Health CommitteeWritten evidence from The King’s Fund (SC 19)

1. The King’s Fund is a charity that seeks to understand how the health system in England can be improved. Using that insight, we help to shape policy, transform services and bring about behaviour change. Our work includes research, analysis, leadership development and service improvement. We also offer a wide range of resources to help everyone working in health to share knowledge, learning and ideas.


2. This submission focuses on the key issues emerging from our recent work on social care spending and the NHS, the Dilnot Commission and the integration of health and social care. In summary:

The need to secure a sustainable funding settlement for social care has never been more urgent, with local government and NHS finances under significant pressure and demand for services increasing as the population ages. The NHS will never work properly without a sustainable approach to social care funding.

The Dilnot report offers a credible and costed way forward – the government must move quickly to undertake detailed work on its recommendations and honour its pledge to publish a White Paper followed by legislation in 2012. There are some “quick wins” that would not involve substantial additional expenditure.

The adoption of the capped cost framework recommended by Dilnot offers a fairer and more transparent way of sharing the costs of care in a partnership between the individual and state. This will make it easier to tackle the deeper problem of under-funding that has led to tighter rationing of services and escalating levels of unmet need.

Arrangements for the economic regulation of adult social care to ensure continuity of care in the event of business failure should be reviewed in the light of the Southern Cross experience – a number of options should be considered to achieve a proportionate and risk-based approach.

Integrated care, based on stronger collaboration among professionals and better co-ordination between services, offers the most promising approach to improving care and meeting the key financial and demographic pressures facing both the local government and the NHS. However, progress so far in integrating health and social care has been patchy, despite emerging evidence that it offers significant opportunities to deliver better outcomes and financial savings. It is essential that the NHS and local authorities do more to pool resources and align services locally.

In the longer term, there is a compelling case for considering how the combined public expenditure on the NHS and social care in excess of £121 billion could be better planned and allocated.

The Government’s Plans for Funding Social Care

3. The squeeze on local authority budgets over the next four years will see a widening gap between needs and resources. As we indicated in our evidence to the Committee’s previous inquiry into public expenditure, despite the additional £2 billion announced in the Spending Review and the best intentions of local authorities to protect social care, a funding gap of at least £1.2 billion could open up by 2014 unless all councils can achieve unprecedented efficiency savings. Since then, the ADASS budget survey shows that there will be almost £1 billion less in adult social services budgets this year, of which councils aim to recover £681 million from efficiency savings. This is a very ambitious target when taking account of efficiencies already achieved in recent years.

4. The King’s Fund welcomes the Dilnot report. While further work is required on the detail, it offers the prospect of a lasting settlement based on a partnership approach in which costs are shared between the individual and the state in an open and transparent way – a principle we have long argued for. The need to secure a sustainable long-term funding settlement for social care has never been more urgent, so it is disappointing that the timetable appears to have slipped. The government must move quickly to bring together its response to the Dilnot report and the Law Commission Review of Adult Social Care Law into a single wide-ranging plan for the reform of social care funding and delivery and ensure there is no further delay in honouring its pledge to publish a white paper followed by legislation in 2012.

5. The proposals to cap individual liability for the costs of care and to raise the upper threshold for the means test would represent a substantial improvement on the current system and ensure that people in every income group are better off. This would avoid placing disproportionate costs on the taxpayer, compared to the costs of providing free personal care, while protecting people from the worst excesses of the current system and the cliff-edge of the present means-testing arrangements. Raising the upper threshold of the means test to £100,000 would involve a relatively modest cost of £100 million. These changes would particularly benefit those on modest incomes, who are heavily penalised under the current system. The level of the contribution to general living costs – suggested at between £7,000 and £10,000 a year – and how this is balanced with the level of the cap will also be important in determining the cost of the proposals and the affordability to individuals.

6. The additional costs of implementing this capped cost model – £1.7 billion, rising to £3.6 billion by 2025-26 – relate to the additional costs of implementing the new proposals only. The Commission acknowledges that the current system is underfunded and has not kept pace with demographic changes in relation to working age adults and older people. The overall level of resources required by the current system was outside the Commission’s terms of reference, but the report makes clear that in addition to funding for the new proposals, “additional public funding for the means-tested system” will also be needed. Unless this is addressed, many of the well-chronicled problems with the current system will continue, including escalating levels of unmet need and underinvestment in preventive support. The Commission’s view is that until the current assessment system is replaced entitlement to local authority funded services should be set at “substantial” or above under the current Fair Access to Care Services (FACS) criteria.

7. While we welcome the proposal that eligibility for social care should be set nationally, replacing the FACS criteria with a new assessment measure may create difficulties in reconciling a new national “offer” with the realities of wide variations in spending and resource levels across 152 local authorities. Having a portable assessment may not entitle someone to the same level of service should they move to another local authority area.

8. The profound difficulties of identifying new resources in the current economic and fiscal climate are recognised and this supports the recommendation of our 2010 review for a staged, long term approach to reform. However, the level of additional resources – both to implement Dilnot and to tackle unmet need – should be viewed against overall public spending on older people of £140 billion and total public spending of just under £700 billion – and would amount to around 0.5% of GDP. The recent decision of the government to find—apparently outside of the spending review—£1 billion for weekly council refuse collections and to freeze council tax – is a reminder that the primary issue is one of relative political priorities rather than absolute affordability.

9. In view of current concerns about the wider economy and the implications for public finances, it is timely to emphasise the economic case for investment in social care. Public spending on this area current represents 1.2% of GDP, the majority of which is expended through wages and salaries of the 1.5 million people who work in a sector that is not characterised by high levels of pay. Any additional investment therefore could create a significant multiplier effect. Further economic benefits could be expected from better social care support for carers and for people with disabilities that would increase the likelihood of retaining employment.

10. The proposal to cap individual liability for care costs would significantly ease boundary disputes between means-tested social care and NHS continuing health care, which is free at the point of use. The Dilnot report recognises that the assessment process for continuing care will need to be reviewed in light of the proposed national eligibility framework for social care, and how the proposed new, more objective assessment tool for social care would operate alongside existing assessment processes for continuing care. The Commission strongly supports the Law Commission’s recommendation to put NHS continuing health care on a stronger statutory footing.

11. There are some immediate steps that could be taken without requiring substantial additional resources. These include: the raising of the upper threshold of the means test for residential care to £100,000; the introduction of a universal deferred payment scheme that would help detoxify the issue of people selling their homes to pay for care; and work to develop comprehensive information and advice services to everyone with care and support needs and not just those entitled to publicly funded services.

Economic Regulation of the Social Care System

12. The recent case of Southern Cross has highlighted the need to consider whether existing arrangements to ensure continuity of care are adequate. Already over 75% of adult social care provision is provided by at least 40,000 private and independent providers. This care is commissioned by local authorities; private individuals with their own funds or with direct payments and by primary care trusts. It is a relatively stable business sector, with approximately 17,500 care homes, of which it is estimated that just 175 were de-registered in 2009-10.

13. A specific objective of government policy is to promote a dynamic, pluralistic market that responds innovatively to individual needs. Those that struggle to achieve this or offer poor quality care will be displaced by new providers. A degree of turnover is inevitable and thus arrangements should be in place to protect threats to individual care arrangements that arise from business failure as well as failure to meet care standards.

14. The characteristics and context of the adult social care market represent are fundamentally different to the NHS, so a model of economic regulation based on the proposed role of Monitor for any qualified providers in health care may not be appropriate. Existing arrangements for the closure of individual care homes generally appear to work well, with the local authority working collaboratively with the CQC and other providers to ensure that no-one is left without the care they need. This suggests that the focus of any new arrangements should be risk-based and proportionate, for example applying to providers who exceed a certain size or market share, especially where these transcend local authority boundaries.

15. A range of additional measures could be considered including strengthening the existing powers of CQC to assess and monitor business viability; developing the role of local authority commissioners in assessing the financial resilience of potential providers; a clearer role for local authorities in overseeing their local market, perhaps in collaboration with the regulator; better money advice for individuals who self-fund their own care; and/or the development of a national protocol that sets out the respective roles and responsibilities of the Department of Health, local authorities, the regulator, and the care industry. This could draw on the lessons learnt in managing the consequences of Southern Cross.

The Integration of Health and Social Care

16. Integrated care has been a recurrent goal of public policy under successive governments for more than 40 years. The Dilnot Commission called for improved integration of health and social care in order to deliver better outcomes for individuals and value for money for the state. We agree that the integration of health and social care is central to meeting the challenges faced by the NHS and social care systems and have set out the inter-dependency of the two systems in more detail elsewhere (Humphries, 2011).

17. Integration can take different forms and at different levels. Our recent assessment of the national and international evidence concluded there is no “one” best way of delivering integrated care. Structural or organisational routes to integration will not deliver benefits unless preceded by other changes such as new ways of working and clinical or service integration. There are some good examples in the area of care for older people, for example, analysis of Torbay’s Integrated Care Project (Thistlethwaite 2011) has highlighted low rates of emergency admissions, emergency bed day use and discharges into residential care compared with other areas in the South West.

18. Successful examples remain isolated, and there are wide variations in progress and performance from one place to another. For a variety of reasons local examples of success have not been replicated at scale throughout the country, with less than 5% of NHS and social care budgets are subject to joint arrangements. A more ambitious approach is required. This should avoid an over-prescription by central government, with the emphasis instead on developing financial, performance and outcome frameworks that create incentives to integrate care.

19. More attention could be focused on aligning the total spend across the NHS and social care—now in excess of £120 billion—around the needs of patients and service users through mechanisms such as joint agreements, pooled budgets and place-based approaches (including work begun under the “Total Place” programme). The identification in the Spending Review of £1 billion within the NHS budget for beneficial spending on social care is a welcome first step and should encourage interest from NHS commissioners in the benefits to the NHS of different kinds of investment in social care services.

20. We welcome the amendments that have been made to the Health and Social Care Bill to promote integration. The proposed duty for clinical commissioning groups (CCGs) to promote integrated care provides an opportunity for local initiatives to be clinically driven. It will be important for CCGs and local authorities to work in partnership through local health and wellbeing boards. The proposed health and wellbeing strategies and enhanced joint strategic needs assessments offer a mechanism by which the commissioning and planning of services can be better coordinated across health and local government boundaries. Our work with local authorities and their partners suggests the emergence of new conversations and relationships between GPs and local government. The government has indicated that CCG boundaries should not now cross those of local authorities, unless this can be justified in terms of benefits to patients. This is a positive development—co-terminosity is an important factor in aligning plans and resources.

21. However, these opportunities may be undermined by other consequences of the NHS reforms. There is clear evidence that the key to delivering integration is stable leadership and time to allow for the evolution vision and trust between local partners. We are concerned that this will be disrupted by the complex organisational changes set in train by the changes. For example, the advent of clinical commissioning groups and the move to PCT clusters potentially threatens the shared management arrangements which have developed between some local authorities and PCTs.

22. The NHS Future Forum argued that “we need to move beyond arguing for integration … to making it happen” and this has become part of the next stage of its work. To support this, The King’s Fund is working with the Nuffield Trust to help develop a national strategy for the promotion of integrated care at scale and pace in local communities. The joint project will:

Identify ways to overcome barriers to integrated care, which can include current NHS policy and management rules and practices;

Support the development of integrated care at a large scale and at pace;

Test ideas with health and social care professionals at the front line; and

Analyse the published evidence about what works in delivering integrated care, including the policy and management characteristics of successful examples.

The findings from this work will be submitted to the Department of Health and the NHS Future Forum, and we would be happy to share them with the Committee.


Social care funding and the NHS: An impending crisis? Humphries (2011). London: The King’s Fund

Integrating health and social care in Torbay: Improving care for Mrs Smith. Thistlethwaite (2011). London: The King’s Fund

October 2011

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Prepared 7th February 2012