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The social care system is in crisis. Here’s how to fix it

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Published date
12 Jul 2019

Social care is a crucial service. The chances are that everyone will either rely upon it or have loved ones who do. But social care has been in crisis for years.

In April, former Deputy PM Damian Green called for a type of social care insurance.

Last week a House of Lords Commission called for £8bn of extra spending to be paid for out of general taxation.

On Thursday, The Resolution Foundation hosted Green, the Liberal Democrat former care minister Norman Lamb and Labour’s former shadow care minister Liz Kendall, to discuss ideas to tackle the social care crisis.

The three different speakers all agreed that it was not possible to carry on as we are.

But there were significant differences within their proposals of what must change.

What was discussed?

Damian Green advocates basic state provision for all while encouraging those who can to pay for additional provision. They might pay premiums over several years like an insurance policy or pension. Or they might make a one-off payment.

Norman Lamb defended the provisions set out in the Dilnot Review from 2011.

This suggested a cap on how much people would pay for care before the state stepped in to pay the rest, set at £35,000. But he acknowledged government would need to go further.

Both he and Liz Kendall argued for citizen’s assemblies to reach a consensus on how to pay for the provision required.

Meanwhile, Liz Kendall argued that we need to find ways to use the wealth and assets that older generations have accumulated – which our present tax system has failed to take account of.

She argued we might need hypothecated taxes (a tax where the money generated is reserved for a specific purpose) to ensure social care gets the funding it requires.

But it’s not just about funding

Solutions to the social care crisis require a rethink in three key areas:

1. Rethinking Commissioning

Increasing funding is important, but unless we change the way funding is delivered, a lot of it won’t go where it’s needed most.

The social care system is dominated by big chain operators. Most of these owe large amounts to the private equity firms that back them.

Even when the local authority pays for the bed in the care home, the market is dominated by large companies.

The largest 5 firms provide 20% of all publicly funded beds. And the big providers frequently offer 11% returns to their investors.

That is a huge amount of money which is leaving the care system and going to shareholders.

These firms rely on high turnover and low overhead models of care to fund massive repayments of these debts and consistent dividend payments to shareholders.

The result is that for every £2bn of public spending on social care, £115m goes to investors and shareholders. That’s cash that could be paying for better training, better wages and better care.

Often hard-pressed councils resort to unimaginative, lowest cost commissioning, which means care is focussed on a production line of tasks to time slots, zero hours contracts and unpaid travel time.

This pushes all the risk on to the low-paid women who make up most of the care workforce.

But there are steps that local authorities can take now, which can start to correct this. Local authorities could use existing powers to become ‘ethical care councils’.

Councils like Salford , Cornwall , and Plymouth already commission for outcomes rather than tasks.

This means long-term relationships that can provide innovative care, more investment in the workforce and better employment standards .

2. Rethinking industrial strategy

Social care is an important part of our economy. It contributes over £40bn a year to the UK economy.

Social care is needed everywhere, and relied upon by almost everyone at one time or another. If you don’t use it directly, someone you care about will.

When we think about boosting local economies, we should think about the role of social care.

Social care is also rooted in local communities, so it has huge capacity to provide social and economic benefits direct to those communities if it is delivered in the right way.

If social care providers ensure better employment standards, providing training and living wages it would provide a huge boost to local economies all over the country.

And the quality of care delivered would improve as well .

Councils can use their commissioning powers to improve the care market.

They could use ethical care charters to insist on a voice for unions representing the workforce, to prevent zero hours contracts and paid training and supervision. This could apply throughout the supply chain.

If they were allowed to borrow at less than market rate from the Public Works Loan Board, they could build new facilities, improving the supply and stimulating the local construction industry, with knock-on effects across the economy.

The opportunities are huge.

3. Rethinking funding

OK, it is about funding too. The funding crisis in social care is a regular feature of budget debates. And for good reason.

We’ve got an ageing population; the number of people aged 65 + increased by a quarter between 2008 and 2018.

But funding is now £700m lower in real terms than it was in 2010/11.

As Liz Kendall pointed out on Thursday, within a decade we will need to find £6bn just to maintain our present, and insufficient services.

At the moment the funding for social care means some people with very low income receive means tested support.

Some people with significant income or personal wealth can pay for a good level of care and the majority of people in the middle just hope they never face the potentially catastrophic costs of significant care needs.

The TUC has been arguing for a tax funded national care service for years. This should be fully integrated with the NHS. It’s the best way of sharing out the risk of significant care needs across society.

One estimate from The Kings Fund suggested that we would need to increase spending on social care from 9.7% of Gross Domestic Product (GDP) to 11.3% GDP by 2025. That’s not a small amount, but other European nations already do it.

Conclusion

Social care is in a bad way. But we should use this opportunity to rethink how it’s structured, how we fund it and the role it plays not just for recipients but for the community and the economy.

Then we can build a system that all of us, whichever party we support, can be proud of.