Responding to COVID-19: insight, support and guidance
Over the last year, at one level, the government has shown it recognises the need for serious reform within the social care system. The phased £2bn increase and flexibility afforded for council tax increases for social care purposes will benefit service users, local government and – in turn – the NHS. However, the whole sector knows this is still not in itself a financial sustainable solution. It is not always sensitive to local needs as the product of the social care precept does not neatly correlate with need in every local area.
There is simply not enough money in the current system to reflect the reality of the costs of an aging population. This remains the most fundamental point: the current rules are incoherent and inequitable. They weigh against a particular class of care, residential social care, for two key reasons.
Firstly, if you are assessed as requiring residential social care, the value of your assets, including the equity in your home, which you may have hoped to pass on to your family or friends, can be run down to help offset the care costs subject to leaving you with a minimum capital value of £23,250. However, if you are assessed as requiring social care at home, even intensive around the clock home care, the value of the home is not taken into account in the calculation of the charges you pay now or at some point in the future.
Secondly, if your condition is assessed as largely health related rather than requiring residential social care, you pay nothing directly as it is deemed to be free care from the NHS rather than from local government. The sometimes quoted example to illustrate this is the different financial consequences on you from the on-going care needs from a cancer versus Alzheimer’s condition. In their different ways devastating for all concerned, but the former does not generate a direct on-going financial charge for you, while the latter condition does.
Someone has to pay. It must either come from national taxation or from local council charges or a combination of the two. The challenge for all recent governments has been to find not just a financially sustainable way to pay for the inevitably rising costs of an aging population, but one that is coherent. One that eliminates perceived inequities and minimises perverse incentives, and is also fair between the generations. It is a far from easy task, one that previous administrations have failed to deliver a sustainable solution.
So what are the prospects with the current government?
Last March, it clearly signalled its wish to address the issue of finding a sustainable, coherent and fair solution. There was the promise of an open discussion on the various options, via a Green Paper on Social Care, which was promised to arrive this coming autumn. All commentators, including CIPFA, warmly welcomed that apparent commitment. However, since then, of course, we saw the issue of paying for social care become a toxic one in the election campaign, which was widely credited with being one of the key negative factors that affected voting behaviours. So while the positive post-election signals from the government are that it remains committed to a Green Paper process, the much less positive aspect is that it is less likely to pursue a ‘courageous’ solution.
The Green Paper on social care finance, when it arrives, will need to revisit some key issues. As the Dilnot Commission postulated in 2012, in any new system without a cap on an individual’s social care contributions for their residential care, a home owner will still face the possibility of massive care costs, with their home equity at risk of being fully consumed by care costs. And while this may happen only to a minority, it is an inherent worry for far more. It is this inherent worry that played out so dramatically during the election campaign. Ironically the Conservative Party’s manifesto proposal would have started to address some of the inequity between payments for different types of care, raising the capital threshold to £100,000 and extending it to home care on a deferred basis, which would have generated extra income. But it had to be quickly rescinded because it did not deal with the primary concern for home owners, namely what would be the maximum contribution they would have to bear. Indeed, on the face of it, the numbers potentially affected would have increased, and many more voters would have dwelt on the fear of the resultant financial consequences.
Finding a solution that is generally deemed to be sustainable, coherent and fair will not be easy. In fact not only will it be complex, it will inevitably involve a number of trade-offs. Not just what it means about relative national spending priorities and national taxation. But also the balance between funding from effectively increased public sector borrowing as opposed to increased local charges to be met by individual recipients of care now. This latter dimension is clearly also a relevant factor when considering inter-generational equity. Conversely though it exposes the reality that society is not homogeneous and individual income and wealth, and thus ability to meet increased local charges now, differs greatly across the country.
CIPFA has been pleased recently to be involved in work for which the King’s Fund and Health Foundation are joining forces and consulting widely to provide a fully thought-through road map for alternative approaches to funding social care. This is not to arrive at a solution, but to set out what issues a solution must tackle successfully. The difficult social care task of balancing cost and equity demands as much transparency and public debate about the issues and options as possible.