Cross-party talks are about to start on funding long-term care in England. A positive start would be implementing the recommendations of the Dilnot Commission in full
The Commission on Funding of Care and Support, chaired by Andrew Dilnot, reported last July. It recommended long overdue changes to the system for funding long-term care in England, which at the time were widely supported. The government promised an early response in the form of a white paper on social care.
Dilnot’s report, Fairer funding for all, proposed raising the means-tested threshold above which people become liable for their full care costs from £23,250 to £100,000. It also recommended capping individual liability at £35,000. After that, the state would pay. If accepted, these changes would cost an extra £2.8bn by 2020/21 and £3.6bn by 2025/26.
These are modest proposals but there are already worrying signs of political backtracking. It now appears that the social care white paper, due to be published by Easter, might not even take Dilnot’s recommendations on board. Instead, a ‘progress report’ is promised on their implementation.
This is all the more disturbing given that the commission’s proposals seriously under-estimate the actual future costs of funding care for an ageing population. Numbers of over-65s are projected to grow by 50% during the next 20 years, with those aged 90-plus almost trebling. As a new report from the Strategic Society Centre policy think-tank spells out, the government will need to spend an extra £8.3bn just to maintain social care services in England at current levels. When spending on social care and disability-related benefits are combined, an additional £11.5bn will be needed by 2025 just to maintain current levels of provision. This is equivalent to about 2% of current taxation revenue.
Meanwhile, current funding for social care is inadequate. According to Age UK, between 2005/06 and 2010/11 demand for social care for older people outstripped expenditure by about 9%. Despite the population ageing, the number of adults using residential and home care services has actually fallen by about 20% since 2003; the number receiving local authority-funded care at home decreased from 489,000 in 2004 to 299,000 in 2009. This is largely because local authorities have raised eligibility thresholds for publicly funded care. Current spending cuts will increase these funding pressures. By 2014, real-terms public expenditure on older people’s care will be some £250m lower than it was in 2004.
Under-funding is related to concerns about the quality of care that older and disabled people receive. The Equality and Human Rights Commission has argued that the poor quality of home care received by some older people fails to protect basic human rights.
We therefore face three major challenges: implementing Dilnot’s modest proposals, keeping pace with demographic trends, and improving the level and quality of social care. All these need extra funding.
The Strategic Society Centre spells out how this could be done. First, some universal benefits, such as the Winter Fuel Payment, could be means-tested and others, such as free TV licences for the over-75s, could be cut. But these measures would yield only a fraction of the total needed.
Second, new taxes could be introduced such as a flat-rate charge on estates worth more than £40,000, levying capital gains tax on the sale of a primary residence after death, or removing tax exemption on private pension contributions.
Third, money could come from pre-funded personal or state-sponsored social insurance. If a third of people opted to pay into a National Care Fund on retirement, this could generate £2.6bn by 2025.
Cross-party talks on care funding are about to begin. Given the stark figures, the participants will have to face some difficult political decisions. Many other countries have already introduced universal entitlements to some public funding for long-term care. Adopting such a principle could yield valuable political dividends.
After all, some of those difficult decisions could be much more palatable if everybody who needs care, now or in the future, stood to gain.
Caroline Glendinning is chair of the UK Social Policy Association and professor of social policy at York University’s Social Policy Research Unit
