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Business Clinic
Fixing the Care Crisis: A valid solution?

The funding of social care is a hotly debated topic with various possibilities for change. In April, Damian Green MP and The Centre for Policy Studies released a report setting out one of these options.

The social care green paper is supposed to be proposing (amongst other things) ideas for the future funding of social care, but with it now expected at ‘the earliest opportunity’, proposals for reform are being put forward by others. Independent Age has been campaigning for social care for older people to be free at the point of use, and The Centre for Policy Studies has put forward another suggestion from Damian Green MP.

The principles

Green states that his starting point is that social care should be ‘free to all at the point of use, regardless of circumstances’ and outlines four principles that he believes social care funding must achieve.

The first of these is simply that more money must be provided for social care. The second calls for fairness across generations and medical conditions, and Green is clear that the funding system should ‘avoid burdening working-age people’ who shouldn’t have to put money aside for their own care in the future as well as paying for the care of older generations.
The third principle states that more reasonably-priced care should be made available, as well as increasing the amount of retirement housing, and the fourth is that the system should secure public and cross-party consensus.

The proposal

The main suggestion in Fixing the Care Crisis is to move social care funding towards a pension-like system.

Under this, people would be given a certain amount of money towards their care, regardless of their financial circumstances, and would also be able to take out an additional insurance that would allow them to top-up their care to improve their options, with examples in the report including ‘larger rooms, better food, more trips and additional entertainment’.
This system would see social care become a nationally-funded service, meaning local authorities would not control the amount of money spent on each person’s support.

Universal Care Entitlement

The part of this funding system that would resemble the state pension is the Universal Care Entitlement.

Green proposes that this would ensure everyone received a certain level of care in any setting. Each type of care would have a cost attached to it and people’s needs would continue to be determined by local authority assessments. Everyone who had eligible needs would be entitled to the amount of money it would cost to meet those needs, whether or not they could afford to pay for this themselves.

Green notes that there will be a transition period, when more money will be required to pay for people who are already using services under the current system, at the same time as bringing the new system in.

To combat this, he makes three suggestions: taxing the winter fuel allowance, which would mean the winter fuel allowance was added to each person’s taxable income and it would not be made available to higher-rate tax payers; using savings from other parts of Government to plug the funding gap; and asking all those aged 50 and over to pay an additional 1% National Insurance – this should be considered only as a last resort, says Green.

Care Supplement

The next part of the proposal is to encourage people to take out a social care insurance to fund a Care Supplement. This would fund the ‘additional’ costs, such as better food and more trips out.

This would differ slightly from the current pensions system, as the idea is to pay a set level upfront for products ranging, for example, between £10,000 to £30,000.
Depending on the level of product you took out, you would have a certain level of care guaranteed to you when you needed it, on top of the level of care already guaranteed by the Universal Care Entitlement.

As with other insurances, the insurers would be able to offset the costs of people who needed a lot of care with the people who had insurance but didn’t need care at all. This would mean that the rates were not set according to family histories or medical testing.

Green anticipates needing to encourage people to take out this insurance but states that ‘in the long term, we would hope and expect that saving for the Care Supplement would become the norm’.

Improving quality and cost

The final area of Green’s report involves improving the quality of care and reducing the cost. One key part of this is increasing the amount of retirement housing available, which Green states is lower-cost and more effective than some other types of support.

He also states that local authorities are ‘wary of importing too many older people because they can see their care costs mounting up’ over time.

However, he argues that his proposed model would negate this, as the funding responsibility wouldn’t lie with each local authority, so they would be inclined to build more retirement properties. He also suggests that investors would be more likely to see these as viable investments, because providers are guaranteed a certain payment for each person. The role of the local authority would become a supervisory one.

Green’s report states that this system would spur the whole sector to improve; would help to keep prices of care low, as profits would be made in providing the additional services paid for by people’s Care Supplements; and would offer peace of mind for the public. CMM

Over to the experts…

Could this model be a solution for funding social care? How could it help with supporting younger adults? What will be the impact on local authorities?

Some merit, but major problems

It is good to see new proposals on social care funding and there is merit in some of the ideas being proposed by Damian Green and the Centre for Policy Studies. However, there are major problems too, the most fundamental of which is cost.

The paper proposes that everyone should be entitled to a good level of social care, whether in a care home or their own home, funded nationally.

This is a noble aspiration which would move social care much closer to the universal, free offer of the NHS. It is an enhanced, and therefore more expensive, version of the free personal care system that operates in Scotland.

The key enhancement is that the system would pay the person’s basic accommodation costs in a care home, whereas in Scotland these are not included and individuals must pay them themselves.

The paper estimates the additional cost of this ‘Universal Care Entitlement’ at just £2.5bn. However, detailed modelling in our recent report, A Fork in the Road, produced with the Health Foundation, found that it would cost an additional £7bn just to introduce the cheaper, Scottish version of free personal care, rising to £14bn by 2030/31.

The paper is therefore an interesting, and in some ways, welcome basic idea, which provides the level of social care support many people – incorrectly – believe they are already entitled to.
However, it is let down by the failure to research, develop and – crucially – cost it.

If it were really possible to provide all eligible adults in England with a good level of care for £2.5bn, the problem of social care may well have been solved by now.

Simon Bottery, Senior Fellow – Social Care, The King’s Fund  

 

A reminder we need the green paper

This report is one of several contributions which should be considered nationally. One of the proposals is for adult social care (ASC) funding to be held at a national level, with local authorities then commissioning services locally. However, the proposals do not fully consider the multiple connections between ASC and other local services, both financially and in delivering improved outcomes for individuals and communities.

ASC funding is mainly determined by local decisions, such as through money raised from the social care precept and business rates. However, councils have become increasingly reliant on one-off funding, when what is needed is a long-term, sustainable solution.

The paper proposes a pension system, with a guarantee of a universal safety net. Any significant funding uplift for ASC should seek to cover the range of needs, be fair and based on the best balance of taxation, potential re-prioritisation of other benefits (pensions and non-means tested benefits), an individual’s contribution and private insurance. Fairness should be between and within generations, and recognise that areas have different geographies, rurality, demographic and socio-economic influences. Funding solutions should be long-term and capable of being adjusted at periodic intervals.

This latest contribution to a critical national debate is also yet another reminder that it is absolutely essential Government gets on with publishing its green paper as soon as possible. Those who receive care, and those who work in the sector, deserve to be given the assurance and certainty they need about how their immediate to long-term future will be funded.

Julie Ogley, President, Association of Directors of Adult Social Services

 

We should do more to reduce demand

Funding social care is important, but supporting everyone to have a good later life must be part of the solution.

When it comes to reforming – and funding – social care, it seems to have been impossible to find a political consensus. The issue has become so contentious that we are in a stalemate where nothing changes. But we can’t afford to wait. The situation is set to get worse without immediate action.

In 20 years, the number of people aged 65 or older will have risen by 40%. And while not everyone will need care in later life, by 2035, estimates suggest there will be a million over-65s needing round-the-clock care.

Last month, Independent Age published research highlighting the financial cost of care for those who need support. A study by The King’s Fund predicted increased demand in future years. A range of funding options have been proposed, like creating a ‘Care ISA’, removing the cap on personal care budgets, or this developing of a kind of social care pension scheme.

But there is much more we could be doing to reduce demand. We need to help people remain healthier as they age and make sure the world they live and work in is one that is supportive, not disabling. That means supporting everyone to be healthier and more physically active; building accessible homes and ensuring people get home adaptations quickly; and offering paid leave and flexible working to employees who are also unpaid carers.

We must find a political consensus on how to fund social care today and for future generations. But helping people to remain healthy, active and independent must be part of the solution.

Dr Anna Dixon, Chief Executive, Centre for Ageing Better

 

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The social care green paper

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