The government must adopt a single budget for £121bn of health and social care funding to stop the two systems fighting against each other, the King’s Fund has warned.

The think tank’s latest report, Social Care in a Cold Climate: the NHS interface, says the current funding “fault-line” makes it difficult to align resources for the two sectors with national policy objectives in a “coherent and coordinated way”.

It calls the £1bn of health service funding allocated to social care in October’s spending review a “welcomed stimulus” for more closely aligning the sectors.

But it says there should be alignment of the entire £121bn annual budget allocation across health and social care, “possibly moving towards a single, shared settlement for both services”.

It states: “There is a case for carrying out a three to five year assessment of the long term resource needs of the NHS and the care and support system as a single exercise, rather than as separate activities within the spending review framework.”

The report also highlights that spending by local authorities on social care services for older people, which has increased by less than 3 per cent since 1994, has failed to keep pace with demographic change.

Instead it says councils have concentrated on boosting resources for working age people with physical or learning disabilities, which is at odds with the demographic burden on NHS services created by an ageing population.

This has “worrying implications for the NHS”, according to the report.