Government claims to have fixed social care with their new tax plan, raising billions with a new health and social care levy. But the fix will turn out to be an illusion unless that tax ambition is matched with reform and innovation in social care services - innovation to put locality and community at the heart of care.

It's extraordinary that, in all the fanfare about the Government's new social care funding plan, we've barely heard the phrase ‘local government', even though social care is a local government responsibility. That silence is not an accident. Of all the billions to be raised by the tax voted through Parliament, not one single penny will be going to local government to actually improve services for people who depend on care to live well.

The plans announced by government will reduce the amount of money private citizens have to contribute to their care costs with a more generous means test, and a cap on the maximum amount you might have to pay. That's welcome, but replacing private money with taxpayers' money doesn't increase the amount of money in the system. It doesn't help meet the rising needs that stem from our ageing population; it doesn't improve wages for care workers or increase the time they can spend with a person during a care visit.

More money is going to have to be part of the solution. But it isn't enough. When national government talks about social care, it usually focuses on the paid for care: it's the part of the system that's visible, quantified, and easy to analyse in a spreadsheet. But in the real world, an individual's care needs are not just met by the formal care sector. The amount of paid care a person needs depends heavily on what informal support they have access to: what friends, family or neighbours are around to help out and check in on them, for example. Informal support is often a real factor in deciding whether it's considered safe to discharge someone from hospital.

Some traditionalists have been arguing that most care should be informal: that we should send our elderly to their children's homes where their (mostly) daughters can look after them, as they did in imagined olden days before women worked outside the home but after life expectancy rose to over 80. That's a terrible idea, that would harm family relationships as much as our economy.

But when we've talked to both carers and recipients of care as part of Demos' work with Capita reimagining public services, they've been clear that they want a mix of formal and informal care. They tell us changes to enable intergenerational housing, flexible working or respite for carers so they don't burn out, are as important as the question of who pays for what, when.

Informal carers provide the equivalent of more than £130bn of care - compared with just £23bn provided by the state. A 10% increase in the care they provide could transform quality of life for people in need of support, while a 10% decrease in what informal carers can do would swallow up every penny of the new Health and Social Care Levy.

So how do we develop a whole-system approach to what care looks like in our communities, that draws informal and formal carers together as partners? Availability of informal support is driven by a host of factors that are complex and interlocking: flexible working rules affect whether family members can take on care alongside work; housing availability and the labour market affect whether family members live nearby at all; the friendliness of the neighbourhood and the community groups that exist affect social capital.

And that's, of course, why local government has to be in the lead. These complex systems play out in local, and even hyperlocal environments that will always be invisible to national government trying to worry about 70 million people. And only local government has a chance of pushing forward the social change we need to help reduce our dependency on state support for care: addressing housing policy, mobilising and coordinating volunteers, building up neighbourliness and social capital and rebuilding communities.

Polly Mackenzie is chief executive of Demos

@pollymackenzie