Written evidence submitted by Independent Age [ASC 024]

About Independent Age

We offer regular contact, a strong campaigning voice, and free, impartial advice on the issues that matter to older people: care and support, money and benefits, health and mobility. Our vision is that we can all live a happy, connected and purposeful later life. Our mission is to ensure that as we grow older, we all have the opportunity to live well with dignity, choice and purpose.

For more information, visit www.independentage.org. Registered charity number 210729.

1.    Introduction

Independent Age has been campaigning for improvements to the social care system for many years and we welcome this new inquiry into the long-term funding of adult social care.

We have focused our response on the two questions within the inquiry where we are best placed to comment.

2.    How has Covid-19 changed the landscape for long-term funding reform of the adult social care sector?

Social care has been one of the sectors most affected by the Covid-19 pandemic. Although there has been more media attention and public support for social care, the sector has struggled to cope with the pandemic, having already been in a fragile economic position prior to Covid-19.

From calls to our Independent Age Helpline, we have heard from older people and their families about various challenges they have faced in relation to social care, including:

• People cancelling or suspending care packages because they don’t think it’s safe to have carers come into their homes.
• Informal carers having to take on more provision of care and support e.g. when face-to-face services are closed.
• People delaying seeking assessments or making decisions about moving into a residential care home/ sheltered accommodation or accessing care and support while lockdown was in place.
• Local authorities switching to telephone-based assessments and reviews, possibly excluding people with hearing loss or other communication issues
• Local authorities refusing to review care and support packages because they cannot get people together face-to-face.
• Confusion about care and support after discharge from hospital
• Confusion about funding of care generally. For example, many have not been aware that Covid-19 funding is only up to six weeks.
• A number of quality of care concerns, and not being able to check family who are receiving care at home are okay, and also not being able to visit care homes during lockdown to see how people are.
• Some callers mentioning that GP’s are not doing home visits and so they are not getting the support they need with other health issues.

From this snapshot of issues alone, it is clear that people have struggled to access and understand the care system during the pandemic. This is likely to have repercussions for the health and wellbeing of these individuals and their families in the longer term.

Unmet need was already a huge concern pre-pandemic: in 2019 an estimated 1.5 million older people were living with an unmet care need[1]. Although the true extent of the impact of Covid-19 is still to be seen, almost half of directors of adult social care thought there had been an increase in unmet need since March 2020[2].

A further aspect of social care that has suffered as a result of the pandemic is public confidence, especially in care homes. Research by IPPR supported by Independent Age showed that around a third (31%) of people were now less likely (after the pandemic) to want to their relatives to move into a care home. For people over 65 (seeking residential care for themselves) this figure is higher at 40%. This trend is also borne out in falling occupancy rates, at a time when providers are already struggling with low local authority weekly rates[3]. According to the National Audit Office, it could take 18 months for care homes to build back up their occupancy rates and thus a vital source of funding[4]. This means that without a substantial long-term funding settlement, many more providers could face insolvency.

Against the background of the specific impacts of the pandemic, there is the longer-term context of a huge disparity between current funding projections and increases in demand for care. The Care Policy and Evaluation Centre estimates that around 57% more adults will need care in 2038 compared with 2018[5]. This equates to a public funding cost increase of 98% during the same period[6].

Taking these facts together, it is clear that the pandemic has served to highlight the urgency of the need for long term funding reform for adult social care. The increased profile of social care amongst the public and in national media also means inaction has become politically risky. Polling commissioned by IPPR and Policy Exchange in late 2020 found that seven in ten voters would see failure to deliver social care reform as a breach of trust. Furthermore, one third of individuals who were Conservative voters in 2019 said they would be less likely to vote for the Party if a solution on social care is not delivered by the next general election in 2024[7]. Along with the whole sector we look forward to the proposal of a long-term funding settlement for social care during 2021, which is essential to the delivery of high-quality care for people of all ages.

3.    How should additional funds for the adult social care sector be raised?

Independent Age does not take a position on the specific funding mechanism that should be pursued by national government. There are various options open to decision makers and it is a political decision that is required to finalise what option is chosen.

However, we do believe that any funding mechanism must:

• Involve risk pooling so that the burden is spread fairly
• Generate sufficient funds for the major increase in investment needed in social care and direct this funding to the areas where it is most needed
• Provide a stable source of revenue
• Provide flexibility

Some of the options for funding that have been discussed do not fulfil these principles and so we would have concerns about pursuing these as possible solutions. One of the common issues with many of the proposed funding mechanisms is that they do not raise the amounts required if used as stand-alone policies[8]. These include:

• increasing business rates
• increasing Corporation Tax
• increasing Council Tax
• increasing Inheritance Tax
• charging National Insurance to the working population over the state pension age

We also have particular concerns about relying on a local mechanism such as Council Tax to raise funds for social care. The amount that local authorities raise through these mechanisms varies considerably and therefore there is no equivalence between the amount raised and the demand for social care. In fact, demand for social care is often highest in the areas where there is least ability to raise funds. Central government grants distributed according to a fair formula, which accurately reflects levels of need, must remain a key feature of social care funding.

However, there are several funding mechanisms available that could be implemented in a way that fulfils the principles outlined above. In our 2018 report, A Taxing Question, we highlighted the options that could realistically be used to raise sufficient sums to cover major reform of social care[9]. These include:

• increasing Income Tax,
• increasing National Insurance,
• introducing an age-related levy from 40 years of age to state pension age and,
• introducing the payment of a lump sum contribution of £30,000 at state pension age.

An Ipsos Mori poll for Independent Age in 2019 found that income tax and national insurance were the two most popular methods of raising funds for social care reform[10]. A set of six focus groups we conducted with older people in 2018 also suggested these two approaches have broad support.[11] These forms of general taxation are flexible, well understood by the public and pool risk broadly across society.

It is also vital that whichever method chosen, it is implemented on a compulsory basis. In recent years some politicians have advocated auto-enrolment insurance schemes, but any option with opt-out would risk not raising enough funds and may take time to grow to sufficient levels.

In addition to ensuring enough money is raised in total, Independent Age wants to see revenue distributed to councils fairly and in a way that reflects levels of need. The current formula for funding distribution has not been changed for many years and was recently described as out-of-date by the National Audit Office[12]. The spending power of councils with responsibility for adult social care varies hugely and does not align well with population need. Looking at the period 2009/10 to 2017/18, the Institute for Fiscal Studies found that on average, the thirty councils with the highest levels of deprivation made cuts to adult social care of 17% per person, compared to 3% per person in the thirty areas with the lowest levels of deprivation[13].

April 2021