12 February 2013

Jeremy Hunt’s social care funding reforms extend state support to more people, but fail to deal with the wider problem of per person funding.

Yesterday, Health Secretary Jeremy Hunt put an end to months of speculation when he revealed the Government’s response to the 2011 Dilnot Commission report Fairer Care Funding. Hunt has proposed a £75,000 cap on the total costs of care that any individual will incur and an increase in the total assets an individual can own before they stop qualifying for assistance. The upshot of this is that around 100,000 more people will now receive some state funding. If state-funded social care was a dinner party, many additional people would have just received an invite.

But this is only one dimension of social care funding. The real heart of the matter is what kind of care these people qualify for. What will guests at this dinner party be served when they arrive?

The pickings look slim. Real expenditure on social care has been falling since 2005, at a time when the number of older people has been steadily rising. Local authorities, who pay for state-funded care, have balanced the books both by limiting needs-based eligibility and by forcing down the fees they pay for services. This downward pressure has resulted in a series of high-profile judicial reviews in which providers have successfully argued that local authorities are failing to pay the cost of a decent service. Respected market analysts Laing and Buisson use a sophisticated statistical model to determine a ‘fair fee’ for care based on costs and a reasonable return for providers. The figures below show just how serious the situation now is.

Laing and Buisson (2011) A Fair Deal. BUPA
Laing and Buisson estimate the funding shortfall of a fully modernised state-funded system at £1.25bn. Hunt’s reforms, by contrast, will shift responsibility for £1bn of costs from self-payers on to the public purse.

Weighty, high-profile reports have been calling for an increase in money for state-funded social care for decades; so why does the shortfall persist? The Institute’s own analysis, which forms part of our research on choice and competition in public services suggests three underlying reasons:

1)No single body is responsible for determining the amount of funding available for social care. DCLG hands formula grants to local authorities, based on relative needs, of which social care funding is a non-ring fenced element. Local authorities then combine this with local revenues, which they have limited discretion to increase, before deciding their budget for care. If the guests at our dinner party go hungry, it’s not clear to whom they should direct their complaints. Our work on the development of public services markets also highlighted the importance of clarity around responsibilities.

2)There is no consistent, data-driven picture of actual social care need meaning that funding cannot be allocated based on the actual needs of elderly people. Apart from making demand management difficult, this makes it very hard for those involved in social care to make a robust, evidence-based plea for adequate funding. If you don’t know how many guests you have invited to your dinner party, or how hungry they might be, how would you know how much to spend on food?

3)For many of us, social care is a hidden issue. We are generally reluctant to think about how we will spend the last months of our lives, often in a state of significantly reduced mental and physical capacity. The BBC documentary The Year the Town Hall Shrank followed a year in the life of Stoke Council as the administration implemented large spending cuts. A group of passionate and organised local parents campaigned hard to keep their local children’s centres from being closed. Local councillors, conscious of the looming elections, decided that some of centres should indeed be saved but with a finite budget the cuts had to fall somewhere and social care, devoid of an effective lobby group, bore the brunt. Social care simply doesn’t have the profile of other policy areas.

We will be publishing our full analysis of four public service markets, including social care, in spring this year and our overarching report on how government should organise itself to deliver public services through choice and competition later in the summer.