The system is unstable, unfair and in need of reform. As well as tackling immediate public health challenges, Rishi Sunak should show there is a clear path forward hereby Charles Tallack / March 9, 2020 / Leave a comment
On his first day as Prime Minister, Boris Johnson promised to “fix the crisis in social care once and for all.” This was welcome, as reform is long overdue. But eight months on, we are still awaiting a concrete plan. The Conservatives’ 2019 manifesto stated “one condition” for reform—that no one should be forced to sell their home to pay for care.
Such concern among politicians is nothing new. Since 1997, when Tony Blair announced that he didn’t want children growing up in a country where pensioners are forced out of their homes, we’ve seen two green papers, four white papers, various consultations and five independent commissions. What is new is the growing acknowledgement of the seriousness of the crisis and consensus on the need for a solution. But what might that look like?
On 11th March, Chancellor Rishi Sunak will present his annual budget. With the unusual circumstances surrounding his recent appointment, growth forecast downgrades, and uncertainty around the coronavirus, there is much to focus on besides social care. But the budget should be an opportunity for the government to at least signal its intentions, putting forward a road map for the coming Spending Review which will determine budgets for 2021/22 and beyond. To be viable, the plan must deliver on two major fronts: stabilising the current system, which remains at risk of collapse, and addressing the inherent unfairness which leaves many older people facing catastrophic care costs.
Most urgent is stabilising the system. As a result of cuts to local authority budgets since 2010, there has been a squeeze on the amount that LAs can pay social care providers, leading to more and more care homes going out of business. Levels of access have also fallen. People are increasingly going without the care they need, with unpaid carers—family and friends—often taking the strain. Additional funding announced in September last year doesn’t cover the current level of unmet need, let alone address future demand from further growth in the numbers of older people.
A further threat to the stability of the system is growing staff shortages. Despite doing immensely important work under emotionally and physically demanding conditions, 30 per cent of staff in social care are paid the minimum wage, 24 per cent are on zero-hours contracts and there is little career progression. This all contributes to an annual turnover rate of over 30 per cent, with effects on the quantity and quality of care. The system relies on a quarter of a million staff from overseas, so the government’s proposed migration policy, which closes routes for social care workers from abroad, is set to make things even worse.
Addressing these pressures will involve considerable funding injections. We estimate that meeting future demand in the current system alone will require an additional £4.2bn annually by 2023/24—a figure which includes increasing pay for care workers in line with what NHS staff will receive. Going further and returning to levels of service last seen in 2010/11 would cost £12.2bn in 2023/24.
Then there is the issue of how we currently pay for social care. Unlike in the NHS, whether you receive help from the state depends not just on your level of need but also on your wealth. Only those with the highest need and lowest means receive support. If you need care and have assets worth more than £23,250, you will have to pay for it, and this includes the value of your house if you’re going into a care home. While some older people will live the rest of their lives without needing social care, a significant minority—those with intense care needs extending over many years—may face hundreds of thousands of pounds in costs. It’s this issue that means that some people are forced to sell their homes to pay for care.
Fixing this requires some form of insurance against care costs, but as the private sector does not and cannot offer this—for several reasons, including the challenge of predicting future care costs—the government must play a fundamental role. The most comprehensive, and expensive, policy option—with a cost of up to £11bn per year—would be to make social care free, in effect making it like the NHS. Another approach would be for the state to cover the costs of some services for everyone—for example, providing “free personal care” as in Scotland, which covers help with activities like washing and dressing. The downside is that individuals would still have to pay all other care costs, leaving some with high bills. In Scotland, free personal care only covers around 25 per cent of residential care costs.
An alternative approach is to target additional public spending on those who currently face the highest costs, by setting a cap on the amount they will pay for care over their lifetime. Once an individual’s lifetime spend reaches the cap, their future care costs would be paid by the state. This is essentially the approach proposed by the landmark Dilnot Commission in 2011 and legislation to enable it is already in the 2014 Care Act, so it could be easily activated by the government. The policy was widely scrutinised and consulted upon at the time and local authorities had worked out how to implement it.
Committing to implementing a cap would be a step towards delivering on the prime minister’s pledge that no one will have to sell their home. While this would still leave people with some costs to bear, it could provide much greater certainty over the maximum amount they will face in later life and enable them to plan. The government would still need to decide on the level at which the cap is set: the lower the cap the greater the protection to individuals, but the greater the cost to government. A cap of £72,000, which was the level proposed by the Cameron government, would do little to help those with modest assets—for example someone with a house worth less than £100,000. But a cap of £46,000 (in today’s money), as recommended by Dilnot, would mean that an older person entering a care home would pay for the first two years of their stay, with the state picking up the bill after that. This would cost around £3.1bn in 2023/24.
As with every funding decision, there are choices and trades-offs to be made—the government will need to balance the protection given to people with the cost to the public purse. Successive governments have ducked the need for reform for too long, but a solution is within reach. Indeed, we are arguably closer than ever to finding a way forward, but the Conservatives must strike while the iron is hot. This week’s budget offers an opportunity to do just that. By taking advantage of policies already on the statute books, the government can act quickly and create a system that is fit for the future.
Charles Tallack is Assistant Director for Health and Social Care Sustainability at the Health Foundation