Andy Burnham announced over the weekend that he intended to create a “National Care Service”:
“The prime minister said the new NHS-style service would be funded by “everybody” but did not give further details on how his long-term plan would be paid for, indicating that a tax rise may be on the cards.
One option could be to link reform of social care with looking again at the pensions triple lock, with government insiders not ruling it out in the future.
He said Labour would put the proposals into its next general election manifesto so voters could give their endorsement, in the hope of reducing the risk that political attacks over “death taxes” would sink the policy.”
I’ve a feeling that Burnham’s recent experience with his own father might inform his approach here but if we are to ‘fix’ the social care system there are a load of questions that need answering before proposals are set out.
The first question we need to answer is what exactly do we mean by care? In England (the service is devolved so falls under the remit of the Scottish and Welsh governments in those countries) care plans can include, depending on circumstances, everything from assistance with cleaning or laundry through to personal nursing care and assistance with personal hygiene. Moreover most of the care provided in England is provided in a person’s own home not in an institutional setting. Defining what is an isn’t care (for the purpose of ‘free’ funding) is a vital precursor to designing any new system.
The Scottish system puts significant limits on its definition of care. The Community Care and Health (Scotland) Act 2002 lists what is defined as care although the term “support for overall health and wellness” leaves quite a bit of wiggle room. It does however specifically exclude care outside the home (shopping, visiting and attending supported community facilities). Plus, in the Scottish system, room and board is not provided free. Typically this reduces a weekly home fee of around £1500 by £400-500.
Under the Burnham system will we get something similar to Scotland or a completely funded service? This is important because if it is the latter we can expect, on day one of the new system, the cost of residential care will increase by roughly 50% as current self-funders switch to state funded.
“Approximately, 137,480 (37.0%) of care home residents were classified as self-funders, compared with approximately 234,555 (63.0%) state-funded residents (Figure 1). This is a 9.2% increase in self-funders from last year (125,954), which was not statistically significant, and the proportion of self-funding residents was also not statistically significantly different from last year (34.9%).”
At present about two-thirds of council social care spending supports residential care and we need to add the NHS Better Care Fund to this making a total of around £27 billion. On these numbers the ending of self-care would result in an additional £9bn in direct residential care costs.
There is, however, an additional impact since across most of the system self-funded residents pay significantly more (an average of £144 per week) than council-funded residents. This simply reflects that, especially in London and the South East, council fee levels do not cover the full cost of the residential placement. If there is no more self care then the cost gap would need to be closed. This is probably going to add a further £2-3bn to the overall cost of providing care.
These estimates only look at residential care yet far more people (roughly three times more) receive council-funded domiciliary care compared to those receiving institutional care. Beyond this there is an unknown number of people who make their own arrangements for care services. The home care industry estimates just short of a million people receiving assessed domiciliary care (split roughly 80/20 between council and self-funded) but with nearly 600,000 people employed in the industry this feels like an underestimate. There is also an unknown number of people who obtain care from friends, neighbours or family. There are 1.5m people receiving carer’s allowance in the UK and a large part of these payments are to people caring for an elderly person.
We can’t assume that, in a wholly free, ‘at the point of need’, system we wouldn’t see an increase in people accessing state provided services who previously made their own arrangements. We can expect additional costs of at least £2bn and probably double that amount. The estimate of £18bn suggested to the Prime Minister isn’t a long way off what a new system would cost. The Health Foundation estimated £17bn additional cost in January 2024 and costs, especially staffing costs, have risen significantly since then.
In short, to get an answer we need to define what we mean by care, look at the cost structures within the industry at the present, and estimate the amount of care provided by people without making use of state provision or support. Because the public debate is all about care homes rather than the whole system the most likely proposal, one similar to the Scottish system, will still result in many people needing to find £1000-1200 per week to pay for bed and board at the care home where they receive their free personal care.
All this additional cost needs also to be set against the anticipated future demand. The Health Foundation estimates that (at today’s prices) an additional £8.4bn is needed by 2032 just to fund the existing inadequate system. To meet the full cost of care within the system as currently structured would need an additional £18.4bn by 2032. If Andy Burnham wants a free system it isn’t going to cost £18bn, it’s going to cost £36bn.
Getting people to use their own wealth to pay for their own care is often condemned as unfair. My Mum spent nearly two years in a care home eating into Dad’s assets whereas my wife’s Dad fell while shopping and died 24 hours later requiring zero in care costs. But we need also to recognise that my generation - over 60s in Britain - own roughly £3 trillion in housing assets. The average costs of care, even with a quite prolonged stay in a home, is affordable by a significant minority of older people. And remember again that most people do not end their lives in a care home. Even among those over 85 less that 15% are in a care home. Most of the elderly spend their last days in their own home supported by family and carers. And, as we’ve seen above, most care home residents are funded by the council. We are in danger of seeing a comprehensive and expensive reform to the current system that gives little additional benefit to the majority of those receiving care but is really good news for the children of those old people with valuable housing assets.