A new adult social care system may lead to extra cost burdens for councils that may not be fully funded from central Government, Essex County Council has been warned.

Essex County Council says it has concerns that the funding for councils will be insufficient to cover the costs of the changes to the care system that will see a new £86,000 cap after which care and support would be free.

The authority’s concerns mirror that of the County Councils Network, which has also said that it remains “extremely uncertain” that the funding announced to date will be sufficient to meet the costs arising from reform when the additional costs from establishing a ‘fair price for care’ are considered – estimated at £761 million annual in county and rural areas alone.

The new system to be initiated from October 2023, will see an £86,000 cap after which the person would receive free care and support, excluding daily living and accommodation costs in a care home.

But private funders pay significantly more for care than those funded by councils.

Given councils will be required to arrange care in a care home for those self-funders with eligible needs who request that they do so, the costs paid by private funders will drop and the amount paid for by councils will rise.

The Government has said the £5.4 billion package includes cash for councils to move towards paying a “fair rate for care”, and to increase the fees they pay care homes. But this may not be enough.

A spokesperson for Essex County Council said: “We are still awaiting the statutory guidance on the new care charging regime so that we can understand the detail and the implications for the council in terms of income and costs.

“This guidance is expected to be published in the new year. It is not possible at this stage to say what it would mean for council budgets and rates we pay.

“The Government has announced a new Health and Care Levy to fund the care cap changes. We are yet to see what our allocation would be. We have concerns, however, that it may be insufficient to cover the cost of the changes.”

Peter Fairley, director for health and social care integration, said private funders can pay up to 30 per cent more than a local authority and the situation in Essex is further complicated given more people there pay for care privately.

He said: “Our hypothesis is that if the private rate was to come down then then market would really struggle if all the the rates were to go down to the authority rate.

“So we’re assuming that at some point the local authority rates will have to increase to ensure an equilibrium.

“From an individual’s perspective a good part of the reform is that it is a much more generous means test than is currently applied so far. More people will be eligible for council-funded support we believe than is currently the case.

“What that will mean for the council’s income? We get well over £100m a year in fees and charges from people driven to the care. We don’t know.

“We know that the Government has announced this new levy – and we know about £3.8 billion of that is to implement the cost of the care cap. There’s lots of concern in the sector that actually the cost will probably be more than that.

“So there’s a bit of a nervousness that there isn’t enough money going to be coming into the system to pay for the cost of the reform itself and we do not know what out allocation will be.”​