out there self-funding who will come to us – why would we?

“It’s new costs in a market that’s already under stress. How much, we don’t know.

“A piece of work has been done by the County Council Network and we think this could all cost NYCC up to £45m a year – additional [to what it already spends on care].”

Implementation of the new equal care fees system has recently been delayed by the government. The new funding structure being introduced next year will also only apply to people entering the care system, not those already in it.

While this takes the immediate pressure off NYCC’s budget by phasing in some of the changes, Cllr Harrison and his department’s officers know the full impact will be felt in the future.

The changes are set to be funded by the new health and social care levy, brought into effect in April, which has seen a 1.25% increase in National Insurance. The money raised is to be shared between the NHS – which will take most of it – and adult social care.

However, the current Conservative leadership race has seen almost all of the contenders to be Prime Minister declare they would scrap the levy – yet none has said what they would do about funding the scheme without it.

Meanwhile, Cllr Harrison said it has not yet been confirmed what NYCC’s share of the money will be to fund the new system coming into force in less than six months.

“If we apply the normal ratios, we can usually be pretty confident what our share of funding would be. If we’re right, we’ve got up to a £23m hole in our budget in a council already producing a structural deficit of £50m. It would bankrupt us.”

So why did NYCC agree to be part of the trailblazers project, bringing the problems of the new system forward by nine months?

Cllr Harrison said he believes North Yorkshire County Council has a reputation for being competent and working constructively with central government.

At the same time, North Yorkshire has certain characteristics that can be tested through the pilot scheme: an older than average population, a large, rural landscape, with 500 care providers spread across it, and a relatively high proportion of self-funders accessing services.

The rural nature of the county, along with a higher than average elderly population, make it a useful case study for the government to test how its new system will work.

He also hopes it will be an opportunity to make careers in care better funded and more respected, in line with the council’s Make Care Matter campaign.

“Part of being involved in the trailblazers is to try and shape government policy to understand the challenges and find solutions to those challenges and pilot the changes up front.

“The risk to us is if it’s going to hurt us financially before the rest of the country.”

However, he said, there are clauses in the agreement which will allow NYCC to pull out if the scheme is not working and to revert to the current arrangements until all councils move to the new system after the pilot concludes.

The aim, however, is to go through the trailblazers project with the ear of the government, proving that more money is needed before it can be rolled out further. But will the funding come through?

“I’m hopeful. If it doesn’t, it will bankrupt a number of councils round the country and potentially impact the viability of the whole care sector.”

North Yorkshire residents should see a “seamless transition” of council services when a new unitary authority covering the whole county launches in April 2023, council chiefs have said.

The new North Yorkshire Council will replace the existing county and district councils – with elections set to take place on 5 May.

It will mark the biggest changes to local government in the county since 1974 and will see key services from bin collections to social care, and street cleaning to leisure centres, come under the control of the new council.

Wallace Sampson, chief executive of Harrogate Borough Council, told a virtual public meeting on Monday that the transition was now fast approaching and staff from all existing councils were working together to ensure services run smoothly from day one.

He said:

“There isn’t a lot of time to prepare for local government reorganisation and the new authority coming into force from 1 April 2023.

“All eight councils are really working hard to make sure the transition to the new North Yorkshire Council is as seamless as possible.”

The restructuring is linked to a devolution deal for North Yorkshire which could get millions of pounds in funding, more decision-making powers and an elected mayor by 2024.

The government had stipulated a key requirement of any deal was for the current two-tier councils system to be replaced by a single unitary authority.

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The aim is to streamline structures and save money, with some of the savings coming from a reduction in senior staff including the eight current chief executives.

Paul Shevlin, chief executive of Craven District Council, told yesterday’s meeting that another aim is to “keep the local in local government”.

He said each of the seven districts – including Craven, Harrogate, Selby, Scarborough, Richmondshire, Hambleton and Ryedale – would each still have a local council office under the reorganisation plans.

Mr Shevlin said:

“We need to look after not just the most vulnerable, but everybody in our society so a local office is going to be crucial.

“Some of the judgements on day one will be: Did you notice a difference? Could you access your local council?

“If the answer to those is yes, then we will have made a successful immediate transition.

“After that comes the transformation.”

Mr Shevlin also said six local area constituency committees were likely to be created on the new council – with 15 councillors on each given decision-making powers over services including licensing and planning.

In total, 90 councillors will be elected on 5 May to serve one year on North Yorkshire County Council before transitioning to the new unitary authority for a four-year term.

Mr Shevlin added:

“This really is the most important election in North Yorkshire since the last local government reorganisation in 1974.

“Please make sure you are registered to vote, and please do vote.”

A series of virtual events are being held this month for residents to find out more about the new North Yorkshire Council.

For more information go to www.northyorks.gov.uk/new-council-virtual-roadshows