Comment Blog 7 November, 2019

A sustainable solution to the social care crisis

‘Free personal care for older people’ was a headline promise from the recent Labour Party Conference. Is this the priority for resolving the social care crisis? And how will it be funded?

There are actually two priorities. The first is to restore the brutal cuts to English adult social care funding. Public funding fell from an average of £346 per person in 2010-11 to £324 in 2017-18. It is unacceptable that almost 1.5 million older people experiencing difficulty with activities of daily living – cooking, dressing, personal hygiene – currently have no help with these essential tasks. Restoring funding to 2009-10 levels requires around £8 billion a year.

The bigger challenge – evaded by successive governments over decades - is to devise an approach to funding care that is fair and sustainable for current and future generations. This is much more than just ending the enforced sale of a home. Honest debate is needed about respective responsibilities - of the individual versus state for funding care and of families versus services for providing care. The experiences of care reform in countries like Germany suggest key principles to underpin a longer-term strategy.

First, maximum risk-pooling. All adults, not just the elderly, should expect to contribute and also be eligible for benefits if they need care. This optimises efficacy and reduces the risks of inter-generational unfairness – one generation funding the care of another, larger, cohort. Second, how revenue is raised should be progressive. Here we do need to acknowledge the disproportionate wealth (including housing assets) enjoyed by the current older generation. Third, eligibility for support - whether as cash personal budgets or in-kind services - should be universal, regardless of age, income or diagnosis. Mechanisms for assessing and allocating resources must be simple, transparent and consistent. Proposals to cap lifetime care costs require establishing individual care accounts, with potential confusion and disagreement over which costs are counted.  Finally, appropriate support for family caregiving should be integral to a longer-term strategy; too often it’s considered separately, with carer support also highly vulnerable to local authority spending cuts.

What mechanisms should be used to raise and manage additional resources? There is no English market for voluntary, individual private insurance, particularly among working age people. England has also experienced the risk of relying on general taxation – its vulnerability to cuts when national and/or local government budgets are tight.  Rather, there are strong arguments for ring-fencing or hypothecating some elements of general taxation for care, or for creating an entirely new social insurance fund. Both would score high on transparency; facilitate better matching of fiscal policy and revenue to anticipated demand; and offer prospects of longer-term sustainability. Revenue would still be affected by broader economic performance, but care funding would be less exposed.

However, any hint of increased taxation (or new compulsory insurance contributions) is assumed to be politically unpopular. What might help smooth its introduction? Recent experience, of social care reform proposals only emerging during election campaigns, has been deeply divisive. Instead, cross-party consensus and political leadership are essential for sustainable reform. Progressive revenue generation, universal entitlement and transparency over eligibility are also helpful in generating widespread support. In Germany, increased care insurance contributions have been unproblematic as they have been clearly linked to benefit increases and expanded eligibility. Sustainability is also crucial, so that current contributors can be assured of receiving support should they need it in the future.

Finally – and often overlooked – reforms to raising and distributing funding for social care imply changes in relationships between central and local government. A ‘national’ care service will require an explicit central government role in guaranteeing entitlements and the availability of quality services.