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Paying for care: back to square one?

The need to address the financial consequences of the success story that is our ageing population is universally acknowledged. But the government’s decision to breach an explicit manifesto commitment by delaying reforms to social care funding (phase 2 of the Care Act 2014) until 2020 again demonstrates the apparent inability of successive governments to make headway on this issue.

The fact that there have been at least four independent reviews or commissions, four consultations, and five white and green papers over the past 17 years pays testimony to how much effort has been expended to so little effect.

It is to the credit of the coalition government that, from the outset, it recognised the ‘urgency’ of addressing social care funding, set up an independent commission chaired by Andrew Dilnot, and to the surprise of many, went on to commit both legislation and new money to implement its central recommendations from 2016.

The Dilnot reforms, however modest, did seem like a breakthrough and commanded impressive support right across the social care sector. They offered some protection to people facing very high or ‘catastrophic’ care costs, more generous means-test thresholds and free care for disabled people entering adulthood with eligible care needs.

So why the about-turn? There were genuine concerns within local government about the challenge of implementing a technically difficult and complex set of changes in the toughest financial climate in living memory. Worries about the deteriorating financial position of social care were fuelled by the £1 billion extra cost of the national minimum/living wage announced in the summer budget. Unsurprisingly the Local Government Association had asked for a delay of two years to allow more time for implementation and address these issues with government. But postponement to the end of this parliament makes it almost certain – as ministerial co-architects of the changes Paul Burstow and Norman Lamb have argued – that these reforms will not happen. In effect they have been abandoned, not postponed.

It was always clear that the reforms were aimed at the question of ‘who pays’ – striking a fairer balance between the individual and the state – not how much money the social care system needs. The Dilnot Commission itself said that additional funding was ‘urgently required’ to address growing needs, a conclusion reiterated more recently by the Barker Commission. It is disappointing that the coalition did not use the Dilnot reforms as a stepping stone towards addressing these bigger funding challenges through a longer term roadmap for reform as we argued at the time. But scrapping the reforms will make this much harder, not easier as some have argued, for at least three reasons.

First, it reverses the landmark principle that, for the first time since the creation of the NHS in 1948, the state places a limit on how much people should have to pay for their care. The cap and means-test thresholds could have been made more generous later on as resources allowed.

Second, it creates at least 80,000 losers – the people who would have benefited both from the cap on care costs and improvements to the means test. Less publicised casualties of the delay include a new duty on councils to help self-funders arrange their own care, and a new appeals system.

The most critical consequence is that the money the government, in the 2013 Budget, had committed to find to pay for the reforms (from changes to inheritance tax thresholds and national insurance) has been lost. There is no commitment to reinvest this money in social care – £2.4 billion a year by 2025, £6 billion in total over the next five years. As things stand, the postponement adds not a penny to beleaguered council care budgets. Instead the case for additional money for social care will have to start all over again in the autumn spending review. Social care will have to take its chance in HM Treasury negotiations, at the mercy of more swingeing cuts to unprotected local government budgets.

So, while the government has set out a clear agenda and £8 billion of new investment for the NHS, its decision leaves it with no plan for social care other than to reconsider the zombie policy of private insurance which has gained no traction despite ministerial efforts to persuade the insurance industry otherwise. Funding reform has gone backwards five years. To everyone who works in or uses health and social care services, this should be a deeply worrying asymmetry. It underlines the compelling case for a single ring-fenced settlement for both the NHS and social care that recognises the inter-dependency of these services and the needs they meet. To demonstrate that it remains genuinely committed to social care reform, the government should ensure that a sum at least equivalent to the cost of implementing the Care Act is identified through the autumn Spending Review.