Long term funding of adult social care Contents

Conclusions and recommendations

The state of social care

1.Authoritative sources in the social care sector say that, despite the additional funding, there will be a funding gap of £2.2–£2.5 billion in 2019–20. Before further reform of the system can be contemplated, the funding gap must be closed. Upfront funding will also be needed for transformation issues. The issue of backdated pay for sleep-ins also presents an immediate risk to organisations’ financial stability and must be addressed urgently. (Paragraph 20)

2.Before further reform of the system can be contemplated, the funding gap must be closed. Upfront funding will also be needed for transformation issues. (Paragraph 20)

3.The combination of rising demand and costs in the face of reductions in funding has placed the social care system under very great and unsustainable strain. In its present state, the system is not fit to respond to the demographic trends of the future. Of greatest concern, is the fact that the very people the system is there to support get only the care they need to survive, rather than the care they need to live full and independent lives. (Paragraph 30)

Principles for funding social care

4.After successive attempts at reform, and in the context of an unrelenting increase in demographic pressures, the social care Green Paper must be the catalyst for achieving a fair, long-term and sustainable settlement. (Paragraph 30)

5.Principle 1—Good quality care:

Funding should be sufficient to achieve the aims of social care, which are to promote a person’s wellbeing, independence and dignity, and enable them to exercise choice and control over the way their live their life. This will require universal provision of high quality, personalised care delivered by a stable well-paid and well-trained workforce alongside well-supported carers to a wider group of people than currently receives care, all within a navigable and accessible system. It should also aim to address the current levels of unmet and under-met need. (Paragraph 36)

6.Principle 2—Considering working age adults as well as older people:

The social care Green Paper is focusing on older people. However, provision of care for working age adults amounts to over half of all spending on social care and is set to grow in future years. To be sustainable, reforms to social care funding, including decisions on where the funding should come from, need to take into account the costs of meeting the needs of working age adults. At the very least, the Green Paper should be closely linked with the parallel programme for working age adults, clearly setting out how its proposals impact on funding for that age group. The Green Paper should consider both. (Paragraph 38)

7.Principle 3—Ensuring fairness between the generations:

Intergenerational fairness needs to be addressed. Contributions towards the cost of care should be fairly distributed between generations. Some older people who stand to be the main beneficiaries of increased spending on social care may be relatively wealthy, with housing assets, savings and pensions, compared to younger generations. Young people often face higher housing costs, less stable employment and less generous pensions, and may be paying back student loans or have family commitments. Life expectancy has increased, which is a cause for celebration, but which again has implications for the balance of contributions between different age groups. Working age employed adults are a shrinking proportion of the total adult population. For these reasons, older people could be expected to continue, while taking into account the fact that they have contributed throughout their working lives via taxation. However, over the longer term, the distribution of wealth between the different age groups may change, with corresponding implications for fairness, suggesting that a flexible solution is required. (Paragraph 40)

8.Principle 4—Aspiring over time towards universal access to personal care free at the point of delivery:

Currently, the burden of the cost falls on individuals in an unfair distribution depending on diagnoses—particularly those paying for dementia care, the costs of which can be extremely high. The balance needs to be redressed, aspiring over time and moving towards, as funding permits, universal access to sustainably funded social care, free at the point of delivery. (Paragraph 42)

9.Principle 5—Risk pooling—protecting people from catastrophic costs, and protecting a greater portion of their savings and assets:

People want to be protected from the lottery of incurring catastrophic care costs, and to feel secure that they will be able to keep a greater proportion of their savings and assets. A cap on the amount of care costs a person paid would pool the risk, distributing the costs of very high care needs across the society. The level of protection (and therefore the costs of this policy) would depend on the level at which the cap is set, and determining this figure requires financial modelling and extensive consultation. Raising the means test threshold (the ‘floor’) is another way of enabling people to keep a greater proportion of their assets; again, the costs would be shared across society. Providing free at point of delivery care for those assessed as having critical or substantial care needs would be another way of protecting people from this risk. (Paragraph 44)

10.Principle 6—‘Earmarked’ payments:

People are generally willing to contribute more to pay for social care if they can be assured that the money will be spent on this purpose. ‘Earmarking’ taxation can help to give confidence and accountability over spending. (Paragraph 46)

Options for funding social care

11.A significant amount of extra funding is needed to maintain provision of social care at its current level, in the order of many billions of pounds over the next ten to twenty years. However, to ensure good care and a stable and quality workforce, the level of funding required may be much higher. (Paragraph 73)

12.Costings of future provision of social care need to begin with a clear articulation of what good care looks like and costs for both older adults and working age adults—simply extending the current, inadequate provision of social care to more people is not a tenable long-term position. The Care Act 2014 provides a basis for determining good care. The starting point for the reform process must be to build on this, determining—in conjunction with service users, carers, care providers and care workers—what good care entails. (Paragraph 74)

13.In the long term, an independent body should be tasked with modelling the amount of funding needed by social care in the future and ensuring funding keeps pace with need, providing the Government with two yearly forecasts of needs and funding requirements. This is in line with the recommendation made by the House of Lords Committee on the Long-term Sustainability of the NHS for an independent ‘Office for Health and Care Sustainability’ to advise on all matters relating to the long-term sustainability of health and social care. (Paragraph 75)

14.Many commentators expressed the view that if we were beginning with a ‘clean sheet of paper’, it is unlikely that we would design the current system of divisions between health and social care. The difficulties with Continuing Healthcare (CHC) funding—the system through which social care is paid for by the NHS for a small number of people with high health and social care needs—illustrate the problems of setting a hard boundary between health and social care. Only around half of those who apply for CHC funding eventually get it, decision making about eligibility is inconsistent across the country, and the ‘cliff edge’ between those qualify and those who do not has been an ongoing source of distress for families, as well as leading to costly and distressing appeals and legal challenges. (Paragraph 76)

15.While some of the evidence we received supported the idea of a social care system free at the point of use, like the NHS, others felt that a balance of responsibility between the state and the individual was appropriate. Our Citizens’ Assembly members expressed strong support for a social care system that was free at the point of use, like the NHS. Clearly, funding a social care system entirely free at the point of use would increase costs substantially and is unlikely to be affordable immediately. However, we support the provision of social care free at the point of delivery as a long-term direction of travel. In principle, we believe that the personal care element of social care should be delivered free at the point of use to everyone who has the need for it, but that accommodation costs should continue to be paid on a means-tested basis. The aim should be to work to achieve this ideal and to see a gradual transfer of financial responsibility for social care away from the individual at the point of need, making it free at the point of delivery. This should begin by extending free personal care to those deemed to have ‘critical’ needs. However, particularly for younger adults, it is essential that social care is viewed more holistically and funding for ‘preventative’ social care for adults with moderate social care needs is reinstated. (Paragraph 77)

16.We recommend that people who receive social care should be allowed to receive direct cash payments to enable them to pay carers, including family carers, to help those families who prefer to care for loved ones themselves at home. (Paragraph 78)

17.There is a clear need for increased funding for social care. Given the scale of the additional funding likely to be needed, a combination of different revenue-raising options will need to be employed, at both a local but also a national level. Combining different revenue streams also has the advantage of enabling a more tailored approach, with people contributing to social care in different ways at different points in their lives. (Paragraph 88)

At local level:

18.There should be a continuation for the foreseeable future of the existing local government revenue streams. In 2020, these funding streams should be enhanced through 75% business rate retention. This should be used to fund social care rather than the replacement of grants the Government is proposing to introduce. While business rates revenue is poorly matched with social care funding needs, it is a source of funding expected to come to councils in 2020. We welcome the fact that the Government is currently working to review and update the formula which determines how revenue is redistributed according to need. (Paragraph 89)

19.In the medium term, there should be a reform of the council tax valuations and bands to bring them up-to-date. (Paragraph 90)

20.In the future, as other funding streams develop, the contribution from council tax and business rates to social care funding could reduce, allowing councils to better fund other important services. (Paragraph 91)

At a national level:

21.Local government funding will only ever be one part of the solution for social care, and it is clear that extra revenue will also need to be raised nationally. (Paragraph 92)

22.We heard strong support for the principle of earmarking tax—it was felt that establishing a visible fund for people to contribute to that is clearly, transparently and accountably linked to spending on social care is key to gaining public acceptance for this measure. The proposals for a long-term care insurance scheme in Germany won support from the public there for similar reasons. (Paragraph 93)

23.We therefore recommend that an earmarked contribution, described as a ‘Social Care Premium’, should be introduced, to which individuals and employers should contribute. This can either be as an addition to National Insurance, or through a separate mechanism similar to the German model. The Social Care Premium could be managed by central government, and audited by the National Audit Office, or managed separately by a statutory body or not for profit insurance based funds, as is the case in Germany.

Published: 27 June 2018