Section 4 – Pulling it all together: policy implications for social care reform

The combined strands of this work represent some of the most comprehensive recent work to identify, analyse and quantify options to reform social care funding, and to understand the wide range of public attitudes to them.

Together, they confirm a widely held belief in public policy circles: while the case for change is overwhelming, reforming social care will not be easy. Our key lessons for policymaking are set out below.

Revision or full reform? There is a need for more consensus on the problem(s) we most need to solve to decide on the type and scale of response required

The case for major action on public funding of social care is strong and widely accepted in policy circles. However, the scale of the challenge is so large that there is less consensus on which ‘burning platform’ needs the greatest attention. If additional funding is available, it could be used to improve access and quality for people under the current system, to address the declines in both since 2010. Alternatively, extra funding could be used to address fundamental issues associated with the current model, including equity, protection against catastrophic costs, and public concerns about people having to sell their homes to fund their care.

The views of policymakers are reflected by those sections of the public who are aware of the problems surrounding social care. Some people are concerned about the potential risk of personal catastrophic costs, of having to sell their homes to pay for care. Others are worried less about funding and more about the quality of the current system or reports of abuse and neglect in care homes. For many people, however, social care remains a confusing and often peripheral issue, one that relatively few have experienced directly.

Providers, meanwhile, may worry about finding a workforce (90,000 social care jobs are vacant at any one time) and delivering services on low fees, while commissioners worry about sustaining a fragile care market with declining income. Policymakers may worry about workforce and market sustainability, too, but also about the wider economic challenges of providing care to an increasing number of people in need, at a time when there will be fewer people paying tax to fund it. From this viewpoint, reducing or at least managing the demand on public finances from social care may well be the priority. The approaches taken to these issues, and the potential solutions, differ and may pose contradictions: capping care costs may prevent catastrophic costs but only at an additional cost for public spending which people may be unwilling to bear.

A key issue for policymakers, then, is this: which problem(s) do we most want to resolve? If the main problem is seen as catastrophic cost, then a cap on costs is an appropriate – and (relatively) low-cost – approach. If equity and complexity are more pressing, then free personal care may be a more attractive option. Yet if improving access and quality for those most in need is more pressing, then arguably providing more funding for the current model may be preferable.

Agreeing the most important issue to address will be fundamental. This is the key question that ultimately split the Sutherland Commission in 1999. Without consensus on this key question, it is unlikely a solution will ever be found.

Sustaining the current social care system will be expensive. While wider reform would cost even more, it may be better value than continuing with a flawed approach

Demographic and workforce pressures on adult social care mean that, under the current system, public spending on social care would need to increase by more than 70% by 2030/31. This would do no more than protect current levels of access and quality, about which the public already has concerns.

However, if funding rises only in line with current trends, there will be a funding gap of £6bn by 2030/31. This is likely to mean even fewer people accessing state-funded services, with further implications for the quality of those services.

Moreover, these may be underestimates since they use as their baseline a social care system which is already, as we have seen, at ‘tipping point’. Eligibility for services has already been cut since 2005 and there are serious questions about the sustainability of providers in the publicly funded social care market. As one example, the Competition and Markets Authority estimated that if local authorities paid the full cost of care for residents of care homes, the additional cost to them would be around £1bn a year.¶¶ Similarly, it is reasonable to wonder whether the up to 700,000 care workers that the sector needs can be found at current levels of pay. Against this should be set any further cost-saving potential in the social care sector from technology or other efficiencies.

So significant additional funding is needed simply to maintain the quality and capacity of the current flawed system. ‘Resetting’ the current system to the levels of access seen in 2009/10 is expensive – we estimate a total cost of £39bn by 2030/31 and a funding gap of £15bn, at current prices. Yet this was not seen as satisfactory at the time, so although it would be an improvement, fundamental issues concerning equity and access would remain.

It may, then, make sense to consider whether reform would be better value. Our modelling estimates that introducing a cap and floor model as proposed by the Conservatives at the 2017 general election would cost £35bn (a funding gap of £12bn on current trends) by 2030/31. Providing free personal care similar to the model in Scotland would require total public spending of £37bn, a funding gap of £14bn.

These two options would take reform in different directions. The cap and floor model provides a more generous means-tested system with more people entitled to ‘free’ care and a protection against catastrophic costs for those who are required to pay. It does, however, move away from the direction of previous policy on ‘ageing in place’, by removing the personal financial incentive to use home care rather than move to a care home. Its administration would remain fundamentally different to the NHS and the cap would require a wholly separate finance system.

Free personal care offers a simpler system, already popular in Scotland, which would allow for closer integration with the NHS – a key direction of travel for this and other governments. But it is the more expensive of the two options.

However, all the potential options for social care funding will require additional investment. The most basic of these is the cheapest but does no more than return the current system to the levels of access and quality it had in 2015, by which time local authorities had already made substantial cuts. Nor does it address the substantive issues raised by the public around quality and costs or by providers and commissioners around sustainability.

To that extent, returning funding levels to those experienced in 2009/10 would be an improvement, especially since local authorities will have made efficiency gains during that period and these savings could be reinvested in quality and market sustainability. Funding would be available to address the increases in population need since 2009/10, as well as to improve payments to providers to address cost pressures. However, this is also the most expensive option and – without specific measures such as introducing a cap – it would not offer any protection against the catastrophic costs that concern the public. The options of real reform – the cap and floor or free personal care – may therefore be far better value for money.

While most people favour a balance of funding between the state and individual, many believe social care should be wholly tax-funded

Since even carrying on with the current model requires additional funding, there is a critical issue around who bears responsibility for the costs of social care: the individual or the state, or some combination of the two. A consensus has developed during previous attempts at reform that a ‘partnership’ approach, in which the individual takes some responsibility and the government the rest, is the correct way forward.

Our research found that in principle, most people (55%) favoured such an approach, with 30% supporting a means-tested system and a further 25% supporting a means test and cap. However, 41% of people believed that the government should be solely responsible, as it is for the NHS. Only 2% believed sole responsibility should lie with the individual.

In the deliberative events, similar feelings were expressed with most people favouring more, rather than less, government responsibility.

Moreover, many older people we spoke to believed strongly that they had already paid for their care through previous income tax and NI and were reluctant to accept they should pay more.

What is the NI for if it isn’t to pay for social care…? Government are washing their hands of us.

Leeds, Workshop 1

And a red line for many was the use of housing wealth to pay for care costs:

Just forget about touching people’s houses. That should be a principle. Just get rid of that rule. Take people’s houses out of it.

Leeds, Workshop 2 

If a significant proportion of the public assume social care will be free at the point of need, paid for by government through taxes and NI then it is unsurprising that new proposals that involve contributions from individuals are seen in a negative light, even if objectively they might be seen as more generous than the current model. This is important and in part explains the reaction to the proposals outlined by the Labour Party in 2010, and again in the 2017 Conservative Party manifesto in 2017. It could be argued that the manifesto pledges were more generous than the current system but would not be seen as such if people think social care is currently free or at least heavily subsidised.

The reality facing a government that wants to secure reform involving use of people’s housing assets is particularly stark and creates a double bind. The public will first have to be informed that the situation facing social care is bad, and that in many cases, their houses are already at risk depending on the care they might need. They will also have to persuade the public that taxation cannot be raised (or will not be enough), and that alternative sources of existing public spending cannot be diverted. While this does not preclude an approach that uses housing wealth in some way, any government would need to understand the strength of opposition and explore further whether approaches that pool revenues, for example though a tax on estates, could find greater acceptance.

Identifying the best source of any additional money will be a major challenge, whether for the individual or government

The need to raise more money, whether from the individual and/or the government, generates difficult questions. For the individual, because no long-term insurance products exist there remains no simple way of insuring against care costs, and worldwide there is little evidence that many people will do so voluntarily even where products exist.

It also seems highly unlikely that many would save towards the costs of future possible care costs – this has been compared to saving up in case your house burns down. This suggests the need for government intervention, as other countries have acknowledged with the introduction of social insurance schemes.

Revenue-raising questions for government are equally if not more profound. We found some people hoping that the extra costs of social care could be paid for by reductions in other government spending, such as foreign aid, by cutting waste or by eliminating the profit motive of providers:

People feel it’s unfair to pay for care homes because the cost is extortionate. If the government and local councils opened care homes, it would be more reasonable.

But in reality, the potential size of the funds needed means that, if the current model of funding social care largely through general taxation remains, it is likely that a wide basket of tax increases and/or new taxes would be needed to fill the gap. The social care precept would raise relatively low amounts – nearly £2bn a year by 2019/20 – but our modelling suggests that a 1 percentage point rise in the basic rate of income tax could raise £3.7bn for England. Local sources also have fundamental problems in that the areas of the country requiring the greatest spend on social care are least able to raise it.

A package of additional funding, which could include taxes on assets such as housing, has the advantage of spreading responsibility for generating a very significant sum across a wide range of sources. However, it risks creating as complicated a funding package for social care as currently exists around eligibility and potentially raises public concerns about transparency:

We need to just speak in layman’s terms… It’s going to be transparent in the way we’re going to do it and this is how you’re going to benefit.

London, Workshop 2

If a government continued down this route, it would be important for it to set out some underlying principles behind the funding package, for example around the split between local and national funding, the balance between income versus wealth and/or the contribution between different cohorts/generations. On this last point, our research found little, if any, evidence of intergenerational tension. While there was a recognition that some younger people were struggling financially, there was also a sense that it is important to be fair to older generations.

An alternative strategy to a funding package would be to accept that there is a profound, long-term requirement for significant additional funds for social care and to consider a single source of funding; for example, a hypothecated tax or social insurance model. This could be a full replacement for other methods or, more realistically, an additional one. Since, along with social care, there is widespread acceptance that funding of the NHS will need to rise in line with additional need, it would be logical to consider both the NHS and social care together in such a funding mechanism. However, it would be important to recognise public concern that such a move might ultimately mean social care for older people losing out to the NHS.

The public wants to be able to ‘follow the money’. While hypothecation is problematic in policy terms, its popularity might be an enabler of reform

Our research found a strong public view about the need to link any increased revenue-raising with clarity about where the money will be spent. Since many already believe that they have paid for their health and care through previous ‘hypothecated’ NI payments, this accounts for some of the public anger over having to pay social care costs in older age. ‘Soft’ hypothecation is a fundamentally short-term lever which cannot answer the long-term challenge of funding social care reform. And there are significant issues around full hypothecation, for which there is little precedent in the UK, and which limits government flexibility and might see spending on social care actually fall if tax receipts fall, for example during a recession. There is also a concern that an unpopular tax directly linked to social care – as happened with the ‘death tax’ controversy in 2010 – might put at risk the wider reform it aims to fund.

However, there is no ignoring the momentum building behind the concept as a way to end the more than 20-year logjam over social care funding reform.

There is now a clear fork in the road for policy reform

There is no consensus on the balance of responsibility between the state and the individual on social care funding, with many people still believing the state should take responsibility, but others accepting more personal responsibility. This suggests we are at an important fork in the road on social care policy between targeting funding at those with the lowest means, as in the current system, or providing some level of service to everyone.

One route of reform therefore points towards retaining the current means-tested system but making it fairer and probably more generous. This has the advantage of being cheaper, too:

What’s going to happen is a means test. It’s inevitable. There’s no way there’s enough money in the pot.

London, Workshop 2

It could be modified by introducing a cap on care costs, which would limit the liability of those who need most care.

Even a system with a cap, however, takes us further away from the funding principle underlying the NHS, with which increasingly we want to integrate social care services. The other route, therefore, points towards social care that is – to some degree – free at the point of use.

Free is good. Simple. Treating everyone the same.

King's Lynn, Workshop 2

While this route is a departure from the recent focus on a cap and floor approach, it is nonetheless a move in the direction of the Sutherland Commission, the 2010 Labour government and the route Scotland has already taken. Nor is it significantly more expensive than the cap and floor model that has already been proposed by the Conservative government.

‘Doing nothing’ or ‘doing as little as possible’ is not safe, and is no longer an easy option

In reforming social care, a critical question is which attributes of a reformed system a government should seek to prioritise: equity/fairness, economic efficiency/value for money, sustainability and resilience, acceptability and accountability, clarity/ease of use or costs of implementation? In practice, successful reform will need to balance each of these attributes. There is therefore no ideal solution:

There’s not a fair way. You’ll never please everyone. It will suit some people more than others. A shame, but that’s how it is.

King's Lynn, Workshop 2

Any reform will include trade-offs, in both the offer and how it is funded. Any reform will also require more money. The case for additional investment in a public service is always challenging, but more so in the current climate with the government looking to reduce the national public deficit. Yet avoiding reform may also be risky. The public has an emerging sense the problems with social care around funding, workforce and the level of care provided. When they have the system explained to them, they dislike it:

It’s not working. For me personally, I don’t think you can continue with this.

Leeds, Workshop 2

And when people encounter the current system in real life – which, as the population ages, more are now doing – they find it complex and are shocked at the extent of personal responsibility.

Choosing between these trade-offs and finding the money will require leadership, not just among politicians but also other stakeholders. The difficulties of achieving change should not – and, given the history of the issue, will not – be underestimated.

It remains too optimistic, then, to say that doing nothing is ‘not an option’. But for policymakers, the pressures of demographics and growing public concern about the state of social care mean it is no longer politically the least risky option. Inaction is surely not a safe option when public satisfaction with social care services is at its lowest level since the question was first asked in 2005. The Care Quality Commission warns of social care at ‘tipping point’ and the risk of another ‘Southern Cross’ collapse remains.

Under those circumstances it may be tempting for government to ‘do as little as possible’, to provide only enough money to prevent the system from falling over and pass the buck of reform to a future government. Yet not only would this be the wrong option in policy terms, it might not be a good investment in political terms. It might in practice mean no more than stabilising the provider market while doing little or nothing about quality, eligibility and the risk of catastrophic costs – the issues about which voters are most concerned.

More fundamental reform, whether improving the means-tested system or a move towards free personal care, would undoubtedly be difficult to fund and implement but – because it would improve the issues that most matter to voters – might also be the right move politically.

To support solutions, people need much better understanding of the problems and solutions. But politicians are not the best people to provide it

Our public attitude findings will not make easy reading for policymakers and politicians looking to present solutions to a problem that is neither widely recognised nor understood. At the heart of what we have learnt from our work on public attitudes is an unpalatable truth: if genuine public support is needed for a systematic and sustainable reform of social care funding, then there will need to be a painful process of revealing to the public just how broken the current system is.

There needs to be a clearer articulation to the public of where we are now, breaking down the misconceptions and presenting an unvarnished picture of the challenges faced. This must be seen as a communications challenge as much as anything else.

One key challenge is language. There is a question mark over whether the term ‘social care’ has had its time and whether there needs to be more thought about how to talk about the services that fall under its umbrella. Public advertising around the implementation of the 2014 Care Act used the term ‘care and support’ rather than ‘social care’.

A second key challenge is the scope of the debate. In the run-up to the 2010 election, Labour started to talk about a ‘National Care Service’, attempting to leverage some of the public’s affection for the NHS and apply its strong branding to social care.

As well as the strategic logic of joining up health and care services, there are good pragmatic arguments for debating the funding challenges for health and social care together. Given the disparity in political clout between the sectors – the combined forces of social care providers and local authorities cannot come close to the emotional and political lobbying power of the hospital sector and medical professions – there may well be gains from linking the two issues together. Rather than setting up a separate discussion, it brings social care into a national institution that comes with significant goodwill on the part of the public. There was already some awareness of the impact on the NHS of an inadequate social care system (the experiences of hospitals in winter 2017/18 covered in the media seem to have reached the public), alongside a more general awareness of funding problems in the NHS.

However, joining the two together also brings problems. While integration may be the generally agreed policy direction, the two systems have very different cultures: social care in particular is very sensitive to being ‘taken over’ by the NHS. And then there is means testing: while situating the debate about social care alongside that regarding the NHS may make sense if the preferred solution is free personal care, it may bring more confusion if the preference is for a model that retains a means test, such as the cap and floor. There should also be concerns that combining the funding challenges of the NHS and social care would create such a large financial requirement that it might appear impossible to some people. And while the public is supportive of the NHS, that support is by no means unconditional, with many believing that the service is inefficient and wasteful.

Nonetheless, nurses and doctors also regularly top the list when it comes to professions trusted by the public to tell the truth (Figure 6). Even if the public understood that social care was the responsibility of local authorities, councillors are not highly trusted, while the current lack of trust in national government that was so apparent in our public attitudes work would suggest that its involvement would have limited value. Independent bodies might have more potential impact.

All this suggests that there has to be a coalition approach, bringing charities, system leaders, the NHS, user groups, academic institutions, think tanks and, where possible, cross-party support. Lessons must be learnt from other campaigns that have been run to draw public attention to particular issues. What can be learnt from mental health and the increasing public debate taking place in that arena? That debate has been led by many different parts of society, such as patient leaders and high-profile spokespeople, including celebrities and the royal family as well as the sector itself. Although a major challenge, it is not impossible to change public attitudes. Optimism and learning should be taken from the success of the Turner Commission on pension reform between 2002 and 2006.

Figure 6: Results from the Veracity Index 2017 on professions respondents trust to tell the truth

Any potential solution has to be seen as an improvement but this will only happen if people understand what is currently in place, rather than thinking social care will be free at the point of need or at least subsidised more significantly than it currently is.

¶¶ Note this is a UK figure.

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