Annex 10: Funding pressures on health
and social care (see paragraphs 21 to 23 of the report)
185. Demographic projections suggest that a substantial
increase in demand is about to hit the healthcare system, adding
to other long-term cost pressures (see Annex 9). This great increase
in demand will naturally create a great increase in cost.
186. The Nuffield Trust has recently estimated
that under the current healthcare system, if the real-terms funding
freeze for the NHS is extended to 2021/22, if no productivity
gains are made and if rates of hospital utilisation by people
with chronic conditions and the rising cost of providing healthcare
continues, then by 2021/22 the NHS in England will see a funding
shortfall of £54 billion for the NHS as a whole.[266]
If the English NHS achieves unprecedented productivity gains of
4% a year in every year from 2010/11 to 2014/15 but no further,
they predicted that this funding gap would be reduced to a potential
shortfall of £34 billion. For comparison, the total budget
for the English NHS in 2010/11 was £107 billion. Yet continuing
this rate of unprecedented productivity growth for a whole decade
would be very difficult. Many of the 'savings' so far achieved
are the result of a wage and salary cap that would be difficult
to sustain for a decade. Even a constant real terms budget would
be difficult to sustain into the next spending round, as it would
result in heavy cuts to other departmental budgets.[267]
187. If the current healthcare system did
not change and the large NHS funding gaps for 2021/22 estimated
by the Nuffield Trust materialised, this would have particularly
serious consequences for older people, as the biggest consumers
of NHS spending.[268]
The NHS will have to be transformed, in service delivery terms,
in order to deal with changing needs more efficiently; this transformation
should help with the predicted funding shortfall.
188. There is already a crisis in social care
funding. The Dilnot Commission concluded in July 2011 that the
current English social care system is inadequately funded and
that "People are not receiving the care and support that
they need and the quality of services is likely to suffer as a
result". The Dilnot Commission calculated that demand had
outstripped expenditure by around 9% over the previous four years
in England.[269] The
Nuffield Trust cited estimates which suggested that even without
reform, spending on social care would have to rise from £14.6
billion in 2010/11 to £23 billion by 2025/26.[270]
The Trust has calculated that with the number of people in England
with moderate or severe disabilities projected to increase by
32% by 2022, public expenditure on social care and continuing
healthcare for older people will have to rise to £12.7 billion
in real terms (an increase of 37% from £9.3 billion in 2010),
to keep pace with expected demographic and unit cost pressures.[271]
189. Recent cuts to social care budgets have
intensified an underlying mismatch between funding and demand,
so that a growing number of people on low incomes are no longer
eligible for state support.[272]
The Local Government Association (LGA), Association of Directors
of Adult Social Services (ADASS) and Society of Local Authority
Chief Executives (SOLACE) told us that, following the capping
of council tax, councils have managed demand by tightening eligibility
thresholds and raising income via increasing fees and charges.
Eighty-five per cent of English councils are now implementing
a threshold at 'substantial' or 'critical' needs, resulting in
a growing level of unmet need, with people unable to access support
until their needs reach crisis point.[273]
Many older people with moderate needs are therefore already suffering,
and the situation is likely to continue to worsen without significant
real terms increases in funding.[274]
The result is further strains on public spending, as well as personal
suffering: we heard from Lord Warner, Commissioner, Commission
on Funding of Care and Support (Dilnot Commission) that the NHS
and social care are now in a very clear symbiotic relationship:
"if you tighten the screws on the funding of social care,
you put an extra load and burden on the NHS".[275]
190. Cuts to social care budgets are also driving
down what local authorities pay private providers. Evidence suggests
that the level of local authority funding is in many cases already
below what residence in a care home costs. This means that "within
a home, you often have private patients subsidising local authority-paid
people".[276]
This is a hidden tax on those who are funding their own care.
191. There should be a sharing of responsibility
for social care between individuals and the state, although on
a basis that is less worrying for older people, as the Dilnot
Commission proposed (see Annex 11). But there are many
people who do not have families who can provide care, or the money
to buy it, but who cannot cope without care—and this situation
is likely to worsen considerably with greatly increasing numbers
needing such care in the coming years. If the neglect of social
care continues and these people are not properly supported in
the community, they will end up with more severe needs or will
suffer crises and go into hospital, which is likely to be contrary
to their wishes, not in their best interests, and more expensive.[277]
266 Nuffield Trust, A decade of austerity? The funding
pressures facing the NHS from 2010/11 to 2021/22, December
2012. Back
267
Nuffield Trust, A decade of austerity? The funding pressures
facing the NHS from 2010/11 to 2021/22, December 2012. Back
268
Department of Health, Resource Allocation: Weighted Capitation
Formula Seventh Edition, 2011. Back
269 Fairer
Care Funding - The Report of the Commission on Funding of Care
and Support, July 2011. Back
270
Nuffield Trust, Reforming social care: options for funding,
May 2012. Back
271
Nuffield Trust, Care for older people - Projected expenditure
to 2022 on social care and continuing health care for England's
older population, December 2012. Back
272
Nuffield Trust, Reforming social care: options for funding,
May 2012. Back
273
LGA/ADASS/SOLACE; Alzheimer's Society; Age Cymru. Back
274
LGA/ADASS/SOLACE. Back
275
Q 588 Back
276
Q 573 (Tony Watts, Independent Chair, South West Forum on Ageing);
Q 573; Q 422 (William Laing, Laing & Buisson (Consultancy)
Ltd). Back
277
LGA/ADASS/SOLACE; Q 457; Q 75 (John Kennedy, Chief Executive,
Joseph Rowntree Housing Trust); Q 588; Nuffield Trust, Reforming
social care: options for funding, May 2012. Back
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