Memorandum by the Universities of Essex
and East Anglia (SC 52)
SOCIAL CARE INQUIRY
is submitted by Professor Stephen Pudney, Francesca Zantomio,
ESRC Research Centre on Micro-Social Change, Institute for Social
and Economic Research, University of Essex, and Professor Ruth
Dr Marcello Morciano, Health Economics Group, Faculty of Health,
University of East Anglia.
Our evidence summarises emerging findings from
our research on the role of cash benefitsAttendance Allowance
(AA) and Disability Living Allowance (DLA)in the support
of older disabled people. It relates to people living in private
households and excludes the care home population. The principal
findings relevant to this inquiry are:
1. Claim behaviour for AA is strongly related
to age, income and severity of disability. People with higher
levels of age and disability, and lower levels of income, are
more likely to make a claim for AA. Adjudication outcomes are,
as expected, strongly related to disability.
2. Although not explicitly means-tested, AA/DLA
payments display a degree of income targeting, since low-income
people are more likely to have severe disability and are also
more likely to make a claim. The degree of income-targeting is
less than for Pension Credit, but still significant.
3. There is evidence of a large group of older
people (at least 30% of the over-65s) who are not receiving AA
but would be predicted to be successful, were they to make a claim.
4. Our analysis finds no evidence of significant
numbers of older people receiving AA/DLA long-term without any
accompanying health problem.
5. Receipt of AA/DLA and receipt of local authority
social care services overlap only partiallythere are many
people who receive social care services who do not receive AA/DLA
and vice versa.
6. A switch from a dual system of support (AA/DLA
+ local care services) to a unitary system providing only care
services will greatly increase the uncertainty faced by potential
applicants for support and the risk of uneven administration.
Increased uncertainty poses a significant threat to take-up.
1. The Social Care Green Paper (DH, 2009)
suggests that as part of reforms to the long-term care funding
system, consideration should be given to integrating some elements
of disability benefits into the social care system. The idea of
diverting (some of) the money spent on disability benefits into
the social care system was first suggested in the 2006 King's
Fund Review of Social Care (Wanless, 2006).
2. In 2008 we provided an initial critique
of the Wanless suggestion (Berthoud and Hancock, 2008). Currently
we are part way through a project funded by the Nuffield Foundation
on the Role and Effectiveness of Disability Benefits for Older
People. Much of the evidence submitted here arises from emerging
findings from that project.
3. The Green Paper puts forward a number
of options for reforming the funding of social care. The front
runner seems to be a "partnership" system in which everyone
assessed as needing formal care services, would get some
proportion (eg a quarter or a third) of their care costs met by
the state without a means test. The remainder of their care costs,
and the hotel costs of care home fees, would remain subject to
a means test of some sort. The Green Paper also says:
"We think we should consider integrating
some elements of disability benefits, for example Attendance Allowance,
to create a new offer for individuals with care needs". (p.
"Whatever the outcome of the consultation,
we want to ensure that the people receiving the benefits at the
time of the reform would continue to receive an equivalent level
of support and protection under a new and better care and support
system" (p. 104).
4. Underpinning the Green Paper is analysis
by Forder and Fernandez (2009) which is referred to in the Green
Paper itself and in the Regulatory Impact Assessment (DH, 2009a).
The latter provides some broad estimates of the costs of various
options (including the partnership option) for "bringing
new money" into the care and support system. These costs
"based on a system where Attendance Allowance
had been drawn into care and support to create a new and better
system." (DH, 2009a, p. 37)
5. The way in which AA is assumed to have
been drawn into the care and support system is not clear. There
is no mention of drawing in DLA although a recent ministerial
statement rules out the possibility of DLA being withdrawn for
people aged under 65.
6. The rationale for diverting resources
spent on disability benefits into the care system seems to be
that these benefits are less well targeted than social care, although
neither the Green Paper nor the 2006 Wanless report offers evidence
on the targeting of social care services. Some analysis is presented
in Forder and Fernandez (2009), which questions the targeting
of AA and DLA, concluding that a relatively large number of people,
despite having no limitations in activities of daily living, receive
AA (p. 12) and that "very wealthy people still show a significant
propensity to claim [AA]" (p. 13). They analyse data from
the English Longitudinal Study on Ageing (ELSA) and the British
Household Panel Survey (BHPS), although we have not found precise
details of their analysis in the public domain.
7. Berthoud and Hancock (2008) undertook
an initial analysis of the Family Resources Survey (FRS) which
showed disability benefits to be received mainly by people whose
incomes, before these disability benefits, are in the lower parts
of the income distribution.
8. Our current research concerns people
aged 65 and over and so focuses mainly on Attendance Allowance
(AA), although some of what follows refers also to DLA paid to
people aged 65 and over.
We aim to answer the following questions:
How does the AA system work in practice
in terms of the achieved pattern of delivery of benefit to potential
Does the chance of success of a claim
for AA depend as strongly on measured disability as we would expect
(ie how effective is the assessment process)? Is the probability
of receiving AA for people with no disabilities really as high
as has sometimes been suggested?
What are the influences on claim behaviour?
In particular, what are the personal characteristics and circumstances
that distinguish AA recipients from potential beneficiaries who
do not claim?
Are many potentially successful AA claims
not pursued by the potential claimants?
Although AA is not means tested, is there
evidence that lower income people are more likely to claim than
higher income people with similar disability levels? Does the
nature of claimant behaviour mean that the AA system in fact mimics
the effects of means-testing?
Are there arguments in favour of having
two separate systemsdisability benefits and social care
servicesparticularly as both entail uncertainty in outcomes?
Our research uses household survey data, so
is confined to people living in private households. It excludes
older people living in care homes.
9. Behavioural theories which regard benefit
claims as a form of "rational" decision-making behaviour
(i) People with higher income will be less likely
to claim AA;
(ii) People with more severe disability will
be more likely to claim AA unless
disability makes it much more difficult
to negotiate the claims process and/or:
disability reduces the individual's capacity
to benefit from additional cash income (eg because of the difficulty
of managing the process of buying care).
Point (i) means that the flat-rate non-means-tested
AA system may mimic a means-tested benefit to some degree. Point
(ii) means that, should we find claim behaviour to be unaffected
by the severity of disability, it would suggest a problem of poor
targeting of AA, in the sense that disability in itself makes
the process of claiming and using the benefit more difficult.
10. Research on this issue is difficult
since no large-scale data source tells us everything we need to
know. Sources like the ELSA, the BHPS and the FRS tell us about
receipt of AA, but not about unsuccessful claims or unpursued
potential awards. The DWP's administrative records also tell us
nothing about unpursued potential awards and they contain no information
on factors like income, which are not required on the AA application
11. Our research uses two new approaches.
First it combines FRS and administrative data to distinguish the
separate roles of individual claim behaviour and the DWP assessment
process. Secondly, it applies a statistical method
which allows us to uncover the underlying level of disability,
on a continuous spectrum, that results in difficulties with activities
etc. which respondents report in surveys. It exploits all the
available measures of disability in the surveys. We can then examine
how AA receipt is related to this underlying level of disability
and to other personal characteristics, including income. We have
applied this method to ELSA, the BHPS and FRS to see whether the
results are consistent across these three sources.
12. Uncertainties are inherent in assessments
of eligibility for disability benefits and for care services.
Two different assessors processing the same application in the
same circumstances may oftenquite reasonablyreach
different conclusions about eligibility for benefits or care.
We therefore offer a preliminary and illustrative assessment of
the consequences of these uncertainties in a single system of
assessment for care services rather than the separate systems
we now have for disability benefits and care services.
Our main findings, presented in detail in a
technical paper (Pudney 2009), are the following:
Finding 1. The probability of an AA claim
being upheld is strongly related to the claimant's severity of
disability (expressed in terms of the number and nature of activities
that are affected by impairments), so that eligibility adjudications
do seem to be responsive to care needs.
Finding 2. Despite its formal design as
a non-means-tested, largely flat-rate, benefit, AA is essentially
self-means-tested in the sense that people who could be seen as
having greater general need (ie older and with lower incomes)
have higher probabilities of claiming AA, for any given level
Finding 3. Claim behaviour is strongly
influenced by the severity of disability. We predict a much higher
probability that a claim for AA will be made by people who are
severely affected by disability. This tends to support the view
that targeting is reasonably good in the sense that there are
not large numbers of frivolous claims, and the "hassle"
of making a claim and the difficulty of using additional cash
income effectively do not become overwhelming for higher-disability
groups. This is, however, only a statistical statement about average
behaviour for groups of peoplethere will still exist many
particular individuals who suffer because they are put off from
claiming by the hassle involved, or by worries about using a cash
allowance to pay for care.
Finding 4. Targeting appears to be some
way short of the picture suggested by the rules of the AA system.
There is evidence of a large group of potential AA awards which
are not made, because no claim is put forward. At least a third
of over-65s in the household population who are not receiving
disability benefit would be predicted to be successful if they
were to make a claim. This is a striking finding which is supported
by the fact that, of AA/DLA non-recipients in the FRS, 37% report
the existence of disability resulting in difficulties in at least
one area of life. Even among those so disabled as to be receiving
care day and night, fewer than 60% are recorded by the survey
as receiving AA. Similar, or even lower, rates of AA receipt are
observed for care recipients in ELSA and the BHPS. The debate
on reform of disability benefits and the care system appears to
have neglected the question of the extent to which the system
deters potentially eligible claimants from coming forward. We
have found no research into how many people who would be judged
entitled to state supported social care, fail to come forward
AA/DLA RECEIPT IS
A forthcoming discussion paper (Morciano et
al., forthcoming) describes out analysis in detail. Emerging findings
Finding 5. Because high-income people
have a lower propensity to claim AA and a lower incidence of severe
disability, there is a degree of targeting of AA towards low-income
peoplealthough this is less pronounced than for the explicitly
means-tested Pension Credit system. For example, around 25% of
people in the bottom fifth of the distribution of original equivalent
receive AA, compared with just over 50% for Pension Credit (Figure
RATES OF RECEIPT OF PENSION CREDIT AND ATTENDANCE
ALLOWANCE/DISABILITY LIVING ALLOWANCE AMONGST PEOPLE AGED 65+,
AGAINST EQUIVALENT INCOME BEFORE MEANS-TESTED AND DISABILITY BENEFITS
(FAMILY RESOURCES SURVEY 2002/03-2004/05).
Finding 6. Of those receiving any AA,
and taking account of the level of disability, people on lower
incomes and those without any savings are more likely to be receiving
the higher than the lower rate of AA. Thus, within the group of
AA recipients, there is evidence of further income targeting in
the pattern of benefit receipt.
Finding 7. When we consider not only limitations
in activities of daily living, but also all the other indicators
of disability and ill-health available in ELSA, we find negligible
numbers of AA/DLA recipients who are healthy on all measures.
In the 2002-03 wave of ELSA, we identified 154 respondents aged
65+ (corresponding to approximately 220 thousand in the population
of England as a whole) who reported income from AA/DLA but reported
no difficulties in activities of daily living. When people who
have limitations in instrumental activities of daily living (such
as preparing a hot meal, doing work around the house or garden,
taking medications) and difficulties in domains of life (such
as walking 100 yards, climbing stairs without resting, getting
up form a chair after sitting for long periods) are included this
number falls to 26. Of these, 20 report at least one of the following
medical conditions: high blood pressure or hypertension; diabetes;
chronic lung disease such as chronic bronchitis or emphysema,
arthritis and/or osteoporosis; cancer or malignant tumour. Of
the six remaining cases, two were not receiving AA/DLA at the
next wave of ELSA. Consequently, there is no evidence from this
analysis of significant numbers of people receiving AA/DLA long
term without an accompanying health problem.
Finding 8. Receipt of AA/DLA is strongly
related to disability. The estimated probability of receipt for
people in the lowest 20% of the distribution of the underlying
disability index is zero, but this rises steeply in the top 20%
of the distribution (Figure 2).
RECEIPT OF AA/DLA AMONG PEOPLE AGED 65+ AGAINST
DECILE OF DISABILITY, FRS, ELSA, BHPS 2002-03.
13. Our preliminary interpretation of these
findings is that they support the view that there is a role for
cash benefits like Attendance Allowance within the system of support
for older disabled people. There is a significant problem of delivery
of these benefits to those who might qualify for them, but we
see no reason to believe that a system based purely on direct
provision of care services would be more effective in its delivery.
The strong disability gradient of claim behaviour suggests that
a large proportion of potential beneficiaries do see cash benefits
as a valuable form of support which is worth the considerable
effort of claiming.
14. Evidence from FRS data suggests that
the systems of AA/DLA and LA home care are quite different in
their coverage of the older disabled population. Of those who
receive LA home care, 34% receive no DLA/AA, while among DLA/AA
recipients, 86% receive no LA care services.
Of people who are receiving night-and-day care from any source,
24% receive no DLA/AA payments and 87% receive no LA care services.
It is sometimes suggested that the AA/DLA system is less well
targeted than LA support, so that shifting of resources from cash
benefits to LA care would improve targeting of support for older
disabled people. This simple argument is not supported by the
survey evidence, which suggests that LA care and AA/DLA payments
are differently targeted relative to needneither of them
15. What would be the consequence of removing
the DLA/AA cash benefits and using the savings to increase LA
home care provision? This question cannot be answered properly
without consideration of uncertaintiesboth systemic and
uncertainties faced by individuals in need of support. The policy
debate and research on which it rests has largely neglected the
important issue of risk.
16. Individual uncertainty (risk)
arises from the variations inherent in any disability assessment
procedure, where "need" and "disability" are
matters of judgement. To a disabled person, applying for LA care
and also for AA/DLA is like buying two lottery tickets. Compared
to a unitary system with a single assessment procedure, this is
equivalent to spreading your resources across two tickets rather
than staking it all on onerisk is higher in a unitary system.
Annex 1 sets out a detailed example of a typical case under realistic
assumptions about the rates of error in LA and AA eligibility
assessments. If AA/DLA is abolished and re-directed to LA care
(a "unitary" system), the typical disabled person's
risk of receiving no support at all rises more than sixfold. The
general level of uncertainty
rises by over 20%. There may be some administrative cost savings
in switching from a dual-support system to a unitary system, but
the accompanying increase in the uncertainty faced by potential
applicants should be set against those savings. The increased
uncertainty will, in turn, reduce the likelihood that disabled
people will choose to apply for support.
17. Increased systemic risk comes
from the transfer of responsibilities from two bodies (DWP and
the LA) to a single care provider (the LA). Arguably, public scrutiny
of the political decisions on disability policy is stronger at
the national (DWP) level than at the local (LA) level. Consequently,
the policy risk is greater under a local unitary system. Moreover,
there is evidence of considerable variation across LAs in the
resourcing of care services and the way that eligibility assessments
are carried out (Commission for Social Care Inspectorate, 2008)
so a transfer of support from a uniform national source to a variable
local source will result in greater inequality of treatment (the
"postcode lottery"). This systemic aspect of risk is
hard to quantify, but it is potentially very important.
Finding 12. A reform that moves from the
current dual benefit + care system to a unitary care-only system
is likely to lead to a significant increase in the uncertainty
facing potential applicants for support.
18. Our work on this project is due to be
completed by 30 September 2010.We will keep the committee informed
of further findings as they emerge.
R and Hancock R (2008) "Disability Benefits and Paying for
Care" in Churchill N (Ed) Advancing opportunity: older
people and social care, London: The Smith Institute.
Commission for Social Care Inspectorate (2008) Cutting
the cake: CSCI review of eligibility criteria for social care,
London: Commission for Social Care Inspectorate.
Curtis, L (2009). Unit Costs of Health and Social
Care 2008. London: Personal Social Services Research Unit.
Department of Health (2009) "Shaping the Future
of Care Together" London: DH.
Department of Health (2009a) "Impact Assessment
of the Care and Support Green Paper" London: DH.
Forder, J and Fernandez, J-L (2009) "Analysing
the costs and benefits of social care funding arrangements in
England: technical report". London: LSE. PSSRU Discussion
Morciano M, Zantomio, F, Hancock R and Pudney S (forthcoming).
Measuring Disability Status in the Older Population; a multi-survey
latent variable approach. ISER working paper. Colchester: Institute
for Social and Economic Research, University of Essex.
Pudney, S. (2009) Participation in disability benefit
programmes: a partial identification analysis of the British Attendance
Allowance system. ISER working paper No. 2009-19. Colchester:
Institute for Social and Economic Research, University of Essex.
Pudney, S. (forthcoming) Disability Benefits for
Older People: how does the UK Attendance Allowance System Really
Work. ISER working paper. Colchester: Institute for Social and
Economic Research, University of Essex.
SSSC (1999) Select Committee on Social Security.
Third Report: Disability Living Allowance. London: House of
Commons, 3 February 1999. Available at http://www.parliament.the-stationery-office.co.uk/pa/cm199899/cmselect/cmsocsec/63/6302.htm
Wanless D, Forder J, Fernandez J-L et al. (2006)
"Securing Good Care for Older People: Taking a long-term
view" London: King's Fund.
Zantomio, F. (forthcoming) Older people's participation
in disability benefits: targeting, timing and financial wellbeing.
ISER working paper. Colchester: Institute for Social and Economic
Research, University of Essex
EXAMPLE OF INDIVIDUAL RISK UNDER DUAL AND
UNITARY CARE/BENEFIT SYSTEMS
Consider a person in great needwho should
therefore be judged entitled to both AA and to LA servicesand
who applies for both forms of support. Assume the relevant rates
of support are the lower rate of AA (£43.15 per week in 2007-08)
and 10 hours of LA home care, valued at £19.30 per hour (Curtis
2009, p. 38).
Under the current dual support system, this
person will experience one of four possible outcomes, depending
on the result of the two eligibility assessments: (i) no support
at all (£0 per week); (ii) AA only (£43.15 per week);
(iii) LA only (£193 per week); (iv) both AA and LA £236.15
per week). There is evidence of a high rate of error in eligibility
Suppose that, on average, 15% of LA assessments are wrong and
that the proportion of incorrect AA adjudications is 15% if LA
care is not received but only 5% if adjudicators know that LA
care is received.
Under these assumptions, the applicant has a 2.25% chance of getting
nothing, a 12.75% chance of receiving £43.15, a 4.25% chance
of receiving £193 and an 80.75% chance of getting the full
£236.15. The average outcome over a large number of similar
people, would be £204.40.
Now suppose that the system is replaced by a
unitary system of LA home care with a single eligibility assessment,
which has a 15% chance of an incorrect rejection of the claim.
If the reform is to be budget-neutral
it must offer this individual the prospect of care services to
the value of £240.47. Then, the applicant has a 15% chance
of receiving nothing and an 85% chance of receiving £240.47
(implying the same average amount of £204.40).
SUMMARISES THE DEGREE OF INDIVIDUAL UNCERTAINTY
INVOLVED IN THE TWO SYSTEMS:
(AA + LA
increase in risk
|Risk of receiving no support||0.0225
|General uncertainty (standard deviation of value of support)
LAs are permitted to take account of AA/DLA when means-testing
individuals for care services,
which would have the effect of reducing the total value of support
received when both assessments are positive. This would strengthen
the argument for a dual system: it would make no difference to
the risk of receiving no support and would reduce the level of
general uncertainty under the dual system.
This evidence updates and expands on evidence submitted by Stephen
Pudney to the Work and Pensions Select Committee's recent Inquiry
into Pensioner Poverty. Back
Corresponding author: Ruth Hancock: email@example.com Back
The work was supported by the Nuffield Foundation, a charitable
trust established by Lord Nuffield. Its widest charitable objective
is "the advancement of social well-being". The Foundation
has long had an interest in social welfare and has supported this
project to stimulate public discussion and policy development.
Support from the ESRC through the Research Centre on Micro-social
Change (MiSoC) at the University of Essex is also acknowledged.
The British Household Panel Survey data were originally collected
by MiSoC (now incorporated within the Institute for Social and
Economic Research) and made available through the UK Data Archive.
Data from the English Longitudinal Study of Ageing (ELSA), made
available through the UK Data Archive, were developed by researchers
based at University College London, the Institute for Fiscal Studies
and the National Centre for Social Research. Material from the
Family Resources Survey, made available from the Office for National
Statistics via the UK Data Archive, has been used with permission.
All responsibility for data analysis and interpretation, and views
expressed, rests with the authors. Back
Speech by Secretary of State for Health, Andy Burnham, to the
National Children and Adult Services conference, 22nd October
2009 (http://www.dh.gov.uk/en/News/Speeches/DH_107455). Back
Of the 2.4m people aged 65+ receiving either AA or DLA in February
2009, 0.8m (ie a third) received DLA (statistics obtained using
the DWP tabulator tool, available at http://220.127.116.11/100pc/dla/tabtool_dla.html. Back
Latent variable structural equation modelling. Back
Income before means-tested and disability benefits, assuming that
the cost of living for couples is 1.6 times that for single people. Back
Analysis of 2002/03-2004/05 Family Resources Survey, over-65s. Back
As measured by the standard deviation of the cash value of support. Back
Note that the 1999 Social Security Select Committee reported a
29% error rate for DLA assessments (SSSC 1999, para. 17). Back
There is a question about receipt of care services on the AA application
form, so this presumably strengthens the claim of need. Back
In other words, to have the same average cost for this type of
individual as the previous dual system. Back
Although they are required to make allowance for the additional
costs of disability. Back