The strange politics of social care funding reform

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When the current Prime Minister first stood on the steps of Downing Street, he promised to fix social care once and for all. Only a few weeks later, these plans have been relegated to being published ‘in due course’. At a recent breakfast event we hosted here at The King’s Fund, the phrase ‘in due course’ was greeted with laughter in the room. For those of us interested in social care funding reform, we have been waiting since 2017 for ‘in due course’ to have its moment by way of a promised Green Paper. Many of us have waited for 20 years for meaningful reform and are still waiting.

It now looks like an election will come our way sooner rather than later. And with that comes the prospect of manifesto commitments from all major parties on the way forward for social care. What chance is there that there might be some agreement between parties on the solution?

At the breakfast event earlier this month, I was joined on the panel by Lord Forsyth (a Thatcherite Conservative peer and former government minister) and Phil Hope (a former Labour Minister for Care). Lord Forsyth was calling for a social care system free at the point of use, paid for by general taxation. Phil Hope was also suggesting a free at the point of use system, largely funded by an inheritance protection care levy (a levy on estates meaning everyone pays a little, but in return no one loses all their inheritance). Hardly surprising that at one stage Lord Forsyth said ‘it feels rather odd’ to have an ex-Labour minister ‘taking a more Thatcherite position’ than him.

Many of us have waited for 20 years for meaningful reform and are still waiting.

Lord Forsyth chaired the recent House of Lords Economic Affairs Committee inquiry into social care, where two former Chancellors and a former Treasury Permanent Secretary proposed a free at the point of use system funded by taxation and agreed that the current Chancellor needed to sign a cheque for £8 billion. To someone who spent much of their civil service career trying to get money out of the Treasury, the committee’s collective conclusion is pretty breathtaking,

We are increasingly seeing what we normally expect to be at opposite ends of the political spectrum coming to similar conclusions about what is needed for social care. A decade ago, the stereotypical difference between ‘left’ and ‘right’ on social care was that the right believed in personal responsibility (and therefore voluntary insurance was preferred), and the left in a universal state offer (a free at the point of use model, perhaps paid for by general taxation, or by changes to taxation that meant the older generation take greater burden).

Last year, The King’s Fund and the Health Foundation published A Fork in the Road, which analysed the different options for reform. Since then, we have seen politicians and think tanks at all points of the political spectrum come out in favour of different types of models which are broadly free at the point of use.

So why is this happening? The policy geek in me hopes these proposals are a sign that the evidence base is still respected – on two fronts.

First, the case for action is now clear to political leadership – as Lord Forsyth optimistically said ‘the facts are such it has to happen, whoever is in power’. It’s hard to look at the evidence about the current model of how we pay for care and not come to the conclusion that it’s fundamentally broken. Lord Forsyth made a particular point that House of Lords Committees have to make recommendations based on the evidence. In his committee, grandees from different places on the political spectrum weighed the evidence and had no hesitation in providing a clear, analytical and reasoned argument about why this just needs to be sorted. For those of us at the event, hearing a Thatcherite Tory without much prior understanding of the issues being really quite outraged about the current system was powerful.

Second, respecting the evidence means voluntary insurance is now widely seen to be completely unworkable. Put simply, it has never worked in any country anywhere in the world (The King’s Fund podcast on social care funding explains this more if you are interested in the detail!).

Once you acknowledge the current system is unworkable and once any voluntary system is discarded as a solution, you end up with all the options coalescing around a small number of options which are really about debating two key things – the shape of the state contribution, and how that state contribution is funded.

It’s hard to look at the evidence about the current model of how we pay for care and not come to the conclusion that it’s fundamentally broken.

Does the state provide for all care needs (broadly free personal care), make a (small) contribution to pay towards your care needs (the Centre for Policy Studies proposal), or step in to cover the unplannable, catastrophic end of life care costs (the cap aspect of Andrew Dilnot’s recommendations)? And should the state raise the necessary additional funding through normal routes (general taxation through Budgets and Spending Reviews), or through new revenue raising steps with some type of hard or soft hypothecation (linking the new cost to the new benefits) to make it more palatable to the population paying (for example, changes to inheritance tax, increases to National Insurance contributions or extension of National Insurance contributions to pensioners)?

On the question of how pay for social care, compared to any period in recent memory, we now appear to have more common ground about broadly what the shape of a policy response should be. It’s important that we hold on to that as we enter the boxing ring of an election, where the temptation will be to exaggerate the difference, and as we debate the detail of options, when we risk no longer being able to see the wood for the tress.

Aside from the apparent convergence on funding reform, there remain important differences between parties on what the service should look like, and in particular the role of the market in service delivery. But we shouldn’t allow that to get in the way of agreeing the overall model for how we finance the system.

The political world is indeed topsy-turvy. That could end up being an advantage to the prospects of social care reform. But it’s also worth remembering that another dictionary definition of topsy-turvy is ‘utter confusion’…

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Michael Jones

Retired / Appointee for relative in non-residential care,
Comment date
26 July 2020

I was previously unaware of the Kings Fund, but was blown-away when I found your website and the quality of your research etc. and I have retweeted a relevant link as part of a campaign I have commenced regarding the discrimination of LAC(DHSC)(2020)1. This can be found on Twitter @extend_the_PEA You may find it of interest.
Best wishes. Mike

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