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A fork in the road

next steps for social care funding reform


The costs of social care funding options, public attitudes to them – and the implications for policy reform

This paper pulls together new financial modelling, public perceptions work and policy analysis to identify the problems with adult social care in England and outline options for its reform. It does not aim to make firm proposals or recommendations but rather to identify and make explicit the advantages and disadvantages, impact and consequences of adopting one option over another. It concludes that reforming the current system will be expensive, but that if reform is chosen, England is now at a clear 'fork in the road' between a better means-tested system and one that is more like the NHS; free at the point of use for those who need it.

While we have not set out to suggest the answer in this work, it does help lay out the groundwork for a solution. We have set out viable options for change, to aid those in government to make the progress that is so desperately needed.

Current funding pressures

There has been concern about the system of publicly funded social care in England for more than 20 years. The report finds that additional revenue will need to be raised for adult social care services even without a major change in the model of delivery. Social care is facing high growth in demand, which is projected to rise by around £12 billion by 2030/31, growing at an average rate of 3.7 per cent a year. At the same time, we project growth in spending on social care of just 2.1 per cent a year. This would leave a funding gap of £1.5 billion in 2020/21 and £6 billion by 2030/31, at current prices.

Alternative models

The paper models the costs of a number of options: maintaining the current system (at 2015/16 levels) and keeping pace with projected demand pressures until 2030/31; restoring the system to the level of quality and access that existed in 2009/10; introducing a ‘cap and floor’ model, similar to the Conservative Party proposals at the 2017 general election; and introducing free personal care (FPC), similar to the model in Scotland.

Funding options

The additional funding required for all these models could be raised in various ways. For example, adding 1p to all rates of National Insurance (NI) by 2030/31 would raise enough to fund introducing the cap and floor model. Combined with the (problematic) option of means-testing winter fuel payments, this could be enough to introduce free personal care. Alternatively, adding 2p to all rates of income tax, or 3p to VAT, would be enough to improve access and quality close to the levels observed in 2009/10.

A rise in general taxation could be delivered through a hypothecated tax for social care. Our research into public attitudes indicated support for its perceived transparency but a key weakness is that any 'take' would rise and fall with the economy, rather than being aligned to changes in need or demand. Implementation would also be a major challenge.

A key question for government is whether, given the need for additional tax revenue will be required to protect the range and quality of care services, it is better to aim for a larger increase in taxation to be able to provide a superior model of care to those facing the burden of the cost. Then, if additional funding is raised, would this be more effectively used to increase access under the current system, or to change the system to address fundamental concerns over equity, complexity and/or protection from catastrophic costs?

Public perceptions and attitudes

The public has little understanding of how social care operates and even less understanding of how it is funded. Although some people have direct or indirect experience of arranging social care, this does not give them insight into the system as a whole.

Many people think the current funding system is more generous than it actually is, with many assuming social care will be free when they need it. Any proposed solution that is not free will be viewed negatively while this remains the case. When people are given more detailed information about how social care works, they recognise that there is a significant problem and believe the current system is not fit for purpose.

Most people in our deliberative events favoured the idea of the state having most responsibility for funding social care. In our quantitative polling, most people (55 per cent) favoured options where responsibility was shared, namely ‘means tested’ (30 per cent) and ‘means tested and capped’ (25 per cent), whereas 41 per cent favoured ‘the government (paid for by taxes)’.

To find and implement a solution to social care funding, public understanding needs to improve and awareness-raising measures must be part of any implementation. Mistrust of government, however, means a traditional education campaign is unlikely to be enough. Instead, a real social movement for social care is needed.

Policy implications

Sustaining the current system will be expensive. Wider reform might cost even more but may be better value.

‘Doing nothing’ is not a safe option and is no longer the easiest one. Demographic pressures, growing public concern and a system at ‘tipping point’ all mean action is politically essential.

To support reform, people need a better understanding of the problems, but politicians are not best placed to provide it. A coalition of organisations, with cross-party support where possible, is required.

Read more in the full report >

The Health Foundation has published a supplementary paper alongside the main report which focuses specifically on social care funding options.