Social Care - Health Committee Contents

Examination of Witnesses (Question Numbers 800-819)



  Q800  Charlotte Atkins: Thank you. You both say in your memos that social care is underfunded. How much is it underfunded and how do you calculate that?

  Councillor Sir Jeremy Beecham: We can start with Alan Johnson's prediction that by 2020 there will be a £6 billion gap in funding. That was predicated on the current level of needs, but as we all know demography and medical advances are likely to increase that. Another way of looking at it is that an LSE study forecasts that we need over 3% real terms growth every year to keep pace with those trends. There does seem to be a very significant gap, and of course that covers both the health and adult social care services provision within local government.

  Q801  Charlotte Atkins: What proportion of local government spending currently goes on social care?

  Councillor Sir Jeremy Beecham: It partly depends on how you define local government spending. Taking the totality it is about 13% but it is a much higher proportion of what local authorities have discretion over because within the total expenditure there are vast amounts of direct grants, particularly in education. Adult services in social care would be the largest item in the expenditure of most upper tier authorities (unitary and county authorities) by a considerable margin.

  Q802  Charlotte Atkins: Obviously you will have heard that the state of public finances are going to be heading into tough times. What will that mean in terms of preparations for budgets for social care?

  Councillor Sir Jeremy Beecham: In any event councils are having to, and are succeeding, in generating efficiency savings. Many councils are re-engineering the way that services are provided, including adult care services. One of the necessary features to bear in mind here is that we have to move to a more "whole systems" approach, so we have to look at both health expenditure on social care and local authority adult services expenditure. Local authority adult services expenditure is only about one-seventh of the NHS total budget. In addition however, to, as it were, direct provision through adult services, local authorities also of course support a range of services which impinge substantially upon the clients in question. Whether that is housing, leisure, transport or education, there is a range of services which apply to that group, and of course that group itself is two-thirds people of pensionable age like me and one-third of younger people, so it is a very diverse population that we are looking at.

  Q803  Charlotte Atkins: Jenny, would you like to come in.

  Ms Owen: I would obviously agree with that, but perhaps I could add a couple of points. First, the Green Paper The Future of Care and Support talks about a £5 billion funding gap that we are going to be looking at in the future, and I think it is important to state not what the funding gap looks like now but thinking about what we are going to be heading into with the big demographic changes that are clearly coming into place. £5 billion is a round figure, a big figure, so look at that. In terms of the local authorities funding of social care, it is also worth noting how much of that can come from local council tax. There is a big variation but, on average, 39% of social care costs are funded by local government through council tax, and in some places it is up to 80%, so there is a significant amount of money that comes from local funding, from local taxation. Your final point was about how we are managing with the economic downturn and the squeeze on budgets.

  Q804  Charlotte Atkins: Yes, the preparations you are making for the tough times ahead in social care budgets.

  Ms Owen: I know from my colleagues nationally, colleague directors across the county, that we are all looking at very significant budget gaps between what we are looking at and what the current costs are, and looking at the demographic pressures. There are very significant gaps that we need to be managing and there is a whole range of activities going on in looking at every bit of efficiency that we can find, looking at how we can do things differently, integration, taking money from back-office costs, lots of work which is broadly labelled "Transformation activity" but which is really trying to do things in a more cost-effective way, because there are very significant concerns about that.

  Q805  Charlotte Atkins: You were talking about a big variation across councils for the cost of social care. What is that down to?

  Ms Owen: I was talking about the very big variation between the costs that are funded through local council tax. There is a number of reason for the variation in terms of costs between councils. Clearly there are differences between regional variations, the costs in the market, the costs that you have to provide care, the amount of costs for staffing and wages and so on, and we know there is a very big variation between how we spend our money.

  Councillor Sir Jeremy Beecham: There is a slightly worrying trend in terms of commissioning, because there is a temptation in commissioning to look to reduce the costs of, for example, domiciliary services. I know in my own authority significant moves have been made there and the outcome of that is that the outsourced staff are being paid at or just above minimum wage to quite a significant degree less than they would have enjoyed with the local authority, and it does raise questions about workforce planning and whether you can attract and retain people with the right skills. That is a concern, but councils are often being driven in that direction.

  Charlotte Atkins: Thank you.

  Q806  Stephen Hesford: The Green Papers sets out funding options. Which, if any, do you favour?

  Councillor Sir Jeremy Beecham: The LGA does not have a position on which of the options it favours, but personally I lean towards the compulsory insurance model. We have not really taken a view about at. Our prime concern is that which Jenny and I have both touched on, pointed to by the Chairman, which is the totality of funding.

  Q807  Stephen Hesford: Can I ask why the LGA does not have a position?

  Councillor Sir Jeremy Beecham: Because our concern is primarily about the totality of the funding. There will be further debate about how it is to be provided. For us, the main thing is to ensure that the quantum is right, and particularly, as I say, that we look at the whole systems approach, which involves the NHS funding. One of the great gains in the proposals around free personal care, about which there are of course still numerous questions to be answered, is that this does get the NHS firmly into the game of effective partnership with local councils in a way that perhaps we have not seen since joint finance projects expired sometime in the 1980s, I think it was. It has not really happened to a significant extent since then and it is potentially a very important step forward. After that, how it is funded of course, in terms of the balance between tax and contributions, is a wider issue, but from the service perspective, the crucial thing is to get that effective partnership and NHS resource into the provision.

  Q808  Stephen Hesford: Jenny, which model?

  Ms Owen: ADASS does not want to rule out entirely the tax-funded option. We thought it was ruled out too soon and that it needs a bit more looking at.

  Q809  Stephen Hesford: Are you lobbying us to put that back in?

  Ms Owen: I think it should be looked at again and not be dismissed. If, once you have done that, you dismiss it and it is a range of the other options, the most important thing for us is that enough money gets in the system, and the model that we think will get enough money in the system is the comprehensive insurance model. That is what we are supporting, for that reason.

  Q810  Mr Scott: The Green Paper proposes either a fully national model or a part local/part national model. What would your response to that be?

  Ms Owen: You are not quite touching on this, but perhaps I could first of all say that we absolutely support the notion of a national assessment, the portability of assessments. That is one part of a national system: that if you have an assessment it should be consistent nationally and people should be able to move with it.

  Q811  Mr Scott: That is the next question. We will be coming to that.

  Ms Owen: Okay. On the second part, which is about how the funding should be delivered—Should it be nationally determined? How much money there should be for that assessment? Should it be locally determined?—we have a position here where you can see the advantages and disadvantage of both systems. We are saying that there are significant advantages in having a part local system. As I was just saying, in some places 80% of social care is funded through local government tax. There is a democratic accountability. You can tie it in and work closely with your partners in the locality; you can work closely with the NHS, primary care trusts, GPs; you can work very closely with other services provided by councils that are really important to people's lives: transport, universal services and all of those things. It is very hard if you do not have that locally driven. However, we know that a lot of people find this inconsistency between what you get in one place and what you get in another, what you are allocated in terms of the funding, is very difficult. We would say that if the Government was going to introduce a national system of funding—so that there would be this amount of money, an entitlement, and it would be nationally determined—then the risk about how affordable that is should be held nationally. We have seen this before, in the past, around residential care and social security payments. Local government is very good at getting a finite budget, a determined amount of cash and working within that budget. We take the risk of demands and the amount of money not working terribly well—the demands are much more than the money we have—and we try to make that pot work. If you have a national funding entitlement, then there is a risk that the control of that money is nationally held.

  Q812  Mr Scott: Would it not be, at the moment, that there could be accusations, depending on where you are in the country, that it is a postcode lottery.

  Ms Owen: Yes.

  Q813  Mr Scott: You will get a great service on one side of the high street and not such a great service on the other side because it is a different council. A national system would in theory stop that, would it not?

  Ms Owen: That is exactly what people say and what they do not like about a locally determined level of funding, because it will be different. That is absolutely clear. However, nationally there is a level of funding available, and the costs escalate. The costs of residential care funding, because it was held nationally, escalated over ten years tenfold because there was no cap on it. It is a very interesting question that the Government are considering doing this again. There is an issue about that. However, on the other hand, there is another issue which it is important to consider. It is not jut the funding that would go into somebody's personal budget or their care allowance, you also have to provide funding for preventative work, for those universal services that need to be delivered locally. I think it is quite a complex system when you start thinking about national.

  Q814  Mr Scott: Sir Jeremy, what in your view would be an ideal balance between local and national funding?

  Councillor Sir Jeremy Beecham: The concept is best described by looking at a national care guarantee rather than talking about a national care service, so that you have that basic entitlement wherever you are. How it is delivered will depend on local circumstances and local choice, of course reinforced by local accountability. After all, we have had the National Health Service for 60 years and, arguably, we have not eliminated the postcode lottery there. Sometimes I have been tempted to form a society for the preservation of the postcode lottery because I do think you have to respect local differences, not only in demand but how you meet that demand, and so you need a system which is flexible enough to allow you to engage with other partners, the third sector perhaps, in particular, to commission appropriately and to offer choice. You cannot do that in a monolithic bureaucratic structure, so you do need to have the framework of a national care guarantee and then that is delivered locally. As to the balance of funding, there is an issue here too, because if the funding were to go national, that would have a significant effect on the gearing that would affect local authorities. Already it is 75% central funding/25% local funding, so a 1% increase in a council's expenditure translates at the moment, on that gearing, into a 4% increase in council tax. The more you push towards the centre, the greater the impact on local council tax of any other decisions that you might be making, including those on services which are not within that national funding: housing, transport and the other things that Jenny and I have both referred to. There is an additional potential downside to, as it were, nationalising the funding in the way that has, for example, happened to the funding of schools, but I do not want to reopen that particular argument. The system, basically, would be a national care guarantee, locally delivered, locally accountable, and based very much on local authorities working in partnership with NHS, carers and third sector and, indeed, private sector organisations.

  Q815  Dr Taylor: Before I move on, I am delighted to hear you say, Jenny, that the tax-funded option should perhaps remain. That was very much the message from our previous witnesses. They disagreed with the assumption that we cannot ask for more cash from the working age principle, provided people can trust that they will get help when they need it, which I thought was absolutely crucial. To move on to the nationally-uniform assessment, ADASS says that "The Single Assessment process has not been fully embedded across the Health and Social Care System and needs to be in order to underpin [this] agenda." Why will a new model work when this has been in place since 2001?

  Ms Owen: The Single Assessment System is a single assessment across health and social care. Although there were different models that you could use, you would work on your single assessment in every locality between health and social care. It was not a single national assessment that worked across the country; it was different in every place, depending on what kind of system you used and the basis for it. The reasons that single assessment between health and social care has not worked very well across the country are many and varied but one of them is not having compatible IT systems. We still do not have IT systems that talk to each other.

  Q816  Dr Taylor: As basic as that.

  Ms Owen: It is really basic stuff, yes. There is a specific thing about that, but the principle about having a single assessment linked to a national assessment really is the same. If you have a national assessment, you agree that assessment criteria. You are still going to have people completing that assessment, and those assessments are between the social care professional and the individual. You would not have a scientific absolute correlation—and I cannot believe that will ever be the case—but you can create a national assessment system where the same questions, the same criteria are used, in the sort of way that we have the FAC (Fair Access to Care) criteria at the moment.

  Q817  Dr Taylor: Do you see computer systems becoming compatible at any time?

  Ms Owen: Between health and social care?

  Q818  Dr Taylor: Yes.

  Ms Owen: I hope before I die!

  Q819  Dr Taylor: Presumably you would be in favour of something this Committee has suggested for a long time, that there should be some merging of social care and health budgets.

  Ms Owen: I think we all would agree there must be greater integration of working between health and social care. How that looks? I do not favour, personally, just structural solutions—I think it is more complicated than that—but greater integrated working and the systems and processes that underpin that are important.

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