Communities and Local Government Committee
Oral evidence: Adult Social Care, HC 47
Monday 12 September 2016
Ordered by the House of Commons to be published on 12 September 2016.
Questions 1-55
Members present: Mr Clive Betts (Chair); Bob Blackman; Helen Hayes; Kevin Hollinrake; Julian Knight; David Mackintosh; Mary Robinson; and Alison Thewliss
Witnesses
I: Vicky McDermott, Chair, Care and Support Alliance; Dr José-Luis Fernández, Deputy Director, Personal Social Services Research Unit, LSE; and Richard Humphries, Assistant Director Policy, The King's Fund
Examination of witnesses
Vicky McDermott, Chair, Care and Support Alliance; Dr José-Luis Fernández, Deputy Director, Personal Social Services Research Unit, LSE; and Richard Humphries, Assistant Director Policy, The King's Fund
Q1 Chair: Good afternoon and welcome to our first evidence session of the Committee’s inquiry into the financial sustainability of social care and the quality of care providers. Thank you very much for coming this afternoon to give evidence. I will begin by asking members of the Committee to put on record any interest they may have that may be particularly relevant to this inquiry. I am a vice-president of the Local Government Association.
David Mackintosh: I am a Northamptonshire county councillor.
Bob Blackman: I have a sister who lives in a care home.
Helen Hayes: I employ a local councillor in my parliamentary staff team.
Chair: Thank you very much for coming this afternoon. To begin, could you say who you are and the organisation you are representing, if we go down the table?
Dr Fernández: I am José-Luis Fernández and I am a researcher from the PSSRU, which is a research unit at the London School of Economics.
Vicky McDermott: I am Vicky McDermott. I am the chair of the Care and Support Alliance, which represents 90 voluntary sector organisations.
Richard Humphries: I am Richard Humphries. I am assistant director of policy at the King’s Fund, which is an independent health policy think tank.
Q2 Chair: One question we would like to begin with, and it sometimes confuses all of us when we are acting in our role as constituency MPs, is the split of responsibilities around social care. The NHS has some responsibilities, local authorities have some responsibilities, and the DWP has some responsibilities. Is it all too complicated? Sometimes we are challenged to understand it. An individual who faces the prospect of either themselves or a relative or friend having to navigate the system could be even more challenged by it and find it totally confusing. Is that a fair assessment?
Dr Fernández: If your question is, “Is it complex?”, then absolutely, yes. It is complex for a number of reasons. As you say, a number of agencies are involved, and so you are going to have to deal with a number of agencies for the overall care package and support that you might get. In addition, the way in which resources are distributed by those agencies is different. Local authorities obviously provide the core social care support, but attendance allowance, for example, is a very important disability‑related benefit that is channelled through the social security system. In addition to that, you have variability at the local level. It is not clear exactly how much you are going to get depending on where you live, and on top of that you have the complexity in terms of the funding. Different agencies will charge for services in different ways. The attendance allowance, for example, is a universal service and payment, whereas the means test for social care is very severe and also very complicated to understand.
Vicky McDermott: Certainly, in our experience with the organisations that are within our membership, lots of people struggle with it for lots of different reasons—the complexities that my colleague has already outlined. Also there is something about how it interacts with the rest of people’s lives. Social care does not sit on its own. There are particular issues around people who require supportive housing and how those things interact, and particular issues with the benefit system and the health system. Navigating it, if that is your question, is quite tricky. In addition to that there is something about people having a clear understanding as to where health stops and starts, which is where the main complexity comes for the average person on the street.
Richard Humphries: If we set out to design a care and support system that was really difficult and hard for people to understand, we would be a world-class leader. There are at least four fault lines in the system that cause this complexity, to which colleagues have alluded. In summary, there is this division of responsibility between central Government and local authorities. Although the Government sets the policy framework and the overall financial framework through the spending review, it is the 152 local authorities in England that implement the policy. They have significant discretion in how they do that and ultimately are responsible for setting how much is spent locally on social care through decisions about council tax.
The second fault line is between people who provide the care. Over 90% of care and support services are now provided through private and voluntary organisations. That has been a big shift in the last 40 years. We have a public/private split in terms of delivery of services.
The third fault line is about who pays for it. Although traditionally we think of social care as something paid through public finance, increasingly more people are having to pay for it themselves. This year around 43% of care-home fees are paid for by private individuals out of their own resources. If you add top-up payments to that, it is around 53%. There is a split between private responsibilities of individuals to fund their care and the role of the state.
The fourth fault line, and it is a big one, is the role of the care and support system and its relationship with other systems that have a vital bearing on meeting people’s needs. The NHS is probably the biggest, but housing is also very important and so is the benefit system. That is a quick run through of why it is complex for people to understand.
Q3 Chair: I have one particular point about the complexities before I go on to a more general question. One of the things that I have found most complex of all is the continuing healthcare assessments. It seems that service users would get involved in a game that is a cross between a tug of war and pass the parcel, where the local authority and the NHS will be trying to make sure the other one pays for it. Is that a fair assessment of what happens? I have difficulty understanding it, and individuals involved almost give up.
Vicky McDermott: That is an entirely fair assessment. I can think of a case that I know of where an individual is literally trapped because there are ongoing arguments in terms of whether or not they should be being paid for out of continuing healthcare or whether they should be being paid for by the local authority. That individual has now been in hospital in excess of 12 weeks when they have been medically well for at least the last eight or nine of those. There is the issue around that increasing cost, and also the issue around that complexity of the number of assessments and things from a practical level. It is really quite unpleasant and unhelpful.
Q4 Chair: In terms of the people now receiving social care or support in some way, could you give us a brief description of who they are currently and how much that has changed over the last 20 years?
Dr Fernández: Yes. It is important to understand the social care system is there to deal with not the health problem directly but the consequences of health problems on people’s lives. Eligibility for social care and recipients of social care is defined mostly in terms of the consequences for the ability of individuals to carry out their daily lives and their daily tasks. That is going to make up a very complex and heterogeneous group of individuals. Broadly speaking, in the last 20 years we have had significant changes in the nature of the needs that have been supported by the state social care system. Ever since the 1990s, there has been a significant reduction in the numbers. There has been a targeting of social care resources on those people with the highest levels of need.
It is important to distinguish what was happening in the 1990s. Even though the overall volume of care provided was growing, it was being increasingly targeted on those people with the highest needs, mostly, with the simplistic assumption that as a result we would be able to prevent people from going into residential care. In the last few years there has been a very significant reduction in the numbers of people receiving services, and therefore the system’s concentration on people with very high needs is associated with a significant drop in the resources available. But over the last 20 years there has been a very significant concentration of the social care system on people with very high needs.
Vicky McDermott: To give an overview of who the users are, around 30% of the users are working-age disabled people whereas often this is seen as an older people’s issue, so that is a fairly significant point. Regarding the primary reason people need social care, for about half of the users it is about dealing with their personal support needs such as toileting, cleaning and those kinds of things. For me one of the most interesting pieces is if you look at what the future demographic is looking like. The ONS is saying that by the time we get to 2030 there is going to be a 44% increase. That has lots in impact in terms of what that means for need and funding. It also poses some really interesting questions in terms of workforce by the time we get there. We have an industrial strength workforce in this area, so it is an interesting proposition.
Richard Humphries: One of the challenges that we have as a country is we have never really asked ourselves the question of what we want our care and support system to do. If we go right back to the 1940s and the founding of the welfare state, what we now call social care was not an issue then very much because most people did not live long enough. There were not that many people that lived long enough to need it to any great extent. What has happened in the 60-odd years since is this fundamental change in the nature of the needs that we need both our healthcare system and social care to meet. A lot of it is around the success of an ageing population.
We now have hundreds of thousands of people in their 80s and their 90s. That has increased by almost a third in the last 10 years and is set to double in the next 20 years. These are largely people who have a lot of things wrong with them: at least two health conditions. Many will have dementia; many will have frailty; and they will require not just a substantial amount of care but a mixture of healthcare as well as social care. Our system has never really faced the question about what it needs to do differently to meet that. This is a fundamental step change in what we are asking the system to do.
Q5 Chair: You have partly answered the question about the likely change in that group of people who need social care in the next 20 years. Is there anything you want to add to that?
Richard Humphries: We often think about the challenges being about older people, but the successes of medical science and improved living conditions that see older people living longer very often also see many more younger people living longer with disabilities and complex health conditions. That is a success story, but it does prompt the question of how we need to organise services and pay for them to meet that challenge. I think the number of young adults with a learning disability, for example, is set to increase by around a third over the next decade or so. It is not just older people; it is across the whole spectrum.
Q6 Mary Robinson: We have talked about many of the challenges that the system is facing. What would you say is the financial state of adult social care in England to face those challenges?
Vicky McDermott: In summary, pretty grim. Currently, half a million people who were receiving social care no longer are. Today my colleagues and I will use lots of big numbers, but to try to put that into some context, that is a population the size of Sheffield’s needing social care and no longer getting it when they were previously. If you compare what has happened over the last number of years, we have seen a gap of £4.6 billion in funding according to Adass. We are expecting a further £1 billion cut in this financial year. The Adass survey tells us that, in order just to stand still and meet the requirement that we have today, there is an ongoing requirement of £1 billion funding per annum. I return to my first point: pretty grim.
Dr Fernández: If the question is about what the situation is like financially, from one point of view it is extremely successful, because the books are balanced, in a sense. There is no big deficit, and that is the nature of local government finance. The question that needs to be understood a bit more broadly is: “What are the consequences of the amount of money that the system has today?” That is where we see some of the very negative stories. We recently held a workshop where we compared the impact of budget cuts internationally across countries. The size of the contraction in public social care in England cannot be compared with any other similar country. We are talking about over the last five years the proportion of people receiving social care supported by the state reducing by 40%. That is unprecedented and unparalleled internationally. The question is whether we should carry on with that level of financial support or whether we should change that.
Richard Humphries: To follow on from that, this is a long-term issue. Successive Governments for some years have really struggled to ensure that funding of social care keeps pace with need. If you look at public spending on social care for older people, that began to plateau and fall from around 2008. By 2010, before the recent cuts in public spending, 90% of local authorities already were limiting publicly funded care to people with the highest needs—in what we used to call substantial and critical need. That was the language of the old eligibility criteria. Obviously reductions since then have made it considerably worse, but this has been a long-term issue. It is not something that has happened overnight. Currently, our estimates suggest that this year there is a shortfall of around £1 billion between needs and resources. We think that will rise to at least £2.8 billion by 2019, depending on what assumptions you make about how much money some of the Government’s measures, in particular the precept, will raise. It is a widening gap and it is not looking to get any easier.
Dr Fernández: Very briefly, those are absolutely important numbers. It is also important to remember those numbers refer to a system in 2008 that many people would say was not ideal to start with. That is important to say.
Q7 Mary Robinson: Given that we have pressures on the social care budget, and we discussed earlier the complexities of the system and various other agencies within it, what are the main factors causing the pressure?
Vicky McDermott: They come from a number of places. As I said at the outset, you cannot look at social care on its own; it is part of an individual. Again, as we saw over the weekend, we now are at the highest level we have ever seen in terms of delayed discharged and the impact on A&E. We know that in some instances it is about people having a minimum level of support that prevents them from falling and ending up requiring higher levels of support. Again, we know that housing is a significant issue, and people have houses that work for them. Often it means there are fewer requirements around social care. There is something as well about the way we view this.
One of the things that I am always quite concerned about is that we think about social care as the thing that stops people from being in hospital, and it is, but social care is much broader than that. If you think about particularly working-age disabled people, of whom 30% of the population are receiving this care, there is something about making this a virtuous circle in terms of enabling those people to potentially access employment and, therefore, pay into the tax system. To look at it in minutiae is unhelpful; there are lots of things that drive it on a local level. The other interesting piece—I know we will talk about the current funding and how that works in a moment—is we are likely to see as we move forward that the very areas where there is the most critical need, owing to lots of health economics issues that we all know and love, are the very areas where there is least opportunity potentially to raise some of that funding through things like precept and other measures. We need to give that some thought too.
Dr Fernández: Perhaps I am going to be boring and predictable, but social care and how much you spend and how much you can save does not involve that many factors. It is how many people you want to save. You have to decide who you want to serve: how many people you want to provide support to, how much care you are going to provide them and what the cost is of that care. There is good evidence that the market currently is quite a competitive market. It is not like we are paying very high prices for the care we are consuming. Local authorities are in fact doing a very good job of keeping those prices very low, because they have this very dominant positon in the market. Ultimately the pressures—and even the demographic pressures that will mean we are going to have to support more people in the long term—are not insurmountable. Predictions are being made about moving from 1.1% of GDP expenditure to 1.4% if we are going to do the same job that we are doing today in 10 years’ time. That is not impossible to achieve. Ultimately the pressure comes from a lack of political attention in social care.
Richard Humphries: In summary, the pressures arise from maybe three or four things that are completely out of alignment. One is the money that we have talked about. The other is the demographic change and the fact that we have many more people with a lot of needs that need more care. A third element is the lack of public awareness and understanding of how the social care system works compared with the NHS. That prevents us as a country from really getting to grips with some of the big questions about how we pay for this and the balance between what is paid for out of the public purse and what private individuals should shoulder.
There is a fourth element, which is about the recent Care Act 2014. It was a very admirable piece of legislation in many ways but has substantially added to both the expectations and statutory duties of local authorities without necessarily being reflected in the money they get. That places everybody in an invidious position in relation to what local authorities are funded to deliver, what the law says they must do and what people expect. There are four things there: money, demography, needs and public awareness, plus the legislative change that has added to the pressures rather than relieved them.
Q8 Mary Robinson: Given all of these factors that would increase or cause pressure on the care budget, would you be able to highlight or pinpoint one that you thought was the most significant?
Richard Humphries: For me it would have to be money, because there are immediate pressures now, particularly in the home care market. We look at the astronomical rise in the number of people stuck in hospital because they are waiting for care-home packages. Consider the fact that two of the country’s biggest homecare providers have withdrawn from local authority contracts. A third is planning to do so. Local authorities are reporting more and more providers who are handing their contracts back. There is a crisis in the provider sector that is upon us now. While I would certainly say that money is not the only part of the problem, currently it would be very difficult to do anything else without addressing the financial pressures.
Vicky McDermott: I absolutely agree. It is twofold for me. One is that we need to, going back to Richard’s earlier point, have a much bigger conversation as to how as a society we are going to support the most vulnerable in our society when they need care and support. That is a multi-generational/multi-government issue. In the meantime we have a significant crisis in funding that we need to manage while we come up with that long‑term solution.
Dr Fernández: I would have to agree, again. I would not want to be a director of social services today. We talk about problems with quality. We talk about problems with not investing in prevention, but all those things are things that cost money. Currently local authorities are doing a good job of managing the resources they have.
Q9 Mary Robinson: Looking ahead, given that there are going to be demographic changes, which we have touched on, is it possible to fund social care sustainably?
Dr Fernández: For me, it depends. It is a question of political preference and will. There are many other countries that are spending as a proportion of their GDP twice as much as we are spending here. It is a question of what we want to achieve as a country. It might be that the agreement is not to go that far, but I do not think it is impossible from an economics point of view.
Richard Humphries: Yes, it is possible to fund social care sustainably. Currently we are heading for a situation by the end of this Parliament where we will be spending less than 1% of our GDP on adult social care. That is utterly demography-defying in relation to most advanced countries in the world. If you look at the graph at what different nations have spent on health and social care since the end of the Second World War, it is relentlessly upwards. There is every suggestion that as societies become more affluent they want to spend more on things, like health and care, that are important to them. We lack a mechanism to translate that into practical reforms that will do it.
Again, successive Governments have struggled with this. We have had at least four commissions to look at it. We have had the Sutherland Royal Commission in 1999. We had the late Derek Wanless in the middle of the last decade. We then had Andrew Dilnot’s commission. Kate Barker chaired something for us at the King’s Fund a couple of years ago. They are all saying the same thing: you can fund this. These costs are not beyond the pale, but obviously you have to find a way of paying for it, and the hard choice is that if you spend money on this, you cannot spend it on something else. That is what is lacking from the current debate.
Q10 Kevin Hollinrake: On that final point, you said we are spending less than 1% and other countries are spending much more. Can you say which countries you were referring to and how much they are spending?
Richard Humphries: Yes. It will be less than 1% by the end of this Parliament. Currently it is around between 1.2% and 1.3%. I would need to check that. José-Luis might have some comments to make. Countries that are spending substantially more are the Netherlands, France, Germany, Japan and Singapore.
Q11 Kevin Hollinrake: How much are they spending?
Richard Humphries: This is where it gets tricky, because different countries define social care and count what is spent on it in different ways. There is not a straightforward read across between what we spend on adult social care and what other countries do. However, even if you make some allowances for error, the Netherlands, for example, is spending around 13%, I believe, currently on health and social care. We are currently spending around 10% combined on health and social care. I will defer to my colleague José-Luis, who may know more and perhaps will have more to say on this.
Dr Fernández: That is absolutely right. Nordic countries will be spending 2% or above in social care. In Denmark, for example, 25% of those 65-plus receive some sort of support with their social care needs, whereas here it used to be 10% four years ago, and now it is 6%. The gap can be very significant.
Q12 Julian Knight: To follow up and to drill down into those figures for a second, you state a tranche of countries, many of which have a different demographic outlook from ours. We have a slightly younger population. For example, you mentioned Japan. We know that is at the very extremes when it comes to demographics. What should we be spending? What sort of percentage do you think is enough to stem the systemic problems that we have?
Richard Humphries: I am not sure that is the way I would come at it, because that in effect means that spending is determined by the size of your GDP. We also need to think about what we achieve with what we spend and not just how much we spend. The quantity is important, but because of the fragmentation that we talked about earlier, we often do not achieve the best outcomes that we could with the current social care spending.
Julian Knight: It is just you made the relationship between other countries and what they spend, so I presume, therefore, you must have an idea of precisely what we should be spending.
Richard Humphries: No, because we need to start first of all by saying what it is we want the social care system to do. Does it need to work better with other parts of other public services, especially the NHS, to get best results? We will need to spend more to do that, but in determining that amount we need to base it on what system we are trying to deliver, not some notional amount that other countries spend, because they do it totally differently.
Q13 Julian Knight: Therefore, the international comparisons are pretty worthless.
Richard Humphries: I would not say they were worthless, and we can always learn from what other countries have done. However, you cannot easily replicate what other countries have done and what they spend in the English context.
Dr Fernández: You would not want to base your system on what has been decided in Germany or in Japan. The social preferences are going to be very different, for example the relationship between unpaid carers—family—and those responsibilities and so on. There are going to be all sorts of different assumptions about what those should be. What is interesting is that if you take Japan, they decided to very significantly expand their system at a point in time when they were faced with a huge demographic challenge. It is interesting to see that even in those circumstances you do not need to expand your system when you think it is easy to do that, but it requires a lot of political will to do it.
Chair: It might help at some point to have a note about the international comparisons, with all the caveats put in, of course.
Dr Fernández: Yes, of course.
Q14 David Mackintosh: We have covered a lot of this already, but how much has the pressure on budgets affected local authorities’ provision of social care, in particular the quality of care and people’s health and wellbeing, and the carers themselves?
Vicky McDermott: It has had a significant impact. To give you some sense as to the size of the unpaid carers workforce, it is estimated that if you had to pay for that, it would be in excess of £130 billion: broadly the same size as the NHS. We know carers tend to have lots of instances where they have to drop out of employment, so there is a more significant impact on the workforce. There is an estimate that says that it costs the Exchequer in excess of £1 billion in terms of tax revenue per annum. Whilst the Care Act 2014 gave rights to carers and gave them parity of rights with those who were being cared for, in reality when carers are going to their local authorities to ask for an assessment, often they are being put off at the first hurdle in terms of saying, “If you have a couple of quid, we are not going to bother doing the assessment.” The requirement for care and support and that advice is being undermined.
I have already mentioned the 500,000 people who were getting social care who now are not. If I refer to some of the modelling done by our members, Age UK estimates 1 million older people have unmet needs at the moment and are not getting any support at all. We have a case study of an older person who was getting two visits per day and they are now down to one. The impact is that they sleep in their wheelchair. They are doubly incontinent, and therefore there is no one to take them to the bathroom. There are fairly significant impacts on an individual level.
A woman who lives with her son needed fairly moderate care, 10 hours per week, which enabled them to cope. The son was working, but as a result of them having lost that care, he has had to give up work. That impact of 10 hours a week that had been able to keep his mother supported has taken him away from the workplace. Ultimately my colleagues will undoubtedly give you the stats as to what is happening, and they are pretty horrific, but some of those cases and some of those individuals that we see every day are pretty horrific too.
Richard Humphries: The biggest concern that I would express is about people who no longer get publicly funded social care from local authorities and the fact that we do not know very much about what happens to them. Do they end up in hospital? Do their carers and families end up doing more? Do they end up paying for care themselves? There are some big questions about what happens to people who have fallen outside of the publicly funded system. Strangely perhaps, satisfaction surveys of people that still get care are incredibly positive. I think only 4% of people are dissatisfied, as of the last national user survey, with the care that they got. That is for older people; for working‑age people, levels of satisfaction are not quite so high.
However, there is a danger, particularly with older people, that gratitude and relief is not necessary the same as satisfaction. What is significant also is that carers report much lower levels of satisfaction. We also have evidence that suggests carers are providing more intensive support. 38% of carers in the last carers’ survey were providing at least 100 hours a week of care. Bearing in mind my earlier comments about people in their 80s and 90s who need a lot of physical care, the burden of caring is increasing. In summary, I am particularly concerned about people who are not getting care at all and the impact on carers.
Vicky McDermott: At the same time, if you refer to last year’s CQC State of Care report, you will remember as part of that we saw an increasing level of care that was below the standard that CQC would expect and require, both in home care and in care homes.
Dr Fernández: It is important that we do not assume that simply because the state social care system is contracting, whoever is no longer in contact with that system is not receiving care. You either contract it yourself, so you become a self-payer, or you get some unpaid care, or you go without. I should never pass up the opportunity to call for more evidence; being an academic, we need more data, but it is really the case in this example. You can look at activity using proxies such as workforce. If you look at the numbers of jobs in the social care sector between 2009 and 2015, there has been very significant growth.
There is an expectation and there is a hint that suggests that people who are now being excluded from the state support are going out there and commissioning that care themselves. That is not going to be the case for everyone, and there is evidence that informal carers, as Richard was saying, are having to do more. There will be a number of people who will not have the means to commission that care themselves, and we do not know who they are and what is happening to them.
Q15 Chair: Why has there been no research done in this area? It seems quite a fundamental issue about what happens to people that would have got care 10 years who do not get it now.
Dr Fernández: It is not that there has not been research. There has been lots of research. There is a lot of information on what happens to you once you are inside the system, and the administrative data systems are focusing on people inside. It is what Richard was saying: once you are in, you are probably going to be okay. However, it is very difficult to find those people with social care needs outside of the system. The national surveys that we have are too small to give a very detailed picture of what is happening to those people.
Richard Humphries: There is research being undertaken as we speak to find out more, particularly about people who fund their own care, but until recently they have been invisible.
Q16 Chair: Who is doing that? Do we know?
Dr Fernández: We are doing some.
Richard Humphries: I think the University of York is doing some work on that as well.
Q17 Chair: Is that likely to be available by the end of our inquiry?
Dr Fernández: That is unlikely.
Chair: You cannot speed it up.
Dr Fernández: There is steam coming out of our ears.
Q18 Julian Knight: Have the funding arrangements that were announced last year affected local authorities’ social care budgets yet? Is there any evidence in that area?
Richard Humphries: Yes, in short. A majority of local authorities have used the opportunity for the new social care precept—I think all bar eight or 10. The figures suggest that this year that has raised around £382 million. Having said that, that is against a funding shortfall of around £1 billion, and the additional cost of the national minimum wage this year is about £300 million. It has helped a bit. The big problem, however, with the precept obviously is that how much it will raise depends on local council tax values. The places with the greatest needs for publicly funded social care will probably raise the least through the precept.
Julian Knight: It is a point Ms McDermott mentioned earlier on.
Richard Humphries: We have done some analysis on that, which was published a while ago in the Health Service Journal, that suggests that the variation is around £5 per head of population to £13 per head of population. There is a big problem about geographical variation in that. The other measure the Government announced was the additional allocation of £1.5 billion by 2019 under the auspices of the Better Care Fund. Unlike the current Better Care Fund, this extra money—and I think it is genuinely new money—would be directed directly to local government rather than through the NHS. That has been welcomed.
The problem with it is that most of it does not start to arrive until 2018. In 2017, next year, councils will get an extra £100 million, I think. The year after, in 2018, that rises to £800 million, I think, and it builds up to the full £1.5 billion in 2019. That is a genuinely welcome additional investment in social care. The problem is that unlike the additional money for the NHS that was announced in the same spending review, this is back‑loaded not front‑loaded. The big question is what is going to happen over the next two years where, even if you use the Government’s own estimates of local authority spending, it is going to be flat. It is not going to go up until 2018.
Q19 Julian Knight: What about the impacts of the living wage on that?
Richard Humphries: The living wage, again, is a very welcome step to improve pay in a notoriously underpaid sector. The early evidence about the implementation of the national minimum wage in the social care sector is encouraging. It appears that, this year, local authorities have used the precept to increase, for the first time in some years, the fees they pay to independent providers so that they can meet their requirements under the national minimum wage. So far it is good, but there is a big question about whether providers can hang on for the next two years until you can have a more appreciable increase in fee levels, particularly in home care, which I referred to earlier.
Q20 Julian Knight: What are your thoughts on the effects of the funding arrangements?
Vicky McDermott: I am very pleased to see that the vast majority of councils took it up this year. As Richard has explained, it is a compounding effect in that, towards the end of the Parliament, it is much more helpful, but it feels like too little, too late in terms of the challenge we have at the moment. If we compare the national living wage, the precept covered about two-thirds of the national living wage increase, so it did not fill the hole this year.
Q21 Julian Knight: I thought the figures were £382 million to £300 million.
Vicky McDermott: Adass tells us that two-thirds of the costs were covered by the precept that was raised.
Q22 Julian Knight: There was a bit of a differential, because Richard just said that £382 million was raised and £300 million was the cost of the living wage. Can we have some background on that? Maybe you can put that in writing, because it is quite an important distinction.
Vicky McDermott: Yes, we can clarify that for you.
Julian Knight: Sorry, please continue.
Vicky McDermott: No problem. Again, we see that the national living wage is hugely welcomed. It is great for the workforce and it is great to bring the right kind of people and the right quality into the sector. To Richard’s point, we are seeing something quite interesting in the market, and we know that councils have a market oversight requirement. We are seeing lots of things in terms of providers choosing to exit the market or choosing not to focus on local authorities.
There is an element that is more worrying. Looking at the big 20% of people, which is where the focus is, is in one way quite easy. We are seeing, certainly from our members, lots of organisations that just are not tendering again. The impact that has on the market more generally is that you have a much smaller market. What does that mean in the long term, in terms of value for money for the public purse?
Q23 Julian Knight: Why are they not tendering again? Is it just the effects of the national living wage?
Vicky McDermott: It is the effects of what it looks like. In my day job, I run an organisation that tenders for these contracts. We have made absolute choices not to do so, because we cannot afford to cover the costs. The differential at the moment is as much as £1 to £1.50 an hour. As a voluntary sector provider, as much as we want to support people, we need to do that in a different way, and that is not the best way to use fund-raised money. That is happening there.
Across other parts of the market, around stand-alone care homes, there might well be a family‑run care home, which for somebody is their pension pot, so they choose to sell the asset, because of the cost of provision and the rates do not really work. That is what we are seeing.
Q24 Julian Knight: The smaller operators exit the market.
Vicky McDermott: Yes.
Julian Knight: It is a little like what has happened in my area with financial advice, for example. Smaller operators are exiting because of the costs of regulation and the ongoing costs. Perhaps they may have got their calculations wrong when it came to bidding in the first place.
Vicky McDermott: Absolutely, so there are issues, but we have seen additional pressures. The cost of regulation has increased at the same time; the cost of a registration has increased. The nursing home sector has a significant issue in terms of being able to attract registered nurses. There are a number of issues, but, for me, it is that boiling frog issue. If a large provider goes bust, we will notice that and people will take some action. If we look back in 18 months’ time and find that we have a lot fewer providers in a particular area, we will have not only a funding issue but an issue of how to physically get care for people.
Q25 Julian Knight: I want to know what you think about the precept and whether or not it is a long-term solution.
Dr Fernández: The issue for me with the precept is that wealthier areas tend to have less social care need. If a precept is seen as a mechanism that will allow local authorities to deal with future increases in need, for example, the local authorities that will be subject in future to a greater need and greater growth in need are likely to be those authorities that are more deprived and less likely to be able to benefit from the precept. The same goes for business rates, and the living wage is likely to impact them more than other authorities. On the one side, these have more need and, on the other, perhaps less capacity to benefit from either business rates or the precept, as well as being hit a bit more by the living wage. So far we have had the revenue support grant, which is the mechanism by which central Government can compensate local authorities for those sorts of issues. With the phasing‑out of the revenue support grant, the question is which mechanism will be in place to try to compensate local authorities for those sorts of variations.
We are talking about the BCF as perhaps the mechanism that will allow that to happen. There are two questions. One is which formula will be used in order to allocate BCF. That will be very important, in order to see what the net effect of this is. Secondly, the BCF is at the moment a mechanism that requires agreement between both partners in order to decide how the money is spent. That is very good in many ways, but it also means that the types of schemes that are associated with the BCF are not core social care services, if you see what I mean. If that is going to continue, given that core social care services are likely to be hit by potential further budget cuts—they are certainly the ones that have been cut so far—I do not know whether BCF would become a viable option for reallocating resources and compensating against some of those variations.
Q26 Julian Knight: I know we are going to touch on the Better Care Fund very shortly. In terms of the precept itself, what are your thoughts as to whether or not this is a long-term solution and its viability in the medium term?
Vicky McDermott: It is a significant issue, having a cap at 2%. There is an interesting question, if one is to give the responsibility to local authorities, about whether they have the opportunity to increase that further, acknowledging that there is a political reality about a local authority’s ability to raise council tax. That is one element of it. Even at 2%, it is not filling the gap that we have. Hence I move back to my more substantive point, which is that we have an issue in the short term, in that it is not going to that compounded area where we need it to be. There is the extent to which we can guarantee that we will receive that funding, in terms of the political imperatives around it.
More fundamentally, how do we want to fund this? How do we want to do this? How do we want to think about the money, the integration between NHS and social care and where the money flows from? In short, it is great to see it, but on its own, no, I do not think it is a sustainable solution to fix the problem.
Q27 Julian Knight: Richard, do you have any thoughts?
Richard Humphries: In its current form, no, it is not a sustainable solution, for the simple reason that 2% in Surrey raises a heck of a lot more than 2% in Salford or Sunderland. On its own, it is not going to do it. It raises questions about where it sits within the overall thrust of policy towards reducing local government’s reliance on central grants and instead using locally raised revenue. It would seem a bit odd to say, “You have to raise it all locally, but we are going to give you special permission for this 2% for social care.” That does not quite sit neatly into the policy direction.
Q28 Kevin Hollinrake: We have tackled some of my questions. This is about the precept and the future in the world of local government, which includes retention of growth in business rates. What correlation is there between those two things and the extra demand that is coming down the line? There is one other factor to throw into the mix, which is a change in the needs assessment, which would set a new starting point for allocation of resources to local authorities that might and, in my view, should incorporate some of these demographic challenges. What are your thoughts on that, in the mix between those different competing elements?
Dr Fernández: What do you mean by the change in needs assessment? Is it at the individual level or at the area level?
Kevin Hollinrake: The previous Secretary of State announced that the funding of local government would include a revised needs assessment.
Vicky McDermott: The needs assessment, as it is set out in the Care Act 2014, has set a requirement so that, in theory, across the country everyone should be getting a fair deal; it should be the same needs assessment so that we do not have that postcode lottery. In reality, the way in which that needs assessment is applied is very different from one local authority to another, and therefore people may not be being treated in the way that the Care Act 2014 initially intended. To the point in terms of the business rates, it is aligned with the precept. The point we have all made is that the areas that are the most able to raise council tax and probably business rates will be the areas where there is likely to be less of the need that is going to be required. We need to think about what the stabilising factor is that enables that to happen across the board.
The other risk we see, which I mentioned in a previous answer, is that, with the balancing of rights for carers with those who are being cared for, it increases the level of need that the local authority has to respond to. That becomes quite problematic with a smaller pot.
Kevin Hollinrake: Sorry, just to clarify my probably confusing comments initially, the needs assessment was about how local authorities generally are funded to take into account some of these demographic differences.
Q29 Chair: The Secretary of State has said that, when we go to the 100% retention of business rates, the starting point for the amounts that local authorities get will be based on the new assessment of their needs. How far should that be reflecting these sorts of issues?
Kevin Hollinrake: At least by 2020, when this happens, we should see some kind of model that takes into account some of these. It is then how we move on from there in terms of making sure that those demographics are catered for ongoing.
Richard Humphries: History is not encouraging on efforts to relate local government funding to local need. It is very difficult to get different parts of local government, London boroughs, counties and districts to all agree that the funding formula is fair and proper. It is very difficult to do. A problem with the current policy direction is that it seems to be all about allowing local authorities to retain business rates and generate income through economic activity; that will be easier for some than for others. It does not seem to give local authorities the power to raise additional money, even if their local electorates want them to do that. That is why the precept in its current form sticks out a little bit like a sore thumb.
There is a fundamental issue about whether you want to empower local authorities to raise enough money to meet local needs. The only international example I can think of that tries to do that is Sweden, I think, where around 60% of local services are funded by local taxation levied by local government. Then the central funding is used to equalise the differences between different parts of the country and anomalies in terms of how much they can raise.
It is easier said than done in Sweden, because Sweden does not have some of the marked geographical disparities that we have in this country, but it is very tough to do. We need to exercise some caution about placing the funding of essential services like social care in a way that is wholly reliant on, in effect, local levels of property wealth and economic activity. There has to be some sort of equalisation mechanism there to protect poorer areas that have not a cat in hell’s chance of raising the sums of money that they need.
Q30 Kevin Hollinrake: Is that not part of what the extra £1.5 billion in the Better Care Fund is supposed to do? Is that not there to try to balance out some of these anomalies?
Richard Humphries: It is in terms of the precept, but I am arguing that we need to go beyond that, because both are relatively short-term measures. We need to have in place a sustainable long-term funding settlement that tries to be fair across local authorities, but also fair in terms of where costs fall on the individual and the state, and where they fall on the NHS, as opposed to the local authority care system. From the point of view of the confused and bewildered citizen, it makes no rhyme or reason at the moment. We mentioned continuing healthcare earlier, so there are some big questions there.
Dr Fernández: The current relative‑need formula for social care includes deprivation as one of its factors, and that shows the importance of controlling for that. I agree that something will need to be in place in order to compensate for some of those differentials that we have talked about. I am not convinced that the BCF is necessarily the best mechanism, because, in addition to how you distribute BCF money across the different local authorities, there are the conditions associated with BCF money. Whether you would want to compensate for the differences in deprivation, or the consequences for your capacity to raise resources and your levels of need, by giving more or less integration money, it does not seem to me to have been designed for the right purpose.
Q31 Kevin Hollinrake: Is BCF working as intended?
Dr Fernández: I am part of the national evaluation. It is too early to say from my point of view.
Vicky McDermott: From an on the ground view of it, we know that, looking backwards at the BCF funding thus far, of the circa £1.6 billion or £1.7 billion that was put into this area, over £1 billion was spent on trying to meet the demographic changes. It was not about doing the transformative element of it or the prevention aspect of it. Again, what we see around some of the BCF activity is that focus on health, at the hospital end of things, rather than focusing on the social care end of things. On the ground, it does not necessarily feel like it is working as intended. It is welcome in many places, but there is a lot more to do, and I think that has been heard in terms of the new improved Better Care Fund.
Q32 Kevin Hollinrake: I have one very quick question. Right at the start, we said that this system is so complicated that, if you were going there, you would not have started here and all that stuff. If somebody suggested changing it, they would be accused of top-down reorganisation. Is that something you would support, or do you think we should just try to work our way through with what we have?
Dr Fernández: I have been part of a number of those reviews that Richard mentioned at the beginning. It has been quite disheartening to see how, after a lot of hype post the reviews, nothing has really happened in terms of changing the system. We need to come up with a position that we are all happy we want to reach in terms of the social care system, and then think about mechanisms that will take us there. I do not think we have a very clear picture, as a nation, of what social care should look like.
Vicky McDermott: My view, having spent many years in the NHS before entering this sector, would be that there is something about what exactly the design principles are. What is the thing that we are trying to get to, what would that look like, and, fundamentally, how would we want to support people? What support do we want people to be eligible for? What does that look like? There are some significant issues around things falling through the cracks between systems. We talk about integration, to what extent we mean that and what that looks like. Arguably, as you move to a more localised system, you have much more opportunity. We all wait with bated breath to see what happens in Manchester around the opportunity to bring the systems together at a localised level that would work for that locality. It requires some movement, rather than theorising.
Q33 Chair: Putting aside the possibility of a complete change to the system, would it be possible to adjust the Better Care Fund to make it more effective? You raised some concerns about what it does or does not do now. Would that be a relatively easy thing to do?
Vicky McDermott: Yes. Some of the issues with the Better Care Fund are political, between organisations, between the NHS and social care, as opposed to being necessarily issues of design. There is something about that clarity as to what it is for. One of the most important things that we could do is have that clarity as to what value it has had, because some of that measurement has not been great and had not enabled us, as a system, to shift it in a way that one would want to. That would be my view.
Richard Humphries: In the words of Simon Stevens, Chief Executive of the NHS, talking about the Better Care Fund, two leaky buckets do not make a watertight solution. The problem with the Better Care Fund is, if you look at its origins, it really stemmed from the decision in the 2010 spending review to protect the NHS budget, but that would in turn put pressure on non-protected Departments, especially local government. The Better Care Fund was a well intentioned initiative to, in effect, take the wire‑cutters to that ring fence and allow a little bit of money through for social care. However, because it was NHS money, NHS colleagues rightly, as they were beginning to face their own financial pressures, wanted a big say and controls over how that money was spent.
We saw a lot of process requirements, with plans that had to be submitted with ridiculous timescales, which had to be signed off and escalated if they were not good enough, all for a sum of money that is less than 5% of total NHS and social care budgets. While in some places the Better Care Fund helped to get local authorities and their NHS partners around the table, in other places it was, quite frankly, a pain in the neck for very little gain. The argument ought to be: if the pooling of health and social care budgets is valuable and important—and I think it is—why are we being so limited and modest in our ambitions? Why do we not require the pooling of the total health and social care spend locally and do it seriously, without a lot of the bureaucracy and top‑down planning requirements that seem to have got in the way and seem to be part of the problem rather than part of the solution?
Dr Fernández: As it is designed at the moment, the BCF is not going to fund a lot of home care, day care and those core services. If we are trying to find a mechanism for increasing the available resources for those sorts of services, the BCF, as it is designed today, is not that appropriate.
Q34 Chair: It could be redesigned.
Dr Fernández: Yes, but it would no longer be the BCF; it would be something else.
Chair: The new Better Care Fund.
Q35 Bob Blackman: Over the last 20 years, we have seen a dramatic transfer from local authorities providing direct services to commissioning them and withdrawing from direct service provision. How has that affected the quality and the financial standing of the providers? Who wants to begin?
Dr Fernández: That is a very tricky question.
Bob Blackman: That is why we are asking. You are the experts.
Dr Fernández: I mentioned before that there is evidence to suggest that the market is quite competitive at the moment. In terms of price in particular, the prices that we are paying for care services are not overly high.
Q36 Bob Blackman: The point I was talking about was the quality of care.
Dr Fernández: Yes, indeed. That was what I was going to say now. The problem is that quality is much more difficult to signal in social care. Social care—we sometimes use this term—is an experience good, in the sense that you will only know whether or how much you like it once you have tried it. There are a lot of personal relations that go into the service, which are very important in terms of defining the quality of the service. Therefore, in terms of a market, it is much more difficult to signal in order to compete in terms of quality than in terms of price. It might be that the opening of the mixed economy of care to the market has emphasised more competition on price than on quality.
Vicky McDermott: Over the last 20 years, the quality regulation framework has changed beyond all recognition. Things that would have been considered great practice 20 years ago would now be a safeguarding alert. There has been a huge change in the expectations we have, in what we are prepared to do and in how we think about risk. Trying to compare whether it was better quality then than it is now is quite tricky, for all of those reasons. We now see quite a lot of services where people are TUPE’d over from a local authority, who might be on second or third generation TUPE, into provider organisations that have been working with the same customers for the last 20 years. In those instances, you have a very similar scenario. The second part of your question was in terms of the financial standing.
Q37 Bob Blackman: It was the financial pressures on the providers. As Mr Fernandez quite rightly pointed out, it is very competitive and cost efficient. However, that then means providers will either cut corners in terms of quality or be very lean and mean in terms of provision of service.
Vicky McDermott: In some ways, any move of market always enables people to sharpen their prices, sharpen their practice and become more efficient. We passed the point of efficiency some time ago, and are beyond that now. We see a variety of providers in the market, some of which are prepared to go in with a very low cost and manage the risks that that might give them in terms of how they manage their quality. We see others that are very focused on quality and therefore, potentially, do not bid or bid in different ways. There are—and we have talked about them to some extent—some significant financial pressures on the provider market.
Q38 Bob Blackman: I hear complaints all the time from users of home care services that their home care provider is expecting the person who comes to provide home care to do almost impossible tasks within an unreasonable period of time. Is that general in the market?
Vicky McDermott: I can think of many instances of that happening. The question is whether that is about the provision of the service or whether it is about what is being commissioned. Is the expectation of what is being commissioned doable in the amount of time that is being commissioned for it? In many instances, you see care packages getting cut and salami‑sliced each year. Particularly, the care worker who has a real passion for this is desperately trying to do all the things they used to do in an hour and a half now in an hour. You see lots of that.
For me, if you are looking at that element of it, you need to think about the commissioning and the provider element in the same way. I am not here to defend providers; there are good ones and there are bad ones.
Q39 Bob Blackman: There is also the other issue, which is travel time between providing care in one home compared to another. That does not seem to be allocated into the whole schedule.
Vicky McDermott: No. Thinking about the number of local authorities that I am very familiar with, that is often not part of what is commissioned, so that provides an overhead on top that then has to be subsumed. That therefore means that providers might be able to provide better in a city area, where somebody can nip from one house to the next, whereas, if somebody has 10 or 15 miles between calls, it becomes a lot trickier. You cannot make a sweeping statement that says it has got better or worse. There is something about rurality, locality and commissioning practice associated with provision.
Richard Humphries: The quality of care that an individual gets will be influenced by all sorts of things, and not just whether it is public or private. The size of homes is important. Smaller homes, generally speaking, will provide better quality care than larger ones.
Q40 Bob Blackman: Could you help us by defining what you mean by small, medium and large? A small care home could be literally four individuals being looked after or it could be 80 beds.
Richard Humphries: By small, I am talking about 30 or less, as opposed to 70 or 80-plus. If we look at inspection ratings, the smaller homes tend to do better than the larger ones. The quality of leadership in homes and in home care is really important. Care homes that have a registered manager in place will do better. The data also suggest that homes run by voluntary organisations or not‑for‑profit organisations tend to do better than for‑profit.
The quality of commissioning by local authorities will affect that as well. Places that are commissioning providers to do work on the basis of outcomes that they want to achieve rather than fixed slots of time will tend to do better, although outcome‑based commissioning is much more difficult. You cannot simply reduce this to public is good and private is bad. In the past, when long-term care was provided largely by the public sector through the NHS, it had its fair share of scandals and failures. No sector has a monopoly on vice or virtue. It is how well they are managed, how well the services are commissioned and how providers are held to account that is key.
Q41 Bob Blackman: There are quality pressures and financial pressures. Ms McDermott, you have mentioned already that there is a risk of small providers going out of business and that you only recognise it when a large provider goes out of business. What is the impact, potentially, of large numbers of providers being at risk of going out of business?
Vicky McDermott: The key risk is obviously in terms of the provision of care to individuals. Here, I would identify three different areas. Care homes create a particular issue, if one goes out of business or chooses no longer to accept local authority commission. Obviously, you then have somebody who is vulnerable and requires moving, often quite quickly.
It is not dissimilar in the supported housing world. At the moment, lots of providers that also deliver supported housing are sitting on the fence as to whether they are going to recommission and waiting to understand what is going to happen with the LHA cap, on the basis of whether it makes it unsustainable. Thinking about lots of that provision being removed in a particular area is one of the things that keep me awake at night, if I am frank.
Both of those, to an extent, are visible and you see them happening. The other element, which is almost more problematic, is around the provision of care at home. It is identifying at what point that water has got too hot for that frog, in terms of when we understand the point that there is not that provision there; either it is not available or there is not sufficient choice. Indeed, that has a likely commercial impact further down the line. If you have a very small provider base in any particular area, the local authority has no choice but to increase its fees, probably beyond where they should be, in order simply to get hold of provision.
For me, the concern is the people at the end of it who are left without that care. Often those people are very vulnerable. If people start moving out of the market quite quickly, those vulnerable people are often not in a position to advocate for themselves about the issues that is causing them.
Richard Humphries: Can I come back on the overall position of providers? On Thursday, we are publishing an assessment of what has happened to social care for older people, from the point of view of local authorities, users and carers themselves, providers and the NHS. In relation to providers, we did some research in four local authority areas, alongside the national stats. The picture is very mixed. There are some parts of the country where providers are doing very well indeed, thank you very much. That is largely in relatively affluent areas where there are high numbers of self-funders, and investment money is going in to new developments in those areas that can take advantage of the demographics.
The providers that are potentially in trouble tend to be the ones that have high levels of debt, that separate the ownership of the property from the operation of the care service and that, in other words, have unusual business models, like Southern Cross five years ago. There are also homes with under‑occupancy and homes where there are quality concerns, which may be causing that under-occupancy. They are the ones for which the lights ought to be flashing in terms of their prospects. The biggest factor is the homes that are reliant on local authority contracts rather than self-funders.
At the moment, in many parts of the country, the market is being propped up in effect by a subsidy from self-funders, which is offsetting the relatively low rates paid by local authorities. One estimate suggests that the premium for self-funders is as much as 40% of what local authorities are paying. That is a big issue. Self-funders are really keeping the market afloat in many places in the care home setting. It is a mixed picture. So much of this—we will make this point in our report on Thursday—now depends on where you live and what you can afford, rather than what you need, in terms of determining what care you get.
Q42 Bob Blackman: What has been the impact of the national living wage on providers? Is it good or bad? It is obviously good for the employees potentially, but is it good in terms of the care and the employers?
Vicky McDermott: It is obviously a really good thing and all providers are really keen to see their staff being remunerated well, because staff that are happy perform better, etc. From that perspective, it is great. In terms of the differential, though, it has not really applied a differential in terms of this sector, because equally you could still get that same national living wage from working in a supermarket. Then there is an interesting question about the nature of this work. People tend not to come into the care sector for money. That is not what drives them. It tends to be about a real passion to work in this sector.
Bob Blackman: Equally, people have traditionally been relatively low paid in this sector.
Vicky McDermott: Absolutely, very low paid. If you compare the requirements that are applied to an individual who might be working on the front line in terms of the personal liability that they have to get it right, you could still be paid the same for working in Tesco. It has been a good thing, but has it provided the differential that says we are attracting much better quality people and people want to stay in the sector? No, not necessarily. It has increased the cost base, and not just the cost base at the front line, because you then need to consider the impact around the differential of salary between supervisors and managers. It has an increasing effect through an organisation, as these things tend to do.
It is great. I am really supportive of it. I am really delighted to have it. Has it made a difference in terms of the quality and number of people we are attracting? Not really. But is it always going to be about pay in our sector? I suggest it is much more about how we create a parity of role and how we make staff feel more valued. It is about significantly investing in people’s training and their development so that they stay within this sector, all of which cost money and are often the first things that go when there is pressure on provision.
Richard Humphries: The Committee may find it helpful to look at a recent briefing that the Resolution Foundation has produced on how the national living wage is being implemented in social care. Its early conclusions are quite positive. It suggests that employers are increasing wages, in some cases more than is required. In part, that might reflect the increase in fees that local authorities have been able to do this year because of the precept. Also, it may well be that employers are finding that they have to pay more to recruit people.
Currently, the vacancy rate in social care is about 4.6%. That compares to 2.8% in the wider economy, so we have a big problem. We have not talked about workforce much, but, alongside money, getting the right people and the right numbers of people to do care work is a huge challenge and explains some of the difficulties, particularly in home care. For the national living wage, so far the results are encouraging, but the $64,000 question is whether employers will have enough money in the future to meet the subsequent increases that will come in on a phased basis between now and 2020? It is so far, so good.
Dr Fernández: I agree with all of that.
Q43 Bob Blackman: One final issue from me is in terms of demographics. We are starting to experience the people who emigrated to this country many years ago now needing care, which then has an impact on specialist care, particularly when those people have difficulty with English. They probably have cultural specialisms and they certainly have dietary concerns. What has been the impact on the sector of that change in demographics coming through?
Vicky McDermott: I do not think it has been as extreme as you would expect, mainly because, for the most part, really good care is about enabling the individual to do what they need and want to do. I would argue that that is just the nth degree of personalisation, in that it does present additional challenges. I deliver services in areas of the country that have some of those demographic challenges and it does require some thinking about, some additional training and some additional focus with staff. Fundamentally, people tend to be very keen to think about how they can deliver whatever that requirement is, whether that is a dietary requirement because of someone’s culture or religion or because of someone’s preference. We are not seeing a huge impact from it specifically.
Q44 Alison Thewliss: I have one question in relation to commissioners, which you mentioned earlier on, and another follow‑up question on workforce issues. You mentioned that, when the commissioners are getting organisations in, they do not always meet the requirements. They may be a bit ambitious about what they think can be delivered for the money involved. Can I ask how exactly that gets challenged? If a commissioner has put out a contract that says, “We want this for that”, and it turns out that is impossible to meet, how is that challenged within the existing model?
Vicky McDermott: A few things are happening in practice. It often depends on the commissioner. Some commissioners have really good strategic partnerships with their providers, will involve a provider in putting together the tender, and will have some understanding as to what the market can or cannot bear. Therefore, that tends to be a much more open conversation. There are some very good commissioners and some great commissioning practice out there.
At the other end of things, sometimes bids just land. In those instances, what tends to happen is that people do not bid, so they get a very poor response, or someone goes in and bids, bids low and then there is failure. I can think of a number of examples where that has happened: where someone has bid too low, it is impossible to deliver and then, within six to nine months, they pull out. That then creates a distress situation, which is significantly more difficult for the commissioner to resolve.
It also depends on the size and the confidence of the provider as to whether or not they go back and have some of those conversations with the commissioner. Again, those providers tend to be the ones that are in the more partnerial scenarios.
Q45 Alison Thewliss: It is the culture of how those contracts are put together in the first place.
Vicky McDermott: It is. You see a wide range of it. At one end, you have some really good person‑centred commissioning. At the other end, you have procurement, so sometimes it feels like people are buying commodities as opposed to trying to deliver outcomes. To Richard’s earlier point, there is something about what it is you are buying, why you are buying it and how you know you have got it that needs to be considered in here. It is a broad church out there.
Q46 Alison Thewliss: Are there recommendations in these contracts for the balance of quality against price, or should there be?
Vicky McDermott: Again, quality becomes quite tricky to measure. The key milestone that we have for quality in our sector tends to be about CQC observations on an annual or bi-annual basis. It is not necessarily easy to do that on a contracting basis. There are other ways of looking at it, around complaints, safeguarding issues and lots of other things. Often, though, those can be quite tricky for commissioners to look at, and we know that local authorities are under significant amounts of pressure. We have also seen, in some instances, their commissioning skills being reduced due to the pressures they have from their own internal resources being reduced. In those instances, their ability to manage a more complex contract is an issue, as is their desire or need to drive down the cost. For many local authorities, adult social care is in excess of 50% of their budget, so, unfortunately, price is king out there.
Richard Humphries: To follow on that latter point, one of the more interesting clauses in the Care Act in 2014 was a new duty on local authorities to take account of the need for a sustainable social care market. I cannot remember the exact words, but it was along the lines of: not to do anything that would undermine a sustainable market, for example by paying fees that do not reflect the cost of care. The key words were “should take account of”, not “must”. It will be interesting to keep an eye on that, to see if it does get legally challenged eventually. There are some clauses in the Care Act that up the ante, in terms of the pressures on local authorities in relation to providers.
Dr Fernández: It is a very difficult issue and there is a lot of research going on about how we can develop measures that might allow contracting on the basis of outcomes and quality. I do not think we are there yet. It is something in which there is a lot of interest. There is interest in the extent to which individuals might be able to signal quality by, for example, using TripAdvisor models, which are very difficult to implement in social care. It is a good question; I do not have the answer.
Q47 Alison Thewliss: The other question is slightly separate to that. I was going to ask if you had made any assessment of the impact that Brexit would have on the workforce. You mentioned the high vacancy rate already. My understanding is that in the region of 6% are EU nationals within the sector. Have you made any assessment of the impact that Brexit would have on those staff and the services provided?
Richard Humphries: It is around 80,000 employees, of a total workforce of around 1.5 million, I think. It is a big chunk, and it would only need a small number of them to be affected, because it is very concentrated.
Dr Fernández: In London, 60% are foreign workers. Not all of them would be European.
Richard Humphries: In terms of the Brexit impact, there is obviously a potential impact on the workforce, particularly given the uncertainty about EU nationals. The second impact is the potential impact on public finances. When the economy catches a cold, the social care system and local government usually get pneumonia. Anything that affects the public finances is bad news both for social care and for health care. Those are the two potential impacts that I would be most concerned about.
Vicky McDermott: I would agree. The key point that Richard raised there is not just the overall number, but what that looks like in terms of geographical clustering, which becomes quite problematic and potentially increases those risks. More generally, the workforce picture differs across the country. In some places, it is about your ability to get people to do the work for the salary. In some instances, it is about the ability to get a skilled workforce. It is a very valid question, but within that context of a much broader need to have a workforce strategy and for us to start thinking, not just as a sector but also politically, of this as being an industry. As I said before, by the time we get to 2030, we will have an industry‑sized workforce here, and we need to start thinking about it in that way.
Q48 Chair: I have one additional point. We talked about the quality of care when it is delivered. One of the biggest complaints I get is when people do not turn up to deliver the care. The providers are working on such fine margins that they are short of staff or do not have any staff to draw on as a replacement if someone goes off ill or whatever. Is there any information or hard evidence about the scale of that problem? It seems to be a growing one over the last few years.
Vicky McDermott: I cannot think of any evidence off the top of my head. I wonder whether colleagues at Skills for Care might have some further information on that. It is a very valid issue and one that I recognise, but I am not necessarily aware of any research.
Richard Humphries: There have been a couple of reports on those issues in home care. I will gladly send you the details.
Chair: There is nothing worse than someone being left without any care at all and being unable to help themselves. When it happens regularly, it is absolutely awful.
Richard Humphries: It is another symptom of the parlous state, in particular, of the home care bit of the social care system. It shows how difficult it is to sustain these care packages, not just today but every day for the next week, month and year, day after day, in a way that offers people consistency of care. It is even tougher in rural areas, where you have the traveling problem as well. It is really difficult to do.
Vicky McDermott: We have found that, when you survey users of care, they value consistency and reliability much more highly than CQC gradings, because that is what they feel and see every day.
Q49 Helen Hayes: Going back to the question on the national living wage, I wondered whether you had a view on the impact of the Ethical Care Charter proposed by UNISON. It includes, as well as a significant increase in pay to the Living Wage Foundation living wage, commitments to train carers, to pay for travel time as well as appointment time and to longer appointments. In areas that have introduced or made a commitment to the Ethical Care Charter, is that making the difference that we need to see in the sector?
Vicky McDermott: Many providers are moving very much in that direction, but the issue comes back down to the practicality of those elements, all of which add additional cost and pressure. Again, in the areas where you might be able to subsidise that with other income, it becomes a lot easier than it is in areas where that is not the case. Pretty much every provider out there would seek to do that, but their ability to do so under the current rates of contract is really limited.
Q50 Helen Hayes: All of you have spoken very clearly about some of the significant challenges that there are in the social care sector. Would you describe social care in England as being in crisis?
Richard Humphries: I am nervous about using the word “crisis”. We have been talking about a crisis in social care for at least five years, and it gets to a point where it becomes devalued. That is not to understate the severity of the situation. My career in social work and social care began 39 years ago, and I cannot think of a time when the pressures were as bad as they are now in relation to need, demand and the way the services are organised.
The fundamental difference between social care and the NHS is, when the NHS has a crisis, you know all about it. You see the picture of the hospital, with the ambulances queuing outside, the wards and corridors jammed; people cannot get into or out of the hospital. It is very visible. There is no equivalent in the social care system. Instead, you have a whole series of hundreds and thousands of silent, invisible crises that affect families and individuals who are not getting or have problems getting the care they need. Together, they do not make enough noise on the radar screen for that to register as a crisis. Even though I prefer not to use the word, we should be under no illusions about the scale of the challenges.
Vicky McDermott: Unlike Richard, I am absolutely prepared to use the word. In my view, some of the case studies that I have described to you today and the many hundreds of them I could have described to you are nothing less than a crisis. Richard is absolutely right: these things happen behind closed doors. Often, the people to whom they are happening do not have the energy or the resources to be able to do anything about it, to make their point or to come to you, as their elected representatives, to get your support. For me, the fact of the impact that we are seeing on carers, older people and disabled people is nothing short of a crisis.
Dr Fernández: Quite often, in the area of long-term care services, the term “crisis” is associated with some sort of challenge that is impossible to meet from a public service point of view. The Asian tsunami, for example, was one of those times. I do not think we are in that situation at all. There has been, however, an unprecedented contraction over the last few years in the level of involvement by the state in social care. As a result of that, there are very serious implications, because it is not just about the state being involved; it is what happens, when it is not involved, to people who are no longer covered.
As we have said before, we do not know exactly what the consequences of that are. We know that there will be people who are no longer receiving state support. They might be using more of their resources than they would have done before, and that could have very serious implications for some people; or it might be putting some very significant pressure on unpaid carers: family and friends, with, potentially, some very serious implications in terms of labour market outcomes. From that point of view, the situation is extremely serious. It is much less so from the point of view that here comes a challenge that is impossible to meet.
Q51 Helen Hayes: Finally, we touched earlier on international comparisons, and you spoke about the scale of resource and different countries doing things differently. Are there any particular lessons that you think the UK should be learning from approaches that are taken in other countries?
Dr Fernández: For me, there are two big models that emerge when you look internationally. Some are entitlement‑based and some are not. They both have some very good things and some very bad things. In the context of a financial crisis, the British model, which is a very flexible model that is cash constrained, has reacted incredibly fast in terms of cutting services. An element of entitlement would have helped with this, certainly when you compare what has happened with trends internationally. The difference is very acute between models that have some element of entitlement and models that do not.
Richard Humphries: I would agree with that. The biggest lesson that we could learn from other countries is the fact that most other advanced countries have embarked upon major reforms of how they fund care in the last 30 years, with different results and effects. Nevertheless, they have bitten the bullet and recognised that, to respond to the needs of an ageing population and young people living longer with disabilities, we have to fundamentally address how we pay for it and where the money comes from. Other countries have faced up to that. For better or worse, we have not.
Vicky McDermott: I would absolutely agree with Richard. We have to grasp the nettle. That is the thing that we have to learn. This is a multi-generational issue. We have to start somewhere with it and understand what we want it to look like for our society moving forward.
Q52 Kevin Hollinrake: Could you be specific on those countries you think have grasped the nettle? Which ones do you mean?
Richard Humphries: There are a whole range of countries. Germany has changed its system, as have Japan, France, the Netherlands and Singapore. They have all gone for slightly different approaches.
Q53 Kevin Hollinrake: Do you think they have all benefited?
Richard Humphries: Not necessarily. The results have been different in different countries.
Q54 Kevin Hollinrake: If you were going to point us to one that you thought was a good model to follow, bearing in mind that you think other countries are doing some things better than we are, which would it be?
Richard Humphries: I always pay heed to those words, “If you want to start from somewhere, do not start from here.” Unfortunately, we have to start with the system that we have, and it would be very difficult to graft on to our system the social insurance model that they use in places like Germany or the employee‑based schemes that they use in other countries like Japan. Part of Japan’s solution was to levy a surcharge on people’s national insurance and tax contributions once they reach the age of 40. There are all sorts of ways that people have tried to do this, but they are all very country‑specific. I am not sure that you could say, “Let us do what Japan did and see how we get on.”
Q55 Kevin Hollinrake: You said that they had reformed when we had not, and you were implying that that was a positive development.
Richard Humphries: It is positive that they have done something.
Kevin Hollinrake: You are not saying what it should be.
Richard Humphries: No, absolutely not, because I do not think you can lift ideas from other countries and transpose them into England. My point is that they have at least done something and they have tried to face up to the hard choices in a way that we have not. It is a challenge that successive Governments have made really heavy weather of. In fact, the overall sums involved are not cataclysmic.
When Sutherland did his Royal Commission in 1999, the costs of his reforms were £1 billion. Today, we talk about a funding gap this year of £1 billion for social care, and our total public spending this year is around £750 billion. Andrew Dilnot made the same point when he did his commission on who should pay for care. In the overall scale of public spending, the sums involved are not huge. This is doable, but you have to have the willingness to address with the public the hard choices about where the money comes from. It is about relative priorities; it is not about affordability in the absolute sense. Much the same could be said for healthcare as well.
Dr Fernández: There are some very interesting models. The French model provides some sort of universal coverage but not equal for everyone. There is a means test built into it, so that at least everyone knows that they are entitled to something, but that something might be as little as 10%. I do not think that any universal entitlement system here that covered 100% of the cost of care would ever run, but there are models that are a bit more flexible. When you think about the system we have here, we have disability benefit and attendance allowance providing some sort of universal coverage on the basis of some targeting, and another system that is means tested. There might be some benefit in trying to co-ordinate that better.
Chair: Thank you all very much indeed for coming to give evidence to us this afternoon. That is appreciated, thank you.
Oral evidence: Adult Social Care, HC 47 32