• Social Care Reform, Too Little Too Late?

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“I don’t want children bought up in a country where the only way pensioners can get long term care is by selling their home.”

This pledge came from Tony Blair back in 1997 at the Labour Party Conference. After thirteen years of a Labour Government, progress on social care reform has been limited. As we enter the second half of the Coalition Government, social care reform is on the tip of everyone’s tongue. At a time of austerity and recently emerging from a double dip recession, times are hard. Despite these obstacles, there is a sense that social care reform is slowly but surely moving in the right direction, with the Coalition recently announcing a cap on costs for social care and the Care and Support Bill due to be published this year. It appears that social care reform has been dragged out of the long grass. Although a question that persists is, is this all too little, too late?

The situation?

In July 2012, the Government published the long awaited White Paper, “Caring for our Future: reforming care and support” which the draft Bill accompanied. However, even if the Bill were to be passed in its current format, the changes would not be implemented until April 2015 at the earliest. For those who have been pressing for reform for many years, accusations of “dithering” from Government are understandable. So why has Government decided to try and do something now? The marked increase in the elderly population, caused by the post-war baby boom reaching retirement age, has been the driver behind the White Paper and the legislative changes called for in the draft Bill. Currently, one in six of the UK population is aged 65 or over and by 2050 this is set to increase to one in four. Once an individual reaches 65, there is a one in four chance they will need long-term care which leaves many people fearful for the future and saddled with an increasing burden of debt that could potentially be passed on to their relatives after their death. It is this combination of factors that has increased the sense of urgency to meet the needs of our ageing population. Chris Skidmore, Conservative MP and Member of the Health Select Committee, summarised the feelings of many when he said “the tragedy is that this ageing of the population is not a new discovery, successive governments have had warning after warning that this is an issue that must be confronted.”

How did we get here?

During the previous Labour administration, there was considerable debate and discussion around introducing a controversial scheme where individuals would pay a ten per cent levy on their estates when they die, to ease social care costs. Prior to the election of May 2010, there had been cross-party agreement to “put politics aside” and focus on finding a solution, which the three main parties would support. However, these discussions dramatically broke down when then Shadow Health Secretary, Andrew Lansley MP, accused Labour of attempting to introduce a “death tax”. The timing of the breakdown in talks had more than a little bit to do with the fast approaching General Election.

Christine Quigley, the Labour MP, wrote an article entitled “The ticking time bomb of social care” on Labour List in May 2012 where she commented:

Labour’s proposals for a National Care Service were too little, too late”…“while there’s no doubt that social care reform is a particularly thorny issue to tackle, it’s a sad legacy of Labour’s thirteen years in government that we failed to introduce comprehensive reform to put the care system on a sure footing and to protect the dignity of adult social care users.”

The Commission on Funding of Care and Support was set up as part of the “Coalition Agreement” in May 2010 – the document signed by the leaders of both parties that agreed the key priorities of the Coalition’s programme. Andrew Dilnot a leading Economist was appointed Chair of the Commission, to recommend an affordable and sustainable funding system for care and support. In the subsequent report, “Fairer Care Funding”, he proposed a £35,000 cap as the maximum amount any individual would have to spend on social care in their lifetime. The cap offered a way for families to plan for the future without the fear of having to sell the key assets for which they worked. It was also hoped it might encourage personal savings, which is disincentivised under the current system. At present, anyone who has under £23,250 in assets is given free social care. If that personal allowance was raised, the incentive to save for one’s retirement might increase.

The Coalition’s announcement of social care needing to be a government priority was reaffirmed a year later in The Fairer Care Funding report. “We understand the urgency of reforming the system of social care to provide much more control to individuals and their carers and to ease the cost burden that they and their families need.” Senior Fellow at the Kings Fund, Richard Humphries praised The Fairer Care Funding report describing it as “a credible and costed way forward.” He stressed the necessity for government to “endorse the framework for reform it sets out; outline a clear timetable for change; and honour its commitment to bring forward legislation in 2012.”

After The Fairer Care Funding report was published, it took the Government another year to respond, with its progress report on “Social Care Funding Reform”, which was published in July 2012. The report was eagerly anticipated as a means to speed up reform, however then Secretary of State for Health Andrew Lansley announced “that while the government supported the care funding principles laid out by the Dilnot Commission, the size of the structural deficit and the economic situation meant it was unable to commit to introducing the new system at this stage.” Instead, the Government’s report introduced a universal system of deferred payments for residential care, starting from April 2015. Local authorities would pay for the care of an individual in advance so they would not have to sell their home. When the individual died and the house was eventually sold, the council would regain the money it had lent for the care. Many have claimed this system reads as similar in structure to Labour’s infamous “death tax” so lambasted by Lansley, although his response was to stress that his system is voluntary and not compulsory.

It has been three years since Dilnot was commissioned by the Government to devise a plan to reform social care and to finally tackle it with a costed and planned solution. Over this period of time there have been huge amounts of speculation. Some have been convinced that it was purely political manoeuvring by David Cameron to announce the cap costs because the Liberal Democrats and Labour were preparing to include proposals in their next election manifestos. Others have raised doubts over how it will be funded; Paul Burstow ex-Care Minister spoke out about his time in the Coalition where he said “when the government last talked about this I made the point we had been frustrated by the Treasury not being willing to engage in a sensible discussion about alternatives to Dilnot – and they have no alternative – or how it might be paid for.” With no consensus being made on a cap, it appeared that social care was stuck in a rut, contributing to people’s frustration.

What now?

As of the 11th of February 2013, the Government finally announced its solution to the social care crisis, which was to cap the elderly population’s care costs at £75,000. The Government further announced plans to increase the asset threshold from £23,250 to £123,000. Any person who has assets of £14,000 or under will pay nothing. Andrew Dilnot said, “The cap that is being proposed is £75,000 we think in 2017 prices. That’s the equivalent of £61,000 in our terms, so it is higher than we would have wanted – £11,000 higher than the top end of our range, and I regret that, but I recognise the public finances are in a pretty tricky state. It doesn’t seem to me that it is so different from what we wanted as to radically transform the basis of the system.”

On the 17th of March 2013, a few days prior to the Budget Speech, Chancellor George Osborne announced that the cap will be lowered to £72,000 and implemented a year earlier in 2016. The proposed asset threshold was also lowered from £123,5000 to £118,000. As part of the Government’s overhaul of the pension system and social care funding, Mr. Osborne said the changes would “be a huge boost for people who want to save for their retirement.” Whilst there is great appreciation and relief that the cap has been announced this year and subsequently lowered, it has been a lengthy three-year wait and it is still £37,000 more than Dilnot suggested. Many are asking how many people is this cap really going to benefit and what about the 800,000 people who are struggling to make ends meet now and are receiving no state support?

How are we funding this?

The current Secretary of State for Health Rt. Hon Jeremy Hunt MP has said the plans “are expected to cost about £1 billion a year [and will] be part funded by freezing the inheritance tax threshold at £325,000 for individuals and £650,000 for couples for three years from 2015.” Eighty per cent of the £1 billion cost will come from extra National Insurance paid by employers as part of introducing the new single-tier pension. The rest (£200 million a year) will come from extending Labour’s freeze on the Inheritance Tax threshold, by three years. The reaction to how the cap will be funded is generating controversy as many critics say “that it will leave thousands of families £95,000 worse off than if the thresholds rose with inflation.” Others see the freezing of the inheritance tax threshold as comparable to Labour’s death tax. Whereas Matthew Sinclair from the TaxPayer’s Alliance said “This sleight of hand from Chancellor George Osborne is unfairly punishing families who simply want to leave something to their relatives.”

What are people saying now?

The Coalition have finally set a cap for social care but seem to have overlooked Dilnot’s recommendations. Janet Davies, managing director of Symponia said:

People should not be duped; this is another smoke and mirrors production by the Coalition. We need the Government to be more transparent with its electorate. Shame on George Osborne for saying once people have spent £72,000 they won’t have to pay any more; it simply isn’t true.”

The £72,000 cap the Government has announced is misleading. It only covers personal social care, but not general living expenses. In Dilnot’s initial report he estimated these general livings costs to be anywhere in the region of £7,000 to £10,000 a year. Therefore, not only will the cap benefit a small percentage of the elderly but also this small amount will still have to fund many other costs for the year ahead. The idea of growing older in the UK still has a rather gloomy outlook with costs spiraling out of control for many.

James Lloyd, a journalist for the magazine ‘Public Finance’ that provides news and expert comment on public policy and finance said:

The capped cost model will only meter people’s notional care costs from the day of its launch onward, rather than counting backward. In fact it’s still likely to be around 2021 before anyone hits the ‘cap’. In presenting the change, the Chancellor said the government will reduce the cap to £72,000 from the previous £75,000 figure. This shows either a worrying lack of grip on the policy, or a deliberate attempt to mislead people. The capped cost model will always see the cap up rated with inflation, so a £72,000 cap in 2016 will still become around £75,000 in 2017, £78,000 in 2018, £81,000 in 2019 and so on.

People are still unclear as to exactly how the cap is going to work and the finer details. Clarification is necessary on several points: how much time will elapse before the Local Authority picks up the bill of individual’s care? How is a postcode lottery going to be avoided? What about people who live in areas of the country where the cost of residential care is more expensive? Will they end up paying considerably more per week than the Local Authority rate? What about the legal challenges councils will face? Will everything be ready for 2016, as the original timetable of 2017 was already challenging? Will the money be available in 2016? Will councils be able to find the money without reducing their quality or amount of care they have available? Can the Government really guarantee that individual’s homes won’t be sold in 2015 if they have no other way of funding the costs?

Conclusions

Many in the sector are urging the Government to think again about introducing a national care system paid through general taxation which would be free at the point of delivery. The idea of everyone paying something was originally proposed by Andy Burnham prior to the 2010 elections, “A universal levy that everyone but the poorest would have to pay now definitely seems dead in the water, however the opposition and many other health and care sector commentators remain convinced by the idea of pooling budgets with the NHS or merging the care and health budgets completely.” However the Coalition has already dismissed this idea on the basis that other countries using this model were forced to abandon it due to economic pressures.

The Coalition deserves credit for tackling such a thorny issue like Social Care and progress has been relatively quick in comparison to the previous Labour government who struggled to deal with the issue. However, at a time of austerity, the Coalition has been less generous than Dilnot recommended. With the cap not being implemented until 2016 many may well ask what happens to the people who are struggling with care costs now? Therefore, the same heartbreaking issues remain where people have gone and worked all their lives and paid their taxes, but could still lose everything. Undoubtedly the support is there for the reforms, but the solutions so far have fallen a little flat by way of cost and slow implementation. Whilst the Coalition have announced a cap they have failed to provide clarity and certainty about the Government’s plans or addressed the fear of the elderly who still feel they are not protected. Whatever the underlying reasons for social care reform moving up the political agenda, those who are impacted by social care costs, often the most vulnerable in our society, will welcome any more progress. As the economy gradually improves, it will be crucial that the Government looks back at these figures and puts more money into social care as the number of elderly is only ever going to increase.

After the battle for the NHS the Coalition may not have the stomach to fight for social care reform, but if they don’t it may cost the Conservatives their most loyal supporters. Richard Humphries summarised the journey of social care reform by stressing that “it will be the big tectonic plates of politics and money – not transient ministerial merry-go-rounds – that will shape the future of our care system and the lives of people who use it.”

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