Panel discussion: The future of health and social care funding in England

Featuring:

Norman Lamb, Liz Kendall, Kate Barker, Yvonne Braun, Dan Poulter

What is the future of social care in light of the spending review and local government financial settlement? What would a new settlement for health and social care look like?

The panel - featuring Rt Hon Norman Lamb MP, Liz Kendall MP, Kate Barker, Yvonne Braun and Dr Dan Poulter MP - discuss these issues and answer questions from the audience.

Panel discussion: The future of health and social care funding in England

This session was filmed at our event A new future for social care? on 12 July 2016.

Transcript

Audience member:  My name’s Catherine from Arthritis Research UK.  One of the things that we have really... What’s come to our attention in talking to people with arthritis around social care is the lack of being able to access information and advice and the Care Act is a really, really smashing piece of legislation because it sets out these duties but, because there’s not been an evaluation of it, no one knows whether they’re being met or not.  And from our anecdotal evidence like for arthritis it’s not been met and I wondered if it’s likely in the new administration if an evaluation of the Care Act and implementation of the Care Act is likely to take place.

Chris Ham: Okay, let me take a second question here.

HB:  Hello, I’m Harold Bodmer, I’m Director of Adult Social Services for Norfolk and I’m also this year the President of the Association of Directors of Adult Social Services. Tomorrow we launch our budget survey which is being completed by 100% of Directors of Adult Social Services, and whole the discussion of the panel is extremely useful about the longer term sustainability of social care, the problem is now urgent and today.  And one of the things that we are calling for is for £700 million of the money that is backloaded in the financial settlement, the money that’s going to come in 2019/20, to be brought forward now.  That’s not enough actually and it’s in a sense borrowing from ourselves but it would make a substantial difference.  And I suppose I wondered whether the panel would consider supporting that call for that to be brought forward and whether that’s something in a cross-party view about social care that’s something that you would consider calling for between yourselves.

CH:  Harold, while you’ve got the microphone, accepting the importance of, you know, if we don’t sort things out in the immediate future there may not be a longer term future to plan for, is there a view from Directors of Adult Social Care about those longer term funding options that we’ve heard the panel speak about?

HB:  Well I think, yes, I mean, we’re anxious to see anything that becomes sustainable and that brings a balance forward, and really anything that properly funds Adult Social Care and in a way doesn’t make it dependent on the NHS, already under huge pressure, transferring bits of money to Adult Social Care.  This is about substantially funding something, a vital public service, properly, so in a way we’re not that concerned how that’s done, we just want to see it done really.

CH:  So Norman, what are your thoughts on those two questions?

NL:  Well first of all, Catherine, I’m glad you think that the Care Act is a fantastic piece of legislation or whatever you described it as, and I’m sorry, incidentally, Dan, that I didn’t acknowledge the fact that the two of us took it through committee.

LK:  I was sort of semi opposed to it at the time.

NL:  You were there as well, absolutely.

 [Laughter]

LK:  Constructively, you know, criticising.

NL:  Yeah, we had to put up with a lot of amendments from Liz

 [Laughter]

But you’re absolutely right, I mean, we need to understand what’s actually happening with it, and the point I was making at the start was that my fear is that the potential for the Care Act won’t be realised because the funding is so impossible. And I think overall we need to... we actually need to align the incentives throughout the health and care system because they’re completing confused at the moment; we incentivise activity in acute hospitals but we don’t have the same incentive anywhere else in the system so it totally distorts where the money goes. And there’s something even worse than that, and I’ve been doing a bit of work on this with the House of Commons Library, the acute sector constantly overspends and then that gets endorsed after the event because they get bailed out by the Department of Health which just, in a sense, reinforces the divide and the differential treatment between the acute sector at the one extreme and social care, the preventative services that stop people ending up in hospital, at the other end.  But on your key point about information and advice, it’s critical, it was there in the Care Act, we need to make sure that local authorities are actually delivering it to make a difference for people.  And in terms then of Harold’s point, well, yes, it clearly needs to be frontloaded rather than backloaded.  Just as there was a debate before the spending review about bringing forward NHS money to earlier than the government had originally planned, the same has to happen, that same debate has to happen in social care, but it doesn’t escape from the fact that we have to determine as a society how we’re going to pay this, and at the moment...  I mean, you can choose just to borrow more but ultimately we need a sustainable solution which demonstrates clearly to everyone where the money’s going to come from to ensure that social care is properly funded, but as a short-term sticking plaster solution I agree with you.

CH:  So Liz, let me encourage you to focus on Harold’s question here because I think Norman’s answered the first one.

LK:  I think that’s completely right, Harold, and, you know, backloading it... I mean, I understand that the £1.5 billion wouldn’t fully come on stream until 2020, we need that now, I agree we should bring it forward.  I’m also concerned that some of that isn’t new money, £800 million is from the supposed savings on the new homes bonus and God knows whether that’ll be possible, but yes.

CH:  And Dan?

DP:  Yes, I mean, while we’re working on a longer term solution it sounds like a very sensible proposal.  The money needs to be in the system now, I’m not sure the 2% precept is going to really touch the sides in many areas so it’s got to be funded essentially so that makes a lot of sense as a sticking plaster, though, not as a long-term solution.

CH:  So I want to bring some debate into the discussion because, I mean, at one level it’s great because there’s consensus here [laughs] but where’s the argument kind of thing?

LK:  You’re not to used it, Chris, you’re used to something different.

CH:  Kate, listening to what Yvonne said about the role of insurers and private funding alongside public funding, your commission looked at that and probably weren’t persuaded that there was a major role.

KB:  Well I think we weren’t persuaded that it had really made sufficient difference in the countries that had used it, we weren’t sure that it had really dealt with the problem, but, more importantly, it takes time to build up an insurance system.  So     I think the way I might put it, you know, reflecting back on it, is that in insurance system might be perfectly good for my children who are in their 20s but it really won’t work for people in their 40s and 50s today because they haven’t got time to build it up.  And I think that comes back to the points that have already been, I think, well made about pensions; we do think of today’s pensioners as a relatively well-off group and we think of tomorrow’s pensioners as a less well-off group.  And one of the issues I think with...  However, we’re starting to add yet another burden to these young people is that is that...  Of course we’ve already talked about student debt and the relative fall in young people’s wages so adding insurance to them doesn’t feel quite right at the moment.  I have a feeling we will have to come back to it.  And I’d like to say something about the comments made about Adairs’ commission which, by the way, I thought was very good but one of the problems with it is that, although I think it has certainly widened access to pensions, the real worry is that people think that the auto-enrolment rates are enough.  The auto-enrolment rates are nowhere near enough to provide people with good pensions, and I think the problem of aging looks pretty bad today and at the moment; it looks much worse tomorrow.

CH:  Yvonne, can I come to you on this question?  Because isn’t the reason that we have a debate about extra public funding because there’s been market failure, the insurance industry hasn’t come forward with sufficient products – you’ve mentioned some of them – to give people confidence that they can access at an affordable rate private long-term care insurance to cover the costs where they need to pay those costs so we’re having this debate about public funding because the market hasn’t worked?

YB:  Well the rate at which people need social care if they’re over 85 is about one in three, I think, it’s quite a high likelihood, so whenever you have a high likelihood insurance it's quite a lot more expensive than if you have a low likelihood.  Insurance is particularly good to insure low probability high impact events, it gets a lot more expensive if you want to insure high impact high probably events, which social care is.  And I think that is the reason why when we looked at this for the Department of Health what people said in the main was they felt there was probably more in the saving space in terms of building up pension provision, building up basically a savings pot, than there was perhaps in life insurance.  But I think what I said earlier about it not being a silver bullet is quite important, I think it has to be some sort of combination of things, because actually...  Say if you only need domiciliary care, say, ‘only’, I mean, there’s still a cost, you might actually be very well served with a life insurance policy that pays out £50,000 or whatever onset of care needs, but there is no - and I think we sort of conclusively got to that – there is no silver bullet solution that sort of works on an indemnity level where you get paid everything up to the Dilnot cap.

CH:  Okay.  Dan, I’ll come to you briefly on this then I’ll take two more comments before we wrap up.

DP:  Just one thing.  I mean, certainly if you’re looking at investing in a sector, like investing in the insurance sector, investors need certainty and confidence in the medium to longer term, and when the government introduced...  Was it all three of us were involved in the passage of the Care Bill?  And the government’s introduced a Care Act and then said very soon into a new parliament, “Actually we’re now going to get rid of one of the main proposals of that act,” it doesn’t exactly engender confidence or certainty or any wish to invest in that sort of market.  So I think fundamentally, unless we do get some political consensus or an agreement at least to a medium to long-term financial settlement, it’s going to be difficult to get to that place, which I think means we’re going to have to look towards general taxation as a primary means of funding longer term, in my view.

CH:  So if there are any more parents of the Care Act in the audience perhaps you could make yourself known.

 [Laughter]

 The gentleman right at the back first and then I’ll come forward and take another question here in the middle.

Audience member:  Hi, my name’s Robert Joy.   I really welcome the fact that you’re talking about younger people with long-term conditions as well as older people because we do need a future for social care that does encompass both populations and particularly disabled people being encouraged to go to work and to participate in the community, which I think we all welcome but you can’t go to work and do that unless you’re actually properly supported within social care.  And also we’re going to get older too and the number of people being born with conditions who would have sadly died 20 or 30 years ago are now living and becoming adults, you know, so I think we need to make sure whatever we come up with actually deals with the whole issue of all the generations, not just concentrating on the current older people population.

CH:  Thank you very much.

 [Applause]

Audience member:  David Pearson, Director of Adult Social Care for Nottinghamshire and STP Lead for Nottingham and Nottinghamshire, so I’m busily working on how to fill the Nottingham and Nottinghamshire proportion of the £22 billion gap plus the £6 billion for social care in Nottingham and Nottinghamshire and therefore these things are very live for me.  I just wanted to applaud the consensus and just enjoy the sacrament of that moment because I think that’s one of the things that’s going to move us forward.  We are within Adass trying to create a social movement around social care and having the support of a broad political spectrum in soft ‘p’ and hard ‘p’ terms is going to be pretty important in that.  I wanted to just support the point about that Liz made about the economy and some work that was done by Skills for Care which indicated it was a £43 billion overall contribution to the economy from a £14 billion expenditure on social care, the state expenditure, and I suppose what that does emphasise is the need for us to harness all the arguments in a really consolidated way.  But I wanted to return to the issue of how we’re going to fund all of this because there’s going to have to be some pretty hard decisions about, it seems to me, not just about one funding solution.  I don’t think the insurance thing works; Dilnot was an attempt to try and shoehorn insurers in and it never got... the funding level would have to be so low that it makes the insurance thing quite difficult otherwise.  And we in Nottinghamshire have tried to promote that over many years with very little success actually so I think that’s a lesson.  But, clearly, there’s an element of what percentage of GDP should social care be?  It’s been hovering around 2% and reducing, which is not a great deal.  What level of taxation are we actually talking about and what other contributions should we make?  So final point is, there is a consultation going on around the use of the business rates and the government argue that it’s £12.5 billion more than local government needs.  Some of that money could be redirected towards funding social care and one of the things they’re discussing is giving attendance allowance to local government as part of that.  What do the panel think about that idea and also the use of attendance allowance in a different way which is allied to the social care budget?  Contentious but what would you say about it?

CH:  So on that specific point I’ll ask for very brief comments from our panel because we’re running over time but also perhaps to ask Norman, Liz, Dan your call for a cross-party approach appeared to have fallen on deaf ears so why might it be different under a new Prime Minister and a new cabinet as of tomorrow?  Norman, why don’t you start on it?

NL:  Well it was an interesting experience, that, because I came out originally with Alan Milburn and Stephen Dorrell to make that case, and the government didn’t ignore the call, there was clearly...  I don’t want to go into detail but there was clearly an interest but then of course everything got taken over by the run-up to the referendum and the whole of government just seemed to come to a complete standstill for two or three months and I suspect that state will continue for the foreseeable future, worryingly.  But what I sensed was the recognition from government that there is an issue that they have to deal with but not a willingness yet to actually deal with it, and that’s why I think pressure from us across the political spectrum remains critical because the need for it just becomes more and more urgent and, as I said earlier, I think we’re just heading towards a crash and there will be some awful consequences to that.  I just wanted before I finish just to, in a sense, put a question to Kate because I’m very attracted actually by the idea of a dedicated health and care tax.  I’m conscious that actually if we compare what’s happened in the UK with continental Europe we haven’t managed to keep pace with demand as well as continental Europe actually, continental Europe with their social insurance systems, which I don’t advocate, but they have kept pace with demand better.  And the problem we face is, particularly when governments decide to impose real constraints on spending because of the state of public finances, even just protecting the NHS we all know isn’t anywhere near enough, and of course then social care keeps getting cut further.  So I think you have to recognise that there is something unique about health and social care, it’s the only area of public spending, apart certainly from pensions, where demand is just rising inexorably, and I think for that reason there is a case for treating it differently and separately and having an earmarked tax on your payslip funding our health and care system.  It would be easier to make the case to increase it when demand clearly justified it.  I think keeping it within general taxation actually ends up having a disastrous effect on other areas of public spending.  We’re at the moment spending a reducing percentage of our GDP on education, which is ridiculous in a modern dynamic economy, to be spending less of our GDP on education is a completely flawed prospectus.  So let’s carve this out, let’s stop the distortions on other areas of spending and let’s have a dedicated tax which could be easier to increase when the demand needed it.

CH:  So does the consensus continue on this, Liz?

LK:  I think I said earlier, I don’t think the full extra costs of paying for a decent health and social care system should all fall on the working age population.

NL:  I agree with that.

LK:  I think if it is separated out that may make it easier to convince people, certainly when those very long years ago when we were in government Gordon Brown did the extra penny for the NHS and that was on the back of, you know, again, a very strong evidence-base for it to be required.  I think that is something worth exploring if people believe that they’ll trust that that money goes in there but how you would...  You said it would be on people’s pay packets but, again, I want to see some more money... I want us to look at the extra support money older people get and see whether that could be transferred to social care so, you know, there’s a debate to be had.  Can I just replay to David on the business rates and attendance allowance and all of that?  I’m on the local government select committee and we’ve looked at business rates, again, my worry is this could be a similar thing to the social care precept; if you’re an area that raises more money from business rates you’ll be able to put more into your local services and if you don’t have a lot then you can’t.  And, seriously, the growing divide between different parts of the country is one of the root causes of the problems we’ve got and I don’t want to see that exacerbated any further.  There is a real issue, I think...  You know, as I said, I believe we’ll have a new Chancellor, probably new Communities and Local Government Secretary, this is a very, very complicated set of proposals, you know, somehow we’re going to have local... ‘we’... local councils are going to have to be paying more because they’ve got more money, I mean, to most people that just sounds like total nonsense.  So we’ve got to keep an eye on it.  I’m all for greater local power and control but if it increases inequalities and gives my patch and your patch less money to put into the things that people need the most I think that’s wrong.

CH:  So your view, Dan, then I’ll come back to Kate finally.

DP:  Clearly, I mean, I agree with what Liz just said about inequalities.  There’s an advantage to having more local control, more local autonomy in many respects but what you do not want to do is then have disparity in what can be afforded in different parts of the country, particularly when we know some of the local authorities that may least be able to benefit from these measures may be those with the greatest healthcare inequalities and those people in greatest need where we actually need to look at reducing those healthcare inequalities.  I think I would want to look in more detail at the proposals and it needs to be, I think, looked into very carefully before we look at that.  And my general concern, as I mentioned earlier, is that we don’t just talk about devolution of power and see that as being a solution in its own right, that we can make sure the funding settlements behind it actually work and support genuine devolution where that’s appropriate for services to be delivered in that way.  And just on the other point about general taxation, I’m broadly probably persuaded by what Norman has said as being probably a sensible way forward about looking at actually people can see that some of their money and their taxes are actually going directly towards health and care, and I think most people would buy into that.  And my concern is, I think if you just do it through just generally putting it as part of general taxation as a whole then the argument is more easily lost if you’re going to make the cases I think we all have been doing, that we need to put more money into the system for health and care.  There are of course other things we could look at in terms of that funding the general settlement between older people’s benefits and how that plays into this and whether there are other forms of additional funding that come in. I don’t want to talk about whether a levy should be estates duties or all those sorts of things - that was very politically controversial in 2010, I remember, when I was first coming into this – but the simpler the solution that’s available, often the better, I think, in these things as well because it’s easier for people to understand and it’s easier then to make the case about why it’s important and why it’s necessary.

CH:  Kate?

KB:  Well I feel very tested this afternoon because I’m having to try to remember things in the report two years ago because I haven’t necessarily stayed in touch with it, but something I do remember was how much we argued over this very issue so that comes back to me very clearly.  And I think the reason...  I’m not... I say in principle I’m incredibly sympathetic to this, the problem with it is that the spending on health and social care is very big, if it’s 10% of GDP it’s a very large percentage of the tax take, and my recollection is that it would use up pretty much all the income tax so that when you paid your tax money you’d wonder...  I can’t even remember whether the national insurance and income tax would add up to enough to necessarily fund the kind of thing we’re talking about so it might end up on more than one bill.  What I think we came down to as a commission was saying that we would like to have a separate group that talked very clearly about how much money was spent on these every year and commented very vigorously on its adequacy.  And I’m sorry if that sounds a bit more pathetic but I think the issue is that people often don’t trust these things, but I think anything that can be done to make it clearer just how much health and social care cost to people is not necessarily a bad thing and actually putting something on people’s payslips about it might be useful and educative, and that’s not the normal Treasury sort of response about hypothecation.   I want to say something slightly different about... I’m incredibly encouraged to find these people from these three political parties talking about having a joint solution, and the reason I think that’s important is there are quite a lot of issues where people say it’s very desirable to have a joint solution and I seemed to have worked on several of them, and I’d say that in health or housing or pensions, or even infrastructure spending or climate change, there are disagreements at the margin but by and large the politicians move in much the same direction, they tend to move within a framework.  On social care, although there’s agreement on this panel, in the political discourse more widely I just don’t find that framework set, and I think that’s what we’re all furiously saying, we just don’t find that this has become a touchstone long-term issue in the political system.  It’s great that the three of you want it to be that and I think if you can make it that you will have done an absolutely terrific job.

CH:  Thank you.  Please join me in thanking the panel.

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