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Dithering on Dilnot?

It is strongly rumoured that the ‘Quad’ (the regular meeting of the Prime Minister, Deputy Prime Minister, Chancellor of the Exchequer and Chief Secretary to the Treasury that discusses important coalition issues) will convene this week to consider the government’s position on the Dilnot Commission’s recommendations for social care funding.

Despite the coalition’s pledge in its programme for government that it recognised the urgency of reform, almost a year has elapsed since Dilnot reported. Whispers from Whitehall – see the BBC’s report last week – reflect deepening pessimism that the government will act. The King’s Fund has made the case for radical change since its landmark report by the late Derek Wanless in 2006 and many people have worked tirelessly to push the issue up the policy agenda. So it will be deeply disappointing if the issue gets kicked back into the long grass.

There’s never been any doubt that the success of longevity – for younger disabled as well as older people – would come at a price and any proposals for reform will require more money, a daunting ask in a worsening economic climate. But setting aside the Treasury’s congenital predisposition to resist any demand for additional public spending, do their concerns about the Dilnot proposals stand up?

Their big worry seems to be that capping people’s maximum contribution to their care costs would involve spending public money to protect the inheritances of wealthy babyboomers when other public services are being cut. But as the graph below shows, if Dilnot were implemented around 75 per cent of care spending would go to those in the lowest 60 per cent of the income distribution. This includes those with relatively modest assets exceeding £23,250 who are disadvantaged most by the current system, especially those just below the median who lose nearly 90 per cent of their assets. If the Treasury really is concerned to ensure any extra spending should not benefit the better off (a commitment to social justice many will find laudable, if somewhat surprising) social care seems a strange place to start, representing a tiny sliver (about 6 per cent) of all public spending on older people. And of course the very poorest will continue to get their care free, so it is virtually impossible for any reforms to improve the position of this group.

Bar chart showing reforms vs current system

Source: Volume 2 Fairer Care Funding – Analysis and evidence supporting the recommendations of the Commission on Funding of Care and Support.

It is worth noting that no one dare question that the NHS should provide free or expensive care for the relatively wealthy – we apply a different principle whereby need overrides personal income or wealth, thus removing people’s fear of catastrophic costs. Dilnot’s proposals apply the same principle to social care. And the overall distributive impact of extra social care spending will depend crucially on how, and from whom, the money is raised – a subject on which there has been little open discussion about the options.

The other apparent objection is that the Dilnot proposals do not address the extra funding needed for demography or the existing unmet need. But the authors of Dilnot’s terms of reference were at pains to exclude those questions and concentrated instead on ways of sharing the costs in a fair and sustainable way. To argue that the proposals should not be implemented because they don’t answer questions that were never asked seems not only to move the goalposts but to dismantle them completely.

Rejecting Dilnot on these grounds does nothing to change the simple arithmetic that care costs will soar as more of us grow older. Without reform they will fall indiscriminately on councils, individuals and their carers, providers and the NHS. There isn’t a no-cost option.

Dilnot has come up with a sensible and coherent framework for sharing the costs in an explicit partnership that protects people from catastrophic costs, offers a better deal for people with modest assets and allows everyone to plan ahead. The urgent challenge now is to identify where the total quantum of resource – for Dilnot and demography – could come from. There are lots of options. In our 2010 analysis Securing good care for more people we showed how attendance allowance and some universal benefits could be reformed. The Institute for Fiscal Studies and others have looked at changes to tax reliefs and national insurance contributions. Estate tax or ‘care duty’ are other ideas. Many of these will be unpalatable, unpopular and deeply controversial. But the consequences of indecision and delay will be worse still.