Reforming social care in England – half a step forward and several steps back?

Social Care

July saw the publication of a long-awaited White Paper on the reform of adult social care in England.  It contained many highly aspirational proposals (many of which have been asserted in earlier policy documents), including improving access to information and advice so that people are better able to plan ahead and prevent the need for care; more community- and housing-based support; and better support for family carers.

Some of these proposals are the response to recommendations from the Law Commission in 2011, on rationalising and modernising the legal framework underpinning adult social care in England.  Thus the White Paper proposed a national minimum threshold for eligibility to adult social care, to create greater consistency in access to services across England; better continuity for people who move from one local authority area to another; and extending the rights of family carers to assessment and support to maintain their own well-being.  The White Paper also included many other proposals that reflect more individualised and consumerist assumptions, such as new national and local information websites (including comparison websites – TripAdvisor for care homes?); legal entitlement to a personal budget for those eligible for social care; and improved access to independent advice to help people plan how to use personal budgets.   Only a few of these proposals have additional funding attached: a £200m capital fund to support the development of specialised housing for older and disabled people; investment in better local on-line services; and further joint-funded integrated NHS and social care services.

Notably, however, the White Paper did not include the major reforms recommended by the Dilnot Commission in July 2011 on the funding of social care in England.  Rather, the Government published an accompanying ‘Progress Report’ that deferred major decisions on Dilnot’s proposals until the next Spending Review.

At the core of the Dilnot Commission’s proposals was a shift in financial risk away from individuals who experience very substantial care-related costs – the 1 in 10 older people who can expect to spend over £100,000 during their lifetimes, mainly through extended periods in residential care.  By raising the current eligibility threshold for state funding from £23,250 to £100,000 and capping individual liability for care costs at £35,000, the highest risks would be transferred to the state (individuals would remain responsible for meeting their accommodation and other non-care costs).  Additionally, by capping individual liability at £35,000, it was hoped to stimulate the development of new insurance products to fill the funding gap.  Dilnot was not coy about the cost of these proposals and estimated them to be £2.2 billion in 2015/16, rising to £3.6 billion by 2025/26.  Nor did the Commission flinch from the reality that its proposals were only partially progressive – more of the additional funding required to implement them would go to the top 2 income quintiles of older people than the bottom 3 income quintiles (and more assets of the better-off would be preserved for future inheritance).

Dilnot’s proposals were widely welcomed by user, provider and statutory organisations (eg the Local Government Association) alike.  Yet the Commission’s were simply the latest in a long series of proposals to reform the funding of social care for older people in England, starting with the Royal Commission on Long-Term Care in 1999 and continuing with reports from the Institute for Public Policy Research, Joseph Rowntree Foundation, the Kings Fund’s review headed by Sir Derek Wanless, the International Longevity Centre, and Green and White Papers published by the last Labour Government in the run-up to the 2010 election.  All had met with Government inaction (and, in the case of the last two, the refusal of the then Conservative Opposition to continue cross-party discussions on reform).

However, despite the widespread welcome for Dilnot’s proposals, they also have serious limitations.  First, and most significant, they fail to address the current under-funding of social care for older people.  Between 2005/06 and 2010/11, demand for social care by older people (taking into account both demographic change and increases in service costs) outstripped expenditure by around 9%. Despite population ageing, the numbers of adults using publicly-funded residential and home care services has actually fallen by around 20% since 2003.  And although there has been a consistent trend towards increasing support for very frail older people to remain in their own homes, in 2010 even the number of hours of publicly-funded home care services fell.  Adult social care has experienced very severe pressures as a result of the Coalition’s deficit reduction strategy and this will increase further; real-terms spending on care and support for older people is expected to be £250 million lower in 2014 than in 2004 (and during a period when the numbers of older people will have increased by two-thirds).   It is, incidentally, far from clear how promises in the 2012 White Paper to ‘rule out crude ‘contracting by the minute’ (whereby older people are allocated home care services for 15 or 30 minute time slots), can be met.

Secondly, there are questions about the longer-term sustainability of current – and possible future – funding arrangements.  Given anticipated increases in the numbers of the oldest older people (the number of people aged 90-plus is expected to treble over the next 20 years), an extra £8.3 billion will be needed by 2025, just to maintain local authority spending on older people’s support at current levels.  This rises to £11.5 billion if the costs of disability-related welfare benefits (Attendance Allowance) are included.  Even the Office for Budget Responsibility estimates  that, without any policy changes, public spending on long-term care for older people will rise from 1.2% of GDP in 2009/10 to 1.7% in 2029/30, as a result of demographic pressures alone.

Thirdly, the Dilnot Commission’s focus was on the exceptionally high costs arising from extended periods in residential care.  It remains far from clear whether, and how, the proposed £100,000 eligibility threshold and the £35,000 cap on individual financial liability, will apply to the costs of community-based services, primarily home care.  Local authorities already apply income tests (as well as levels of need or risk) to determine eligibility for these services and those who do qualify are usually liable to pay income-related charges.  Many older people have fluctuating support needs, with their home care support suspended during periods of hospitalisation or respite care and increased during crises or as their health deteriorates.  There is huge potential for disagreement, error and lack of transparency in calculating the costs of home-based support incurred by individual older people that counts towards the £35,000 cap.  Yet if the Dilnot proposals only apply to residential care, they will create a perverse incentive to enter residential care as early as possible, so that these care costs can start contributing to the £35,000 cap, unlike the expensive (but not counted) costs of support to remain at home.

It is however clear from the summer’s Progress Report that the costs that will be taken into account in contributing to the £35,000 cap would only be those that would be paid by the local authority, were it funding the care.  There are already significant gaps between the levels of fees that local authorities will pay and those charged by care homes.  Often homes charge significantly higher fees to self-funding residents in order to cross-subsidise this gap; other homes require local authority-funded residents to pay additional top-ups to the level of self-funders’ fees.  It is therefore likely that only some of the costs incurred even by those requiring expensive, extended periods of residential care would count towards the £35,000 cap.

Underpinning the failure of the Government to respond positively to the Dilnot Commission – as with the failure of other funding reform proposals – are the absence of political commitments to increase public expenditure and wider debates about how existing areas of public spending might be diverted.  The All-Party Parliamentary Group on Social Care has pointed out that the Treasury will have to face up to the need for increased expenditure anyway, just to cope with demographic change.   Alternative funding proposals have come from the Strategic Society Centre, which has concluded that relying wholly on resources from general taxation meets neither sustainability nor intergenerational fairness tests.  Other options include means-testing or cutting altogether universal benefits for older people such as winter fuel payments or concessionary travel; increasing inheritance and/or capital gains tax; pre-funded insurance; disability-linked annuities; and a National Care Fund established on social insurance principles.  The Strategic Society Centre concludes that, even if some resources are diverted from general taxation to fund care and support for growing numbers of older people, additional revenue-raising strategies will also need to be employed.

Further proposals have come from the Nuffield Trust. These include diverting more resources from the NHS budget into social care (including the estimated underspend of £1.5 billion by Primary Care Trusts in 2011/12); bringing in additional health and welfare funding streams to fund a reformed social care system; and removing better-off older people from the scope of universal and categorical welfare benefits.  The Trust argues that any tax increases should be directed towards wealthier older people.  Meanwhile the Institute for Fiscal Studies has pointed to the revenue that could be generated by reforming the complicated tax arrangements for pensions, which it argues are neither rational nor coherent; and by continuing to levy national insurance contributions on post-retirement incomes.

These arguments for increased public spending on social care and how additional revenue might be raised are welcome and brave in the current economic climate. However there are two major risks.  First, the Dilnot Commission’s proposals are currently the only reform proposals on the policy table – and certainly the only proposals that the Coalition Government has shown any commitment to respond to.  Older people’s, provider and other organisations will need to continue to press for action on these.  Yet, as noted above, the Commission’s proposals are limited in scope and do not address the wider and longer-term underfunding of the sector. It will be vital that these wider arguments continue to be aired, alongside continuing pressure for an adequate response to Dilnot.  Secondly, there is a risk of the well-costed arguments for additional revenue sources to fund social care being high-jacked by the Treasury and simply used to plug its failing deficit reduction programme.   Older people’s campaign groups, think tanks, local authorities and academics alike will need to exercise considerable skills to sustain these arguments over the coming months, in the face of increasingly overt Treasury hostility (see, for example, George Osborne blocked cap on elderly care costs, Daily Telegraph 2 October 2012.  There is certainly neither the political and policy scope for radical reforms to long-term care funding like those that were introduced in Germany in 1994-5 and in Japan at the turn of the century.  Over the coming years, it is likely to be increasingly difficult to keep the wider ambitions – for high quality social care services underpinned by principles of universality and equity – on the public policy agenda.

Caroline Glendinning

Professor of Social Policy

Social Policy Research Unit University of York

Age UK (2011) Care in Crisis: Causes and Solutions

Department of Health (2011) Fairer Care Funding: the Report of the Commission on Funding of Care and Support.

HM Government (2012) Caring for our Future: Reforming Care and Support

HM Government (2012) Caring for our Future: Progress Report on Funding Reform

Nuffield Trust (2012) Reforming Social Care: Options for Funding

Strategic Society Centre (2012) The Roadmap: England’s Choices for the Care Crisis

Also published in the Social Policy Association’s Newsletter Policy World.