Jef Smith reviews the still-uncertain prospects for a reform of social care funding.

Is it a good or a bad thing that people are generally living much longer than they were half a century ago? It would of course be terrible to deplore this development in human terms — the once-widely-used expression “demographic time bomb” has been pretty much banished from professional discussion as making old people sound like a nuisance — but politically and financially it has to be admitted that increasing longevity poses massive problems.

The fact is that older people who are no longer working, even taking into account the value of their contributions to social and family life through volunteering, serving on committees, looking after grandchildren and the like, constitute a significant and steeply growing net cost to the economy. This is obviously apparent on the pensions front, hence the controversial raising of the retirement age, and the elderly are also heavy consumers of health services, a fact to which many acute hospitals have not yet fully adjusted.

Older people, however, also make heavy demands on social care services. Despite the increase in alternatives to residential care — day centres, domiciliary support, sheltered housing and so on — the numbers of people needing to be accommodated in homes towards the end of their lives continues to increase. This trend is fuelled by longer lives, which means that more people survive into extreme old age, often outliving partners and carers though severely disabled in ways that inhibit their capacity for self-care.

As a result, as the Department of Health has itself pointed out, “half of 65-year-olds will need care costing more than £20,000 while 1 in 10 will have care needs costing over £100,000”. Current arrangements for funding such levels of care are clearly unfair, indeed totally unfit for purpose.

The Dilnot Commission

Recognising this fact, the Government, shortly after coming to power in 2010, set up an independent committee to consider these issues. What has come to be known as the Dilnot Commission consisting of three eminent people — the economist Andrew Dilnot, Dame Jo Williams, who chairs the Care Quality Commission, and Labour peer and ex-minister Lord Warner — were charged with the task of devising a new funding system that would be fair and transparent.

It was obvious from the outset that their proposals would need to be affordable, so they made an early decision not to go down the path adopted some years ago in Scotland of suggesting that care services should be free. Despite their acknowledging that this would be the most popular solution among the public at large, such a significant extension of state funding would clearly be politically unrealistic in the current climate.

When they published their report in July 2011, however, they were not able to come up with plans that were cost-neutral; if such a solution were available it would have been grabbed long ago. The system they backed, of which the centrepieces are the raising of the asset threshold for means testing from the current £23,250 to £100,000 and a cap on lifetime care contributions at £35,000, would require an investment of something approaching £2 billion annually, rising to £3.6 billion by 2025.

Andrew Dilnot makes light of these figures. One of his tricks when speaking to conferences on the subject has been to show a diagram of a large wall illustrating the totality of national expenditure with his proposed additional social care costs represented only by two small bricks. Easily affordable, he boldly states.

The report and its supporters

Deeply committed to seeing his plans put into operation, Professor Dilnot has been addressing audiences across the country and urging them to lobby for reform. Similarly enthused, his fellow commissioner Norman Warner has used every opportunity to raise the Dilnot report in the House of Lords during discussion of the — strictly speaking unrelated — Health and Social Care Bill. Dame Jo Williams has been a bit too heavily occupied with affairs at the beleaguered CQC to spare much time since the report’s publication, but as a ex-director of social services, one-time head of Mencap, and now social care’s regulator-in-chief, she has perhaps the largest personal stake of the three in seeing the proposals translated into legislation.

Some within the social care community, including managers of homes, might have been momentarily carried away by Dilnot’s evangelism, but there is little sign that hard-headed ministers are similarly impressed.

In his first reaction to the report’s publication, the Secretary of State for Health warned that “we have to consider carefully the additional costs ... against other funding priorities”. As if commending his caution, the independent Office of Budget Responsibility almost simultaneously published a document describing the public finance difficulties which will occur from the mid-2020s onwards as a crisis arising largely from the growth in the elderly population. Short-to-medium-term prospects have significantly worsened in recent months, both for the economy in general on account of sluggish growth, rapid inflation and rising unemployment, and for social care funding in particular, through cuts to local authority grants which have badly affected Dilnot’s maths.

The general welcome for the proposals from directors of adult care services, disability charities and provider organisations is therefore unlikely to find an echo within the Government. The Department of Health is currently seeking £20 billion of savings over five years while at the same time carrying out an expensive reorganisation of the NHS, so there is little energy and even less money to be spent on social care, long regarded as health’s junior partner. Every official statement on Dilnot refers to competing claims on expenditure as if softening up public opinion for a substantial letdown.

The minister’s role

Perhaps this was the intention too of Paul Burstow, Minister for Care Services, who astonished the House of Commons Health Select Committee in January by asserting that there simply is no social care funding shortfall. This strange claim prompted an immediate counterattack by a consortium of social care pressure groups, which pointed out that local authority spending on older people had fallen by 4.5% in real terms in the last year alone, making a long-term problem even worse. The gap seems to be of credibility as well as resources.

Mr Burstow’s role in these matters is critical. As a back-bencher before the general election he campaigned vigorously on controversial issues such as adult abuse and the overuse of antipsychotic drugs for residents in homes, and he was widely admired in social care circles as an informed and committed friend to the sector.

His elevation to office, the sole Liberal Democrat in the Department of Health ministerial team, has inevitably strained that reputation. His enthusiastic support for the Department’s line on NHS reform made even some of his own party colleagues question his judgment and his loyalty to the Coalition’s cuts in public sector funding have lost him friends inside and outside Parliament. His critics feel that as a result he is less than optimally placed to fight social care’s corner on funding, but could anyone do better in the present strained economic situation?

The Department of Health is currently playing a waiting game. The announcement immediately after Dilnot’s publication that there would be a White Paper before any legislation followed regular parliamentary procedure, but the revelation in September that the White Paper’s publication was to be delayed until the spring cannot be regarded as good news.

That announcement accompanied the launch of the “Caring for our Future” engagement exercise, a consultation which, again ominously, set funding issues within “a wider care and support reform agenda”, with further cautions from Mr Burstow that “making changes will not be simple” and “there are no easy answers”. Analysts of the Government’s intentions have been making increasing references to the issue’s being “pushed onto the back burner” or “kicked into the long grass”.

Apparently showing good faith, however, Mr Burstow recruited a number of leading figures from the care world — none of whom, perhaps significantly, represent mainstream managers of residential homes — to help him conduct the consultation. Their task was to lead “workstreams” on six topics — quality, personalisation, shaping local care, prevention, integration with health, and the role of financial services — with a remit to present feedback from these discussions by the end of 2011.

It is true that Dilnot covered a range of issues beyond straight finance, including for example, portable assessments, standardised eligibility criteria, better information and advice, and more generous support to carers. But the consultation initiative so substantially broadened the agenda, with even the wider questions of rationalising social care legislation raised by last year’s Law Commission report also drawn into the equation, that it is hardly cynical to infer a deliberate attempt to marginalise the central question of funding.

The fate of the proposals

Even laying aside the issue of where the money will come from, Dilnot’s proposals would not, of course, resolve all of social care’s difficulties. It has been pointed out, for example, that a drop in the number of self-funders would put a brake on the current arrangement by which many residential home providers cross-subsidise those whose fees are paid by local authorities. This practice has been criticised as unfair, but it has at least allowed homes to compensate themselves for the unrealistically low fees often paid by local authorities: another problem on which Dilnot is silent.

Implementing Dilnot, in any case, would do little more than transfer care costs from individuals and their families to the state. There would be nothing extra for providers to improve staff training and pay, which are crucial to quality.

On coming to power a decade and a half ago, the Labour Government set up a Royal Commission on what it described then as the urgent issue of long-term care for the elderly, but when Sir Stuart Sutherland and his colleagues reported in 1999, their recommendations were swiftly rejected by the Treasury. Could history repeat itself? Certainly, there are dangerous signs that the present government — facing, to be fair, a much more inhospitable financial climate — is again intending to duck this difficult issue and leave the problem still unresolved.

It looks increasingly likely that social care will be obliged to muddle through for some years yet with a manifestly dysfunctional funding system.

Last reviewed 22 February 2012