Written evidence submitted by Later Life Ambitions [ASC 062]

Introduction

Later Life Ambitions (LLA) brings together the voices of over 250,000 older people through three organisations, the National Federation of Occupational Pensioners, the Civil Service Pensioners’ Alliance, and the National Association of Retired Police Officers. We campaign nationally, regionally, and locally on a wide range of issues to improve the lives of our members, and older people more generally.  

The Prime Minister proclaimed in 2019 that he would “fix” the crisis in social care. The situation is now desperate, with our social care system in turmoil as a result of underfunding and a lack of staffing. It is widely agreed to be headed for collapse without a coordinated and long-term recovery plan. Urgent action is needed to ensure that older people are supported to have a safe and dignified later life. The important role of social care has been made clear during the pandemic, with social care workers on the frontline, fighting to keep our communities safe. As the UK’s population continues to age, it is essential that the Government brings forward a system that sees parity between social care funding and wider funding of the NHS. Better investment is needed not only in social care, but in public health too, in order to reduce demand on social care services and the NHS in the long term.  

Many of us will require some level of care when we get older. Whilst life expectancy is increasing, there are also a growing number of people spending their later lives unwell, and by 2030 the number of older disabled people is expected to double. The number of people over the age of 75 is also set to double over the next 40 years, from current levels of 5.3 million, making the need for better care in later life increasingly acute.[1] We are calling for a national care system that is free at the point of use, like the NHS. Funding through general taxation, with money that is ringfenced, will likely be the most effective way to pool financial risk and ensure the burden of paying for care does not fall on individuals. Almost half of MPs surveyed by the NHS Confederation (and 72% of councillors) believe that social care should be paid for through some form of collective funding mechanism from across the population.[2] Additionally, in a survey of over 3,300 of our members, 71% said they would prioritise investment in affordable social care when directing their tax revenues.

We understand that in the current economic climate, significant tax increases are difficult for the Government to bring forward and we therefore suggest that social insurance schemes are considered, together with other potential solutions. Social insurance schemes are being used successfully in Germany and Japan and are recommended by the Nuffield Trust.[3] This would see individuals pay into a ringfenced fund through mandatory payments deducted automatically from wages or pensions, which can be managed by an independent or arm’s-length body. This would pool the financial risk but would also ensure that those who earn less, pay less. Public polling by the Local Government Association in 2018 found that 56% of people would support paying extra for social insurance.[4]

Social care that is free at the point of use will provide the best chance of forming a well-funded stable system that can meet the increasing needs of our ageing population. We are keen to work with the Government and Parliament to find solutions to this problem. This response provides both short- and medium-term policy recommendations, which the Government should implement as soon as possible whilst the national care system is being established. We have formed these policies through regular consultation with our large membership base. They include:

Short Term

• A public information campaign, explaining the different types of care that people might need and the associated costs, to ensure wider education when people are of working age and better able to save.
• Increased Government support and funding to local authorities to reduce the reliance on expensive private providers.
• Re-evaluate current immigration guidance to include social care to the list of shortage occupations, as suggested by the Migration Advisory Committee.
• Recognise the value of social care work, through measures such as improved pay scales and training programmes for care staff, in addition to clearer career progression opportunities.
• Urgently set out provisions to address demand, should care home companies continue to close.

Medium and Long Term

• A national care system free for all at the point of use, funded through a mechanism that pools financial risk, for example, a social insurance scheme.
• Long-term, ringfenced funding that meets the estimated shortfalls to stabilise the sector.
• Create a culture of transparency for private care providers about the costs of social care, including providers being subject to independent and reliable audits to ensure accountability.
• Work to increase confidence in the private market to demonstrate that the care system is a worthwhile and stable investment.

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

Social care is facing a crisis. A report by the Health and Social Care Committee in October 2020 set out the impacts of funding shortfalls and called for an increase in annual funding of £3.9 billion by 2023-24.[5] The Government took steps in the 2020 Budget and local government financial settlement to mitigate this, with £1 billion of extra funding for social care committed for each year of this Parliament, but this is still significantly lower than the estimates of what is needed. The difficulties faced by the care sector are often increased due to the gaps between the UK’s health and social care systems. A more joined-up approach is needed to support the NHS to operate more efficiently, and it was welcome to see the Government make progress towards this through its recent Health and Social Care White Paper. However, the Government must also commit to increased levels of funding over the short, medium, and long term if the social care system is to avoid collapse.

The funding gap is felt most acutely by local authorities, which spent approximately £18 billion on social care during 2018-19.[6] Austerity measures in 2010, have meant social care services have been consistently underfunded, with local councils’ spending on social care dropping by 10%. This has eroded stability and confidence that local authorities can provide safe and high-quality care to those that need it. Currently, publicly funded social care is financed through local government revenue funding. This is made up of central Government funding from the local government finance settlement combined with revenue from business rates, council tax and income from fees and charges. However, given the impact of Covid-19 on public finances, more funding from central Government or from alternative sources is going to be needed to support local authorities as the economy recovers.

Councils with responsibility for social care were given the power to levy a 3% precept for social care in 2021-22 at the 2020 Spending Review. Whilst this should provide some relief to council finances, it is not sustainable, and the funding still falls short of what is needed. The policy also favours wealthier areas, where income from council tax bills tends to be higher and demand for social care is lower, and therefore leads to a postcode lottery of care provision. We are calling for the Government to increase the level of sustainable funding for local authorities, to ensure that no matter where you live, you can access high quality care from your local authority.

People who do not qualify for publicly funded social care must pay all of their care costs themselves and Independent Age found that this has led to approximately 143,000 older people facing “catastrophic lifetime costs” of £100,000 or more. [7] This is not sustainable or fair and is becoming increasingly dangerous for our members who rely on these services. The Government committed that no one would have to sell their home to pay for their care at the 2019 election, but we are yet to see any action to ensure this is the case.

LLA has been calling on the Government to ensure that in the long term, its expenditure on adult social care will rise proportionally to total public expenditure, and that an urgent review of the long-term funding of social care is conducted. Whilst additional funding streams for social care are necessary, this should not be solely the responsibility of the taxpayer. Should the Government decide to raise revenues to fund social care, LLA would want public assurances that this money would be ring-fenced. Such an approach is vital to ensuring public support for such an increase in taxation.

We believe social care should be administered through a national care system, which is funded through a mechanism that pools financial risk across the population, meaning everyone can access decent care, regardless of whether they can afford it, and live comfortable later lives. We suggest that the Government explore funding options including general taxation, such as the way we pay for the NHS, or a new system that uses social insurance schemes, which are being successfully used in countries with ageing populations.

We understand that establishing a national care system is a long-term project that will take time and therefore in the short term and whilst we wait for a national care system, the Government should also invest in a public information campaign, explaining the different types of care that people might need and the associated costs. This will ensure the cost of care is being considered whilst people are working and better able to save. Stronger financial planning during younger years would undeniably support people better in their later life and would likely reduce their need to rely on public finances.

How can the adult social care market be stabilised?

Millions of older people are uncertain or unaware as to how they will be cared for in old age. An Ipsos Mori report found that the majority of the British public were unaware that individuals are often responsible for paying for all or most of their own care.

Given the difficulties with local authority provided care outlined above, private care providers make up a significant percentage of all care in the UK, with approximately 5,500 different providers in the UK operating 11,300 care homes for the elderly. These care homes are prohibitively expensive and the lack of government assistance in paying for homecare is passing increased costs on to the most vulnerable.

51% of care homes’ income now comes from self-funders paying extortionate costs to cover their care.[8] An Institute for Fiscal Studies report found that self-funders are charged on average 41% more than those receiving local authority funding support for exactly the same provision.[9] The significant demand for local authority services is meaning many older people are forced towards paying these unaffordable rates for private care. High prices in the private market are only set to increase as the lack of Government support for the care system has caused investors and companies to lose confidence. In 2019, the four largest care home groups which accounted for 14% of all beds in the UK were on sale.[10] If large players continue to leave the market, there could be an even more serious shortage in social care provision than the one we are already facing.

Whilst we value private providers and acknowledge that they offer essential care to those that local authorities cannot reach, it is essential that Government funding is increased to reduce reliance on private providers. Additionally, we believe there should be a culture of transparency given the amount that these care providers charge, with providers being subject to independent and reliable audits to ensure their accountability.

A final element that significantly destabilises the social care system and applies to both local authority and private care providers are the workforce pressures that have come to characterise care work. Care workers are paid little, often on zero-hours contracts and work long shifts to keep up with skyrocketing demand. Our care workers have gone above and beyond during the pandemic, but unfortunately are not seen as equals with NHS staff. These factors mean there are over 100,000 vacancies in the sector and little drive from aspiring young people to join the profession. As a result, the UK’s social care system is heavily reliant on professionals from European countries. This includes 80,000 working in the adult social care sector.[11] About 90% of these people do not have British citizenship meaning many will need to apply to the EU Settlement Scheme by 30 June 2021.

The increasing vacancies in the adult social care system mean the UK needs to have access to workers abroad, but Government policy stipulates that in order to migrate, workers must be skilled with academic qualifications and receive an annual salary of over £30,000. For many working in the social care sector this is unrealistic. As such, we are calling for the Government to re-evaluate its guidance and add social care to its list of shortage occupations, as per the suggestion by the Migration Advisory Committee, to ensure the sector continues to have access to talent from abroad.

We believe the Government not only needs to increase the funding for social care but must also recognise the value of social care work, through measures such as improved pay scales and training programmes to ensure that professional development and productivity in the sector improves. This could not be more important following the pandemic, as the system that was already suffering due to high demand and a funding shortfall, may now collapse entirely if it is suddenly hit by a worker retention and recruitment crisis.

How can the adult social care market be incentivised to compete on quality and/or innovation?

The Government needs to urgently set out provisions to deal with demand for care, particularly if private care home providers continue to close at their current rate. The Government must work to increase confidence in the private market that the system is a worthwhile and a stable investment. Inspiration could be taken from the Chancellor’s latest plans to boost investment in the UK, with a super-deduction and increased guidance and support for those planning to invest in the UK’s private care market.

April 2021