More than two years since Boris Johnson stood on the steps of 10 Downing Street and promised to “fix the crisis in social care once and for all”, the prime minister has announced his long-awaited plan for reform.

The problems with the existing system have been well-known for a long time – nearly a quarter of a century has passed since Tony Blair announced that a royal commission would consider how to reform social care funding – but successive governments have struggled to address them because of the public and media backlash that has greeted any proposals. But while this administration should be congratulated for grasping the nettle, there is little clarity about how it intends to fix existing problems in social care – or whether the promised money will make its way to the system.

It is a shame that the government’s tax rises will hit workers hardest

The government’s announcement identified not only how it will extend support for care costs but also how it will be paid for. This is good politics, as packaging these announcements together makes it more likely that both parts of the deal will pass – the public have been told clearly that this new offer from the state does not come for free.

And while the government’s plan to pay for extra social care spending by raising National Insurance contributions (NICs) breaks a manifesto pledge, from an economic perspective it is preferable to do this than creating larger economic distortions by securing the same sum of money from other smaller taxes not explicitly mentioned in the manifesto. 

It is unfortunate, however, that the government has once again pandered to the public’s misconception that some labelled taxes “pay for” specific items of spending, which makes them more willing to accept a NICs rise – and the proposed new health and social care levy – than an increase in other taxes. There is no meaningful link between NICs and health spending – anymore than there is a direct link between, say, income tax and health spending. Different taxes hit different people and it is not clear why the government has decided that workers, who are liable to pay NICs, should pay more, while (say) those with income from pensions should not; or why employees should have their tax liability increased more than the self-employed.

The government’s social care proposals do not fix the problems in the current system

Properly funding and staffing the existing system is a major problem, and any expansion of state-funded care will ring hollow without making the existing means-tested system – which is creaking at the seams – sustainable. Fewer people now receive local authority-funded social care than in 2010 despite rapidly rising demand. Care worker turnover and vacancy rates had increased to record levels before the pandemic – creating high recruitment costs for care providers and causing disruption for care users. These pressures are only likely to grow in the near future. Johnson’s promise of an £86,000 cap to eliminate the risk of unlimited costs will increase the number of people who would qualify for state-funded care and reduce the number of people who have to sell their home to pay for care, but it will not address the problems that have built up over the last decade.[3]

The government has promised £5.4bn over the next three years to cover implementing the cap, floor, and improving existing services. It has promised it will better support unpaid carers, provide more housing adaptations to help people live at home, and more staff support. But it has also said that it expects local authorities to meet rising demand and costs of the existing system through “council tax, the social care precept, and long-term efficiencies”. Given the tight settlement for the rest of public spending and the limited number of opportunities for efficiencies after a decade of austerity, this is unlikely to be enough to fix the problems.

The announcement risks temporary funding for the NHS becoming permanent

The government plans to spend an additional £12bn in each year between 2022/23 and 2024/25. In theory, this is enough to reform social care with some money left over for tackling the backlog of elective operations. Of the £36bn allocated over the next three years, 44% will go to NHS England and Improvement, 16% to the devolved nations as Barnett consequentials, 15% to social care in England, and the remaining 25% to the Department of Health and Social Care – although the government has said that it will only confirm the allocation of additional money between local authorities and the Department of Health and Social Care in the 2021 spending review.

Previous funds for specific tasks for the NHS have ended up being swallowed into the NHS budget permanently. The 2015 Sustainability and Transformation Fund – which was designed for NHS trusts to eliminate deficits and transform services – was ultimately used to “to address the financial deficit in the trust sector, rather than improving and developing services for patients”.[1] There is a risk that the funding for the NHS to tackle backlogs goes into the baseline NHS budget and the funding never ends up going to local authorities to reform social care.

The additional funding for the NHS appears to be frontloaded – with the largest increase over the NHS pre-covid budget coming in 2022/23. But spare staff and beds to undertake lots more operations are in short supply.[2] Trying to spend the money to reduce the elective backlog as quickly as possible could force NHS trusts to pay over the odds for staff and to use the independent sector’s beds and capacity. In short: it’s not clear how many additional operations this money can actually buy.

To ensure it spends the money well and that local authorities receive additional funds for social care, the government should publish a clear plan covering:

  • how NHS England and Improvement will spend the money to reduce elective waiting times
  • where the staff to perform the additional operations will come from
  • how much additional money it intends to spend on social care, in each year
  • how much of that sum is for reform and how much is for improvements to the existing system

The government’s announcement today is welcome, but the plan it has unveiled does not yet go far enough.

 


  1. House of Commons Committee of Public Accounts, Sustainability and transformation in the NHS Twenty-Ninth Report of Session 2017–19, 27 March 2018, https://publications.parliament.uk/pa/cm201719/cmselect/cmpubacc/793/793.pdf
  2. Anandaciva S, A combined health and care levy could create as many problems as it solves, The King’s Fund, 18 August 2021, www.kingsfund.org.uk/blog/2021/08/health-and-care-levy-problems

 

Original source – The Institute for Government

Comments closed