No country for old men?

Social care was an issue on the minds of many politicians before the general election. This includes former business secretary Lord Mandelson, who shared his thoughts with a camera crew during the election campaign for a documentary called The Real PM? 

One scene shows Mandelson reclining as he listens to a worried Downing Street adviser, Patrick Diamond, in a meeting to discuss Labour’s manifesto. “Personally, I think we are in a real mess over social care,” says Diamond. “We’ve discovered a £3.8bn black hole in the funding for maintaining the current provision.” With considerable understatement, Mandelson quietly replies: “Okay, that’s very unfortunate.”

Nothing has changed that would eliminate that black hole. And not only is current funding insufficient to maintain current levels of support, but demand for adult social care is expected to burgeon. Health secretary Andrew Lansley recently said that the number of 85-year-olds is projected to double, so that “in the next 20 years, we estimate that 1.7 million more people will have a potential care need than today”.

This is a financial time bomb for local authorities – which spent £13.8bn on commissioning and providing social care in 2008-9 alone. Civil servants working with local authorities on other topics should be aware that adult social care will be taking up a lot of their partners’ attention.

If the issue isn’t defused, the NHS will have to pick up the pieces – and fixing medical problems caused by a lack of care is far more expensive than providing a good, preventative level of care in the first place. Prior to the election, the three major parties tried to build consensus on how to proceed, but discussions collapsed and they put forward different ideas in their manifestos (see box).

In July, the coalition government set up the Commission on the Funding of Care and Support to report back within a year on a sustainable model for funding adult social care. The commission is chaired by economist Andrew Dilnot, who’s joined by ex-health minister Lord Norman Warner and former disability charity chief executive Dame Jo Williams. “It’s a very skilled and credible group of people,” says Richard Humphries, senior fellow at the King’s Fund think-tank. “If they can’t come up with a well-crafted set of recommendations, I’m not sure who can.”

The King’s Fund did analyse potential funding models in 2005, in an influential review called Securing Good Care for Older People. Care is currently means-tested and provided by the taxpayer, but the King’s Fund did not include this model among its three favourite solutions. Instead it suggested a free personal care model – which would provide a full package of personal care without charge; a limited liability model – a means-tested system for the first three or four years, with free care provided thereafter; and a partnership model – which provides a minimum amount of care free of charge, but then requires individuals to match contributions by the state.

The King’s Fund favoured the partnership model, partly because it allows the balance between state and individual care to be adjusted over time. Humphries worked on the report, and updated it earlier this year. “We’ve won the argument that the solution has got to involve a partnership between the individual and the state,” he says. “The $64m question is: how do you construct a balance between the two?” The Dilnot Commission has until July to decide. This will quickly translate into a piece of legislation: Andrew Lansley has announced that he wants to see a bill put before Parliament next year.

Once the policy situation is clear, according to the chair of the English Community Care Association (ECCA) Martin Green, the private sector will be able to quickly unveil new packages. “The insurance sector is dynamic, creative, and will find always find a solution if it’s got the backdrop of policy,” he says. “But when you’re going to invest millions of pounds in developing a product, you need a guarantee that the policy agenda won’t suddenly pull the rug from under you.”

Effects of the spending review

In the short term, the coalition government announced £2bn extra funding for social care in the spending review. £1bn extra funding will be made available within the NHS to 2014-15 to support social care provision. The exact details have yet to be published, but the aim is to encourage closer collaboration between the Health Service and social care providers.

Green is positive about the effects of this £1bn and, when asked whether it will encourage closer co-operation says: “It definitely will. It’s a pertinent reminder for the NHS that if social care fails, the people who have to pick up the pieces are the NHS. So when a person with dementia has a crisis, if there’s no social care support, then obviously people go into a hospital bed. This is the most expensive option and it’s not orientated for people with dementia.”

He envisages a greater role for residential homes in NHS provision, and thinks they could provide overnight respite, daycare, outreach work for carers, and ‘re-ablement care’ which helps those recovering from severe illness or impairment. Indeed, out of the £1bn spending set aside for the NHS, £300m has specifically been set aside for re-ablement. Green also believes back office savings could be made through co-location with primary care trusts and social work bodies.

The spending review also provided another £1bn of extra funding for social care through Department of Health grants to local authorities. However, this is highly unlikely to lead to an increase in social care provision in local communities; indeed, the funds haven’t been ringfenced and may be spent elsewhere by local authorities. The director of care and adult services at Northamptonshire County Council, Charlie MacNally, admits that because “funding to councils has been reduced by 26 per cent and the largest budget we have is our social care budget, clearly the cuts will have an effect on adult social care”.

He thinks this is a situation that will be faced by all county councils. “I can’t see how a 26 per cent reduction in income to a council will not affect their adult social care,” he says. This concern has been highlighted across the board, by provider representatives the ECCA, care worker trade union Unison, think-tanks such as the King’s Fund, and campaigning organisations Age Concern and Scope. Norfolk County Council has already started to propose specific cuts, including £6m from its prevention services for older people.

However, the coalition government believes that local authorities should have more control over how their funds are spent, and is ideologically opposed to ring-fencing council budgets. Responding to questions on this, care services minister Paul Burstow told CSWthat: “Councils must step up the pace of reform. There needs to be a focus on increased productivity, more innovation, and greater personalisation so people have more choice and control.”

Local care, local control

Social care provision is indicative of the challenges other public services will face as they are moved closer to communities. A key problem is that “one person’s localism is another person’s postcode lottery”, as Humphries says.

Indeed, a study released this month by the Joseph Rowntree Foundation, called Shaping Public Spending Priorities for Adult Social Care, said that “We may see a widening gap in the performance of local authorities and the quality and range of care provided.” It added that “those already ahead of the curve are well placed to reshape and respond, and those which are behind the curve or have weaker local partnerships will lag even further behind.”

How can government ensure a better quality of social care, and allow local communities to take more control? And what happens when services fail? Green thinks the solution is to improve the incentives in the system.“Local authorities that succeed should be given more than local authorities that fail,” he says. Currently, he believes that good social care providers are not rewarded or acknowledged, except perhaps by “a passing reference in a report saying you’ve done a good job”. Meanwhile, Green says that failing institutions get an “endless amount of support initiatives”. He believes that failing services should be taken over by better-performing providers.

Humphries also supports a more local approach, and doesn’t think the alternative can work. “I don’t think it’s realistic to engineer a uniform approach,” he says. “No-one has ever achieved that. The task is to eliminate variations that are down to neglect.”
Seventy per cent of all adult social care provision is already provided by private companies, voluntary organisations and social enterprises, but the government wants to see all of it outsourced by councils.

Then councils’ role will be purely as a commissioner of social care, rather than a provider. Burstow told CSWthat local authorities will “have a vital role in stimulating, managing and shaping the market, supporting communities, voluntary organisations, social enterprises and mutuals to flourish and develop innovative and creative ways of addressing care needs”.

The way forward

David Behan, the Department of Health’s director-general for social care, local government and care partnerships, sent a letter to all directors of adult social services last week. It reveals that next month, “the department will be publishing an ambitious vision for social care, where local authorities will be expected to put individuals in greater control of their care, foster a vibrant social care market, and make significant efficiency savings by focusing on prevention and delivering more cost-effective care.”

Social care provision is to become more focused on individuals’ needs and provided in people’s homes – something called ‘domiciliary care’. According to MacNally, “It’s what people want”. It also featured in all three party’s election manifestos.

But when choice is introduced, a problem arises with supply. As Green says, “politicians tell us that choice, choice, choice is their mantra. If that’s the case, they need to make sure that there’s enough provision, and what people in politics seem absolutely incapable of understanding is that choice requires oversupply. They think somehow you can provide choice without support for different packages of care and different types of care throughout the system.”

The government also wants to move towards personal social care budgets. Burstow said recently in a speech that “individuals are better guardians of the public purse than institutions sometimes can be, precisely because they know what they need and when they need it. It makes commissioning more efficient and it also saves money down the line.”

Personal budgets allow people to make decisions about where and how they receive their care, stimulating competition among local service providers to offer the most attractive services and give patients flexibility over which services they use. Humphries says that this “changes the relationship between the individual and the profession”. But it does require that people are “given good information and advice”, he adds.

The future for social care

In the short term, the spending review sought to provide stop-gap funding until Dilnot’s commission reports. However, while the extra £2bn may increase collaboration between the adult social care sector and the NHS, the £1bn local authority grant looks nugatory in the face of local government funding.

There was another announcement in the spending review that could cause problems: the axing of the mobility allowance for people in residential homes. Richard Hawkes, chief executive of disability charity Scope, said of the spending review that: “This assault on the most vulnerable is characterised by the callous removal of the mobility component of Disability Living Allowance for people living in residential care, which will simply increase dependency and mean many more people will literally become prisoners in their own homes.” According to Humphries, it is likely to be looked at again: “It wouldn’t surprise me if it’s revisited,” he says.

Meanwhile, longer term changes to adult social care will require deliberation and discussion. The predominant themes in the discussion are clear, but the exact balance between state and individual funding will be difficult to resolve. What is certain is that if the Dilnot Commission and government don’t tackle this issue promptly, it will end up causing serious difficulties for government and local authorities alike.

New models of provision: a mutual

Margaret Elliott (pictured below, far left) set up Sunderland Home Care Associates (SHCA) after previous experience setting up and running co-operatives. It was founded on 1 July 1994, and changed its structure from a co-operative to an employee-owned social enterprise 12 years later. This means that the profits are put into a trust and each employee becomes a member of the share scheme – as at John Lewis.

SHCA started off providing 450 hours a week of domiciliary care for the council, but wanted to get bigger and so diversified and started to work with the University of Sunderland in providing support to students at the university. It also started an internet café, serving five tower blocks on the north side of the river.

The firm set up a larger umbrella company, which now runs care services in North Tyneside, Newcastle, Manchester and Calderdale – all of which are stand-alone, employee-owned social enterprises.

Elliott is clear on the advantages of mutualism: “The people who are in the organisation are valued and respected. That all comes back and you get very little staff turnover because people are happy where they work. The end result is a better quality of service,” she says.

Elliott is now a mentor for the Cabinet Office’s mutuals pathfinder scheme, which is supporting 12 groups of public sector workers to establish employee-owned mutuals.

New models of provision: local authority trading company

Mark Lloyd is managing director of Essex Cares, a local authority trading company. “With a trading company, the council remains the 100 per cent shareholder, and so benefits from the success of the business,” he explains.

He says Essex Cares has made “massive savings” in reducing its corporate costs because it’s run as a competitive business. But it’s owned by the council and protects frontline workers’ pensions and conditions.

The company makes money not only by providing services to the council, but also by competing for private sector contracts. The council meanwhile, has the ability to sell the enterprise if it needs to raise funds.

“The trading company has the freedom to trade and complete decision-making power,” Lloyd says. “We didn’t have that in local government.”