Funding gap with the ‘cap and floor’ and with free personal care

In previous chapters we have estimated the additional costs of:

  • continuing with the current model and level of provision
  • improving provision under the current model
  • introducing a cap and floor approach as proposed in the Conservative Party manifesto
  • introducing FPC.

In Chapter 2 we compared the cost of the current model and improvements to the current model, returning to 2009/10 access and quality, to an estimated budget. In this section, we present the cost implications for changes to the model, on top of the demand pressures projected from PSSRU research, compared with the estimated budget to 2030/31, in order to show the total additional spending required.

We present pressures for the total social care system, including for people aged 18–64, although we have not assumed any additional cost for this age group beyond the demand and cost pressures modelled by the PSSRU. We have applied estimates to the initial model projections, rather than the estimates for improving the offer, on the assumption that additional funding will be used to either improve the current offer, or change the fundamental offer of the system. In both cases, the total number of people receiving publicly funded care is increased compared with the current system (Table 9) which contributes to their increase in cost.

Table 9: Estimated number of people aged 65 and over receiving publicly funded social care in 2015 under current system, compared with how many might receive care under the cap and floor or free personal care models

Estimated people aged 65 and over receiving fully publicly funded care in 2015/16 

Current system

Cap and floor

FPC

Domiciliary care

248,000

166,000

480,000

Residential care

157,000

280,000

157,000

Total

405,000

446,000

637,000

Note: For the cap and floor we estimate that there would be an additional 93,000 people who receive level some public funding, due to either hitting the floor or the cap following some private spending on their care.

We estimated that the cap and floor model would cost an additional £3.2bn per year based on 2015/16 data. To project the demand pressures of introducing this new system by 2020/21, we apply the PSSRU’s projected growth in spending pressures. This would mean that the cap and floor model would cost an additional £4bn a year by 2020/21, over and above PSSRU’s estimated demand growth, and an extra £5.8bn a year by 2030/31.

Similarly, for the introduction of FPC, we estimate that it would cost an additional £4.3bn a year based on 2015/16 data. Using the PSSRU’s projections of demand, we estimate that this would rise to an additional £5.5bn a year by 2020/21, over and above PSSRU’s estimated demand growth, and to an extra £7.9bn a year by 2030/31.

These additions to the social care funding gap in 2030/31 are presented in Figure 4. For simplicity, the additional cost is shown as an increase in 2020/21, though in reality it would likely be phased in over a period of time, as social care users become used to the new system.

These estimates do not include the cost of implementing a new system. A 2013 impact assessment for introducing a cap on social care spending suggested that the financial cost associated with implementation would be small compared with the overall cost of the policy, so we have not attempted to include implementation costs here. This does not mean that such costs, including political costs, would not be large.

Figure 4: Increased funding gap for social care with the ‘cap and floor’and free personal care, 2018/19 prices

Note: we have presented the additional cost as an increase in 2020/21 for simplicity. In reality it would likely be phased in over a period of time.

Continuing with the current system for adult social care would require investment of £1.5bn in 2020/21 above the estimated budget to keep pace with rising demand and cost pressures. This would rise to an extra £6.1bn by 2030/31.

Introducing changes to the model to provide publicly funded care to more people would further increase the need for additional funding. Introducing the ‘cap and floor’ model could therefore increase the projected funding gap from £1.5bn to £5.5bn in 2020/21, and from £6.1bn to £11.9bn in 2030/31. Alternatively, introducing FPC could increase the projected funding gap to £7.0bn and £14.0bn respectively.


‡‡‡‡‡‡‡‡‡ It may be that a new approach is also introduced with improved eligibility criteria, which would further increase costs. This would require modelling beyond what we were able to include here.

§§§§§§§§§ For more detail see: the Health Foundation (2018). Approaches to social care funding. Available at: www.health.org.uk/sites/health/files/Approaches-social-
care-funding_1.pdf

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