3Longer term reform of social care funding
74.Unlike the NHS, social care in England is not free for all those who need it. People who have savings over a modest threshold, or who own their own property, will need to use their savings and potentially sell their home to fund their care. According to the Alzheimer’s Society, the total cost of care for people living with dementia is typically £100,000, but that cost can rise to as much as £500,000. Two-thirds of this cost is currently being paid by people with dementia and their families, either in unpaid care or in paying for private social care. The risk of that level of cost is high; one in ten over 65s will pay more than £100,000 for their care.108 In addition, the means-tested system has also led to a situation where the care home market relies on significant cross subsidy between care-home residents paying for themselves and those who are funded by their local authority. On average, a self-funder’s care home place costs around 40 per cent more than one paid for by the local authority.109
The impact on people who need social care
75.During the course of this inquiry, we were given vivid descriptions of the impact the current social care funding system by from people who use social care, and their families.
Unfair distinction
76.Deborah’s husband Atherton, who worked for the NHS as a doctor, was diagnosed with dementia in his 60s. She described the profound unfairness faced by those who are diagnosed with this devastating illness, and can find themselves without any financial support:
My husband was a doctor in the NHS. He was really proud to be a doctor in the NHS. He spent his whole life paying his national insurance, in the knowledge that when it was his turn the NHS would take care of him, but it hasn’t.
He was a poet. He had vigorous interests in astronomy, the arts and philosophy. Now, he is unable to utter a couple of words at a time. He has seizures and falls. He is doubly incontinent. He doesn’t recognise his own children.
Dementia is not just a matter of ageing. Liver failure is not like that. Cancer is not like that. It is the unfairness of the treatment of somebody with dementia that makes me really angry. It is like picking up a random card from a pack and saying, “Oh, you’ve got this particular one. Tough. That’s the disease the NHS isn’t going to pay for.”110
77.Deborah’s words were echoed by Lord Forsyth, Chair of the cross-party Lords Economic Affairs Committee whose report on the funding of social care was published last year:
We need to deal with the issue that basic care is being charged for certain types of condition and not for others, as you have just heard. If you have dementia or motor neurone disease, you get no free care. If you have cancer, you get free care.
I believe in the principles of the health service, which are that you should be able to get care according to need regardless of ability to pay. I do not understand how it can be right that someone with motor neurone disease is not treated in exactly the same way as someone with cancer … The false distinction, and the hardship and stress it causes to families, is something I find intolerable.111
Choosing your care according to price
78.Pamela King described the experience of supporting her sister, Diana, to make arrangements to pay for the long term care she needed after suffering a stroke. She told us how, as a self-funder, her sister’s choice of care provider was restricted by what she could afford–a dilemma not faced by people accessing NHS services:
I found from experience that the cheapest home I could find in our Leicestershire area was £650 a week. Hers is currently £712. There are many more at £800 or £1,000 a week. The one she wanted to go to, and asked to go to, was between £1,000 and £1,100 a week. I had to say to her, “I’m sorry, but you can’t.”112
Demeaning financial assessment
79.Drawing on his experiences, Kevin Caulfield also told us that he felt it was demeaning to be subject to a financial assessment at a very vulnerable time in your life:
The financial assessment process is often demeaning. It comes at a point in people’s lives when they need support and peace and tranquility. Instead, what happens is that you move further and further away from that. Overnight, my life changed in terms of me needing state support to live independently. I cannot survive without that support, but then you start on a whole process of taking you further away in terms of the additional burdens that are placed on you as an individual to navigate the system and deal with the assessment and charging process.
It reinforces the sense of you being other and different. The underlying message is of being a burden and expensive. These are all negative messages. If we are really interested in developing a national care and support service that meets people’s needs, those things have to be taken into consideration. They are all issues that disabled people have been raising for 20 years or more. They are not new.113
Difficulty of navigating the system
80.Our witnesses with experience of the social care system also described the huge difficulties they face, as self-funders, in arranging care for their loved ones at a very stressful time in their lives, with very little support or guidance. Deborah described the system she had to navigate, without any signposting, as a ‘quagmire’, and told us that information was ‘confusing, hard to find, and contradictory’ and that a lack of information made it impossible to plan ahead.114 Several years after her husband Atherton started needing care, Deborah discovered a day care centre which would have been very helpful to her husband, seven minutes away from their home, but the confusion and lack of signposting meant they had missed out on it for several years.115 Pamela described having to help her sister choose care from a directory provided by social services but which had no prices in it, “because the prices change all the time”.116
Risk of having to move to a cheaper home
81.During our inquiry we heard that the way the funding system currently works subjects care users to the risk of great uncertainty and upheaval as their savings are spent and they approach the £23,500 threshold to become eligible for local authority funding. Pamela King told us:
She hadn’t got any property and she was renting, and all the money she had was in pension pots, but they said that because she had more than £23,250, she would have to pay for her own care. She was paying in full for her own care until very recently, but I was advised not to find somewhere too expensive because when the time came that we needed to get social services to pay any difference, if we had chosen somewhere too expensive, they would probably ask me to move her out into a cheaper home.117
82.Pamela told us of the huge anxiety she and her sister then faced as her sister’s money ran down towards the £23,250 threshold, and the risk that the local authority would move her to a cheaper care home. The local authority initially asked Pamela and her brother, both pensioners, to pay the top-up fee of £109 per week to enable their sister to stay in the care home which she had chosen and where she was settled. As they couldn’t afford it, they had to go through a further local authority process of a review board to determine whether Diana would have to move.118
No incentive to plan for the future
83.It is not just older people who are adversely affected. We also heard that, for younger adults with lifelong care needs, the current funding system leaves them with no incentive to save or to buy their own home. Anna Severwright described the situation she faces as a young person with ongoing care needs:
I have had genuine conversations with my family that at some point I will probably inherit half a house. That money will go completely. I would become completely a self-funder, and that money will be spent on social care. Some people might think that is right and some people might think it is wrong; I don’t know. If I was not having social care and I inherited half a house, I could think about investing that money and doing all sorts with it. Obviously, if I spend it very quickly—I don’t know on what—it would not go on social care. For me, there is some sense of inequity. Perhaps the only thing that could come in, if we are still going to contribute to care, is some sort of cap, so that once I have spent £40,000 in my lifetime on care, any money I then save, inherit or earn would be mine and would not be touched for social care.119
Written evidence to the inquiry backed up the impacts described by the service users we spoke to.120
Impact on the care market
84.Sir Andrew Dilnot told us that the current funding system also had a negative impact on the care market:
At the moment, the funding model means that if you have to buy social care, as Pamela, Kevin and Deborah all do, it is a bit like being in a shop with no prices. Although you know how much the price is per week or per month, you have no idea how long it will carry on, so you do not know what the overall cost will be. That makes it very difficult as a provider to invest and innovate. Forgive me for being an economist for a moment. Instead of there being a nice downward sloping demand curve, there is, effectively, a flat demand curve at whatever the cost of the minimum level of provision will be. That makes it very hard to innovate or invest. I would emphasise that the funding model not only creates fear, unfairness and anxiety for individual consumers, but also makes it a very difficult market in which to be a provider and contributes to the low and very consistent level of wages.121
85.As we set out in Chapter 1, the warnings about the future viability of the care market were expressed clearly and unequivocally by our witnesses representing local government.
The options for reform
The Japanese system
86.We were privileged to take evidence from Yasu Shiozaki, who previously served for three years as Minister for Health, Labour and Welfare in the Cabinet of Japan. Minister Shiozaki described the Japanese reforms that were introduced in 2000 to address difficulties in providing and funding social care for their rapidly ageing population.
Box 2: <social care funding in Japan>
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Japan introduced a new long-term social care system in 2000, to meet the challenges caused by a rapidly ageing population and decreasing capacity for families to take care of older relatives. The system provides universal comprehensive social care packages for those who need them, which are co-ordinated by care managers. As well as increasing access to social care, the introduction of this system has resulted in a very active competitive market for care providers, who compete on quality and reputation rather than price, with prices set nationally. Service users pay a co-payment of between 10% and 30% of the total care cost. Those in residential care pay ‘hotel costs’ (accommodation and food) but these contributions are means-tested and capped for those on low incomes. The system is funded through general taxation and through ‘premiums’ paid by all people over 40 at a rate of 1% of income. |
87.Minster Shiozaki told us that these reforms have had a positive impact on the care provider market in Japan, expanding the number and variety of affordable care services. It has resulted in people who use care, and their families, having a choice, and has delivered greater efficiency, variety and flexibility of services. Of equal importance, it has mitigated the financial burden arising from out-of-pocket payments by each household. As a result, the burden on family carers—particularly women—has decreased. Finally, the improved access to affordable social are has brought about a reduction of hospitalisation without due clinical need.122
88.Minister Shiozaki told us that, in common with many social care systems, financial sustainability is always a big challenge. Japan is also facing workforce problems, with a shortage of social care workers which they plan to tackle by growing their international recruitment of care workers. While accepting that ‘nobody loves being taxed’, Minister Shiozaki said that the public insurance scheme for elderly care has now been accepted as an indispensable part of the social infrastructure.123
89.The current system is unfair, confusing, demeaning, and frightening for the most vulnerable people in our society, and their families. It is therefore essential that the Government tackle the problems in the care sector as a priority. The success of the reforms in Japan has demonstrated that it is possible for a Government to grasp the nettle and take decisions on social care which, though they may be initially difficult, lead to positive and lasting change which is widely accepted by society.
Options for reform—free personal care and a cap on care costs
90.In this section we consider the options for long-term sustainable reform of the funding of social care. We were grateful to Lord Forsyth, Chair of the Lords Economic Affairs Committee, whose in-depth inquiry into social care funding reported in July 2019; and to Sir Andrew Dilnot, Chair of the Government’s Commission on the Funding of Care and Support, which reported in 2011 who gave evidence on their proposals for a long-term solution.
Lord’s Economic Affairs Committee’s report on social care funding
91.Lord Forsyth’s Committee recommended the introduction of free personal care, with an estimated cost of £7bn:
The Government should introduce a basic entitlement to publicly funded personal care124 for individuals with substantial and critical levels of need. Accommodation costs and the costs of other help and support should still be incurred by the individual.125
92.In Scotland, where free personal care is in place, a limit of £180 per week is placed on funding for personal care, with a further £81 for people needing nursing care. If care costs more than that, the person’s savings or assets would be used to pay the difference. The Health Foundation estimate that free personal care allowances currently only meet around 25% of the weekly cost of a residential care home. The Health Foundation’s estimate of introducing a version of the Scottish system in England is £5bn.
93.Free personal care was also a key recommendation of the report on the Long Term Funding of Adult Social Care published by our predecessor Health and Social Care Committee, working jointly with the Housing, Communities and Local Government Committee, published in 2018.126
Sir Andrew Dilnot’s Review
94.Sir Andrew Dilnot’s review recommended the introduction of a lifetime cap on care costs. Under this policy a person with savings and assets would be expected to make a contribution, but only up to a certain maximum, after which the state would fund care. In common with proposals for free personal care, under a lifetime cap policy, people would still be expected to pay their basic living costs. This reduces the incentive to move to into residential care, as there is increasing evidence in favour of supporting people to receive care in their own homes, where this is feasible.127
95.A cap on care costs was accepted in principle by the Government, and the Care Act 2014 includes provisions to implement such a measure. The Commission recommended a cap of £35,000 for over 65s, with lower caps for those under 65. The Government, however, opted for a less generous cap of £75,000. Despite the passage of the Care Act 2014 and widespread acceptance of the policy, its implementation was delayed in 2015 and has never been reinstated.128
96.In evidence to us, Sir Andrew reiterated his recommendation that the cap should be set at £46,000 and that the charge for general living allowances should be set at £8,000 per year. The Health Foundation estimate that implementing a cap on care costs set at this level would cost £3.1 billion in 2023–24.129
Weighing up the options
97.Anita Charlesworth of the Health Foundation gave the following explanation of the differences between free personal care and a cap:
The key differences between the cap on care costs and free personal care are that neither pay for the full cost of care; both require individuals to contribute. Free personal care… helps individuals from the beginning when they move into a care home, but if individuals need to stay there for a long time or they have very high needs, they are not protected against very high costs. A cap on care costs means that individuals contribute at the beginning, but they are protected from very high costs. That shifts the balance of state spending to those in greatest need. In the end, it is a judgment call between those two things as to which unfairness you think is greater.130
98.Lord Forsyth told us that his Committee came to the conclusion that free personal care was the best way to reform care because it would align social care funding with the principles of the NHS—having care delivered free at point of use without a means test—and would take away the complexity and worry currently faced by social care users and their families:
We came to the conclusion that the difference in cost between having free personal care—the basics like washing, cleaning, continence and feeding—as they have in Scotland, and the Dilnot proposals did not represent a very substantial increase in funding. It just meant that it was simple and was aligned with the principles of the health service.
I did not think shopping, cleaning and things of that kind should be covered, but very basic services—help for people who are doubly incontinent, with the changing of beds, and help with feeding. All of those basic things should be provided free according to need. People should not have the complexity and worry that arises as they run out of money. They see their savings run down to the last £14,250, and even then they are asked to make a contribution. If they cannot afford to pay, “Couldn’t you get some of your relatives to pay?” It is a most debilitating system and difficult to defend.131
99.Andrew Dilnot set out to us the arguments in favour of a cap:
If your costs are more than £200 a week—say, the £712 a week that Pamela was paying in the care home for her sister, or the £1,000 a week that is needed for Atherton’s care costs—free personal care does not help you very much. It pays for the first slice, but it still leaves you exposed to the much higher costs. I think a cap is the most efficient way of spending money to help the people who are in the greatest need. It takes away the fear that otherwise people face.
In social care, free personal care would help everybody who had social care needs, but the people it would help the most would be the people with low needs, all of whose costs would be met, whereas somebody like Atherton, or Pamela’s sister Diana, would still be left exposed to very substantial costs. It seems to me that, when we introduce a social insurance system, the people we want to help most are the people who face the highest needs and the greatest category of problems.132
100.A decision on free personal care and a lifetime cap on care costs is not a binary choice. Both could be introduced, giving individuals a social care service where basic care is free at the point of delivery, as is the case with the NHS, as well as introducing a protection against unaffordable costs. The Lords Committee report acknowledged that if free personal care was introduced, some people who need long-term care for many years, particularly in residential and nursing homes, might still face catastrophic accommodation costs. It therefore recommended that “to avoid catastrophic accommodation costs, the Government should also explore a cap”.133 The Health Foundation, arguing for the introduction of a cap first, also says that following that, free personal care could be introduced as a next step.134 Sir Andrew Dilnot was also supportive of free personal care being introduced as well as a cap, if funding allowed.135
101.The Lords Economic Affairs Committee’s report makes a persuasive case for the introduction of free personal care. This would cost around £5bn per year, which is only a small fraction of what is currently spent on NHS care. It would also simplify the current confusing arrangements for people who need care, and would put social care on a more equal footing with the NHS by ensuring that all basic care needs are met free at the point of need. Free personal care was also recommended by a joint report of the Health and Social Care Committee and Housing, Communities and Local Government Committee in 2018.
102.We also strongly endorse a lifetime cap on care costs which could be implemented swiftly under the provisions of the Care Act 2014. Such a change would focuses resources on the most severely affected people, protecting those with very high care needs–and remove the injustice which sees the NHS cover certain types of extreme care costs but the social care system not cover others, including those with dementia, motor neurone disease or many other neurological conditions. Any reform package must therefore introduce a cap on care costs to protect people against catastrophic costs. We believe this should be set at the level specified in Sir Andrew Dilnot’s original report, namely £46,000 which will cost around £3.1bn by 2023–24.
Overall conclusion
103.The COVID-19 pandemic has had devastating consequences both for vulnerable people using social care, and for the committed professional workforce that provide that care. These challenges have been exacerbated by long-standing funding and workforce issues which need to be recognised by the government in a social care reform package that must be brought forward before the end of this financial year.
104.We believe that the starting point for the social care funding increase must be an additional £7bn per year by 2023–24 to cover demographic changes, uplift staff pay in line with the National Minimum Wage and to protect people who face catastrophic social care costs. This represents a 34% increase from the 2023–24 £20.4bn adult social care baseline projected budget at today’s prices. In this report we have not examined how such an increase could be funded but we recognise the challenges involved and the need for innovative thinking to address them.
105.But we are clear that this is only a starting point. It will not provide any improvement in access to care, which is urgently needed and would be improved through introducing free personal care as recommended by previous select committee reports from both the Lords and the Commons, which we continue to endorse as worthy of consideration. The full cost of adequately funding social care is therefore likely to be substantially higher than £7bn, potentially running to tens of billions of pounds. We recognise these are substantial increases at a time of severe financial pressure but the evidence we have heard both from those who use social care, and frontline social care workers suggests that the gravity of the crisis now facing the social care sector requires a bold response if we are to recognise the sacrifices made recently by the social care workforce and—most importantly—look after vulnerable people in our society with the dignity and respect they deserve.
109 King’s Fund, Adult Social Care Funding and Eligibility
120 See, for example, Motor Neurone Disease (MND) Association (SCF0100); Independent Age (SCF0043); Alzheimer’s Society (SCF0034)
124 Personal care means essential help with basic activities of daily living, such as washing and bathing, dressing, continence, mobility and help with eating and drinking. It does not include other areas where support might be needed, such as assistance with housework, laundry or shopping.
125 House of Lords Economic Affairs Committee, Social care funding: time to end a national scandal, HL 392, paragraph 135
126 Health and Social Care Committee and Housing, Communities and Local Government Committee, Long Term Funding of Adult Social Care, 2018
127 House of Commons Library, Social Care: Government reviews and policy proposals for paying for care since 1997 (England) October 2017
128 House of Commons Library, Social Care: Government reviews and policy proposals for paying for care since 1997 (England) October 2017
129 If pay is to be increased in line with the National Living Wage uplift modelled by the Health Foundation, as per the Committee’s earlier recommendation, this figure of £3.1bn is a slight underestimate of the total required to implement the cap on care costs.
133 House of Lords Economic Affairs Committee, Social care funding: time to end a national scandal, HL 392, paragraph 135
135 Oral evidence, Sir Andrew Dilnot
Published: 22 October 2020