Social care reform is welcome but must be first step on bigger journey
This week’s announcement of a health and social care levy was hugely significant. Much has been made of the impact on the taxation system: a 1.25 percentage point increase in national insurance contributions across employee earnings and employer wage costs (representing a 2.5% overall increase in the tax rate on earnings). It’s a move that will raise £12-14bn a year, and take this Conservative Government into new territory on exchequer spending at a time the economy remains in a vulnerable position.
The precise allocations of the £36bn package between the NHS, local government and the devolved administrations are to be confirmed in October’s spending review. In the short term however, we should assess how these proposals stack-up against alternatives, including those proposed by Policy Exchange in 2019 which look to fund long-term complex social care out of general taxation. We also need to ask if the proposals meet the primary objective on the first page of the Build Back Better plan: will the proposals sustain a world leading health and social care system across the UK?
The response is mixed. Around 85% of the funding for this first three years will go towards the NHS. A large portion of this is earmarked for addressing the backlogs in planned care, which were worsening pre-pandemic but have since spiralled out of control – with 92% of people waiting 44 weeks for treatment, up from 25 weeks pre-COVID-19. Whilst the document only has a few paragraphs on how the funding will be deployed, the thrust and the sentiment here is a recognition that a transformative approach to tackling the waiting list is required, echoing our recent report on the waiting list. This should be welcomed. But there is a danger here that we walk into the same wall, with investment in acute care prioritised and social care remaining the junior partner, receiving inadequate resource and attention.
On social care, the announcement is the first meaningful movement toward reform in decades. For that, the Prime Minister deserves credit. Yet whilst the introduction of a dedicated levy borrows from the New Labour playbook of the 2000s (whereby the revenue-raising mechanism is closely tied to the outcome) the downside to hypothecation is linking revenue generation to the ups and downs of the economic cycle – an issue Jacob Rees-Mogg explicitly raised in his Foreword to Policy Exchange’s 2019 report. There is a risk here that the fiscal certainty required to deliver a reformed, long-term approach to care isn’t met.
It’s politics however that has won the day. Previous attempts at reform have been dogged by a lack of public understanding. Around 90 percent of us have at least one interaction with the NHS each year, whereas only 14 percent do the same with social care. It is no surprise that the public have struggled to vote for proposals which they do not understand. As complicated as this reform is at first glance, showing how a single, significant tax rise can help to deliver reform in both, the Government can perhaps start to push the public conversation around the importance of a functioning adult social care system up onto a shared platform with the NHS. For a social care sector often overlooked, that can only be a good thing.
Yet with most of the funding allocated towards the NHS, the £5.4bn package for social care disappoints. The majority of older people requiring social care support will never hit the new £86,000 cap in lifetime care costs when it is introduced from 2023 – especially given that so-called ‘hotel costs’ (i.e., the costs of accommodation, food and energy bills) are excluded. And many could still find themselves excluded by the restrictive means test which is applied by local authorities. There is also no guarantee that the new cap will prevent someone having to sell their own home to fund social care – breaching a key test set by Boris Johnson in his first speech at Prime Minister.
In 2019, Policy Exchange produced an alternative proposal for the social care market. We based our recommendation for complex social care to be made available free at the point of use on a simple realisation: the current system exhibits a bias in favour of treating acute conditions, along with neglect of community medicine, palliative care and other help for the chronically ill, the old and the dying.
The State should not pay for everything, but there must be logic behind what the State does for its citizens. There should be – for instance – a level-playing field when it comes to the conditions we care for: why should somebody with Alzheimer’s not receive adequate coverage compared to those receiving treatment for cancer? The Policy Exchange proposal would logically unify the welfare state fragmented by the creation of the NHS in 1948 whereby a formal distinction was made between healthcare, provided free at the point of use by the NHS, and social care, provided by local authorities on a means-tested basis. This brings with it greater costs, but would fundamentally address the disparity between health and care in a way that the Build Back Better plan does not. Importantly a cap on social care costs and free personal care are not mutually exclusive; an improved economic outlook could still see Policy Exchange’s proposals implemented later in this Parliament.
The plan published this week must therefore be the starting point. DHSC has committed to producing a paper on integration later this year, looking at where proposals can go further than the current Health and Care Bill which has reached Committee stage in the Commons. A White Paper for Adult Social Care will also follow in the coming months. This Government will use this to set out more information on support for unpaid carers, information advice and guidance for service users, and investment in housing and technology. Many in the social care market will be hoping and advocating for more.
There is particular nervousness that the NHS will control the lion’s share of funding, with the potential for wider transformation in adult social care squeezed out. This week’s announcement signalled a fiscal event and made a statement of intent. Now it must stimulate the Government’s ambition to further reform social care for good.
Robert Ede is Head of Health and Social Care at Policy Exchange.