Skip to content

This content is more than five years old

Report

Approaches to social care funding

It is widely accepted that the system for funding social care is in urgent need of reform. Faced with shrinking budgets, local authorities are struggling to meet the growing demand for care, linked to increasing complexity in need and an ageing population.

As a result, the number of older people receiving publicly funded social care has declined. While in practice, much of this shortfall has been met by private spending and informal care; it is also likely that many people’s care needs are going unmet.

There is little sign of a long-term solution on the horizon. For those who have watched the progress of the social care system over the years, this is a familiar disappointment. Since 1998, there have been 12 green papers, white papers and other consultations, as well as five independent commissions, all attempting to grapple with the problem of securing a sustainable social care system. It has been called ‘one of the greatest unresolved public policy issues of our time’.

Against this background, the Health Foundation and The King’s Fund are undertaking work exploring options for the future funding of social care. This paper considers the following approaches to funding social care for older people in England:

  • Improving the current system

  • The Conservative Party’s proposals at the time of the 2017 general election (a revised means test and a cap on care costs)

  • A single budget for health and social care

  • Free personal care

  • A hypothecated tax for social care

These models were chosen to reflect the solutions most commonly raised in the debate around social care funding, and are not a comprehensive list of possible models. We undertook a review of relevant literature and engaged with two stakeholder groups to develop a framework for exploring these options, and to identify the key strengths and weakness of each. Our objective is not to put forward a single recommendation, but to set out the implications of each of the models.

Key findings

  • There is scope for making small improvements within the current system, and this approach would recognise the great difficulty successive governments have faced in achieving major reform. However, it would not address many of the fundamental problems with the current system, including the downward trend in the numbers receiving publicly funded care. Nor would it protect people against ‘catastrophic’ care costs.

  • The Conservative Party’s proposals would have, for some, resulted in a more generous system than the one currently in place. However, there are real concerns around implementing and operating such a complex system. There is also a question as to whether this would be the best use of additional funding for social care.

  • Whilst a joint health and social care budget might support progress towards more integrated care, it will not in itself address the differences in eligibility between the two systems, or generate additional revenue for health or care.

  • Free personal care would mean increasing the government’s ‘offer’ on social care. However, given this would require an increase in public spending, there is a question as to whether this would be the best use of additional funding for social care.

  • A hypothecated tax may help gain public support for raising additional funding for social care. However, this would represent a significant shift from the existing system, and could exacerbate the lack of alignment between the health and social care.