Written evidence submitted by London Councils [ASC 073]

1. We welcome the opportunity to submit written evidence to the Committee’s Inquiry into the long-term funding of adult social care. Over the past few years it has become increasingly evident that the health and social care sector are highly interdependent. Challenges in the social care sector often result in problems on the health sector.  

2. Among the public, there is little distinction between health and adult social care. The important issue for many people is the need to receive a good seamless service regardless of who is providing the service.

3. However, funding challenges can mean that people do not receive a seamless service. For example, when a person is being discharged from hospital to their home, there is a clear interdependence between decision making to discharge and preparedness for providing care in the community. Poorly resourced adult social care sector can lead to delays in providing the right support quickly to people who are ready to leave hospitals – causing them to stay in hospital longer than they need to.

4. A health and care system that is working efficiently has people flowing through the system from hospital to home or other forms of care without delays. However, delays continue, and it is important to acknowledge that unnecessary time spent in hospitals can have a negative impact on the individual’s health outcomes, for example:

• Exposure to picking up other infections
• Losing mobility - research by Newton Europe found that a stay in hospital of over 10 days[1] can lead to ten years of muscle ageing for some people who are most at risk like the elderly.  The research also found that 35% of 70-year-old patients experience functional decline during hospital stays and are worse off than when they entered the hospital this increases to 65% in those over the age of 90 experiencing functional decline.
• Losing continuity of care packages that may have been in place and can often increase longer term support needs
• Longer stays can have an impact on the mental wellbeing of clients.

5. Better flow of patients between the NHS and adult social care reduces costs to the NHS.

6. A combination of rising demand, rising costs in social care and increasing duties as a result of changes in social care policies and judicial reviews has meant that local government finances in particular adult social care departments have been facing unprecedented budgetary pressures.
7. The scale of the funding crisis in adult social care (ASC) is such that even before the onset of Covid 19 it has required several major policy and funding interventions to help the sector. However, despite these additional funding boosts, this additional funding has still not fully met the funding gap in the sector.

8. Adult social care continues to face a number of challenges arising from a combination of long-term public spending constraint, significant demographic growth and increased complexity of cases.

Impact of COVID-19

9. Covid-19 has disrupted health and care provision substantially and will shape the way people access and experience health and care in the coming years in fundamental ways. Using the strong local knowledge that they hold, London boroughs have been in the forefront of innovation during the pandemic, whilst at the same time, using partnership arrangements already in place working more broadly together across the health and care sector to deliver cost effective services.

10. Adult social care (ASC) has been acutely impacted by the COVID-19 pandemic and the financial cost has been significant. MHCLG has undertaken monthly surveys since April to gauge the overall financial impact of the crisis on local government. The latest survey returns (from March 2021) showed London boroughs estimate ASC spending to have increased by £418 million as a result of the pandemic – approximately 16% of total adult social care budgets in London.

11. The overall financial impact of COVID-19 across London boroughs in 2020-21 is forecast to be £2.2 billion, comprising £1.2 billion in lost income and £1 billion in increased expenditure. With boroughs receiving £805m so far in emergency funding, alongside £530m of other grants and an estimated £601m in compensation and reimbursement, the estimated funding gap is £289 million for 2020-21.

Funding Outlook

12. Even before COVID-19, the immediate outlook for adult social care in London was difficult. In 2020-21, London boroughs planned to spend £2.6 billion on adult social care, and local authorities nationally planned to spend £17.7 billion.

13. Across England, the LGA estimated that there is a £810 million funding gap in 2020-21. London Councils estimates that London’s share of funding gap could be in the region of £120- £130 million in 2020-21.

14. This gap is calculated after accounting for a series of welcome funding interventions by the Government over the last four years. The Spending Review 2015 saw the addition of the ASC precept (for councils with ASC responsibilities) and the Improved Better Care Fund. However, the scale of demand for adult social care services led the Government to make six major funding interventions in three years, which included funding for the iBCF, continuing the ASCP and adding various separate grants, for example for Winter pressures. In total, an additional £3.7 billion was made available over the SR15 period (2016-17 to 2019-20), of which London boroughs received £475 million. SR19 confirmed all of these measures would continue for a further year in 2020-21, with an additional £1 billion (£160 million in London) in grant funding for adult and children’s social care, and a further £574 million in ASC precept (£82 million in London). Most recently, SR20 confirmed the continuation of the Improved Better Care Fund, the Social Care Grant (with an additional £300 million) and the Adult Social Care Precept (raised to 3%), leading to £1 billion of additional funding in London. 

15. Prior to COVID-19, the LGA was predicting the funding gap would grow to £3.9 billion across England by 2025; London Councils estimates this could mean a gap in the region of £600 million for London boroughs by 2025. The impact of COVID-19 will have added to this challenge even further.

16. It is clear, that significant and sustained investment is required in adult social care at Spending Review 2021. The work of local authorities impacts not just social care but wider health and wellbeing needs of communities. Increased investment in social care would deliver more cost-effective improvements for the health and well-being of residents and contribute to making health services financially efficient and sustainable. For example, through borough investment in HIV prevention services, London has delivered sustained reductions in new diagnosis which will, in time, avoid NHS costs treating the life-long affects of HIV.

17. The challenges that the sector has faced during the pandemic have also highlighted the need for long term social care reform. Addressing how social care should be paid for has become a pressing issue for the sector. Moving to a more sustainable funding approach will provide greater certainty for all those involved in the system, including local authorities, health partners, providers and the individuals and families using social care services. Clarity regarding the long-term funding of care will empower individuals to plan for their care needs.

18. It is time for the government to publish the long-awaited plans for reforming adult social care. The reforms are an opportunity to address the long-term funding of adult social care, as well as the sector’s other challenges that go beyond the issue of funding.

19. Since 2010-11 successive governments have focused on reducing the fiscal deficit. However, a combination of rising demand, rising costs in social care and the pandemic that local government finances in particular adult social care departments have been facing unprecedented budgetary pressures.

20. Local authorities have shown considerable ingenuity and adaptability in response to the requirement to deliver a disproportionate share of deficit reduction. They have already implemented radical transformation plans, invested in demand reduction, renegotiated contracts, combined services, amalgamated back office functions, implemented IT programmes, and engaged in a wide range of commercial activities. In London the highest efficiency savings have been achieved in adult social care.

21. There are a number of characteristics that will have an impact on how funding for adult social care should be raised. These are:

• Means Testing: Taking into account the current state of the economy and high increasing costs offering free care to all is not possible. Therefore, some form of means testing to help fund social care costs should continue to be part of accessing care services.

• Costs Cap: Introduction of a maximum limit that people must pay for care also seems reasonable. However, this will need to be well communicated and there needs to be clarity regarding the relationship between the state and individual with clear defined roles and expectations in the delivery of social care services.

• Easing the flow of funding between health and care: The tension between demand led and budget constrained funding models must be overcome in order to release the financial efficiencies and quality improvements of person centred care. It is vital to remove the barriers to the deployment of funds across the two sectors that so often undermine the quality and cost effectiveness of care, this would include changing some of the legislation that stop the easy flow of funding between the health system and the care system. The reforms must commit to long term funding based on a more joined up funding system allowing the easier flow of funding between health and care.

• Reforming the hospital tariffs: Hospitals in England are paid a tariff based on a Payment by Results model (PbR). However, over the last few years providers have been facing rising financial pressures as a result of a combination of high staffing costs and reducing tariff payments.

22. As a key part of the health and care system the increasing financial challenges being faced by providers has an impact on the overall sustainability of the system and also hampers the ability of areas to integrate as providers have their focus on those activities that will result in increasing their tariff payments and not the wider care issues that may be challenging the sector.

23. Providers need to be given the right incentive that will also ensure there full commitment towards integration of health and social care. The current tariff system is a disincentive for providers to fully engage in non-tariff linked activities skewing the system towards hospitals.

24. Any system for raising funds for adult social should be based on the following principles:

• Raising funds must be done at a national level and not based on regional or local schemes as this may result in variations in money raised. For example, raising funds through council tax or business rates puts poorer areas that need the funds most at a disadvantage. We have always argued that the social care precept reflects the size of an authority’s council tax base which does not necessarily correlate with areas of highest need. For this reason, council tax should not be considered as a viable long-term solution for funding adult social care and increasing it further could potentially make council tax unaffordable to many.

• The system must aim to be fair for all and therefore age-related premiums/taxes must be avoided to avoid inter-generational inequalities.

• Access must also be equitable to remove any geographical and regional disparities. Should a social care premium on national insurance is to be introduced it should be for all working age people. Previous proposals have often not progressed because they have been seen to be unfair for a particular group of people such as the elderly and the dementia tax.

• At the national level money raised for adult social care through a premium should be ring-fenced.

25. The Care Act 2014 introduced a new duty on local authorities to facilitate and shape the adult social care market, this included a duty to ensure service users have access to a range of different care services in their local areas, whether the local authority has organised the care or not.
26. Local authorities have a key role to play in ensuring that they have a healthy adult social care market in place; intervening when necessary and planning for future demands. This role requires local authorities to have a good understanding of the care market in their local areas if they are to be responsive to the needs of their communities.
27. However, this responsibility has been handed to local authorities at a time when the care market is at its most fragile and the adult care sector is facing unprecedented risks and challenges.
28. Providers of social care are an absolutely vital part of the social care landscape, delivering practical care services with an essential human touch both to self-funders who pay for their own care and those who are funded by their council.

29. However, there is evidence that Covid-19 has over the past few months destabilised the market. This is particularly challenging as it is coming at a time when market sustainability was already a growing issue due to the funding challenges the sector has been facing. Over the summer of 2020, the Care Quality Commission[2] (CQC) published its report and found that admissions to care homes fell by more than a quarter amongst publicly funded clients but by two thirds amongst self-funders due to safety concerns during the pandemic.

30. There is growing concern that If this trend continues this is likely to put added financial pressures on the care market and result in potential closure of further residential and nursing homes.

31. As risks are increasing in the wider care and health market, local authorities have the task of ensuring that they have strong systems in place enabling them to respond quickly to the challenge of increased provider closures and ensuring that service users are protected during what is a worrying period for those that are impacted,
32. A paradoxical challenge of the market shaping role has been the increase in personalisation. As more and more people have control over the big decisions that affect their lives and the funding for their own care and support through personal budgets and direct payments, the power local authorities would have had over the care market through commissioning people’s care in blocks is reducing. This means that it is more difficult for councils to shape the market by themselves through direct purchasing of large volumes of care. Therefore, an approach to commissioning and planning for future demand should be based on councils, providers and citizens working together if local authorities are to successfully deliver their responsibilities on market shaping and facilitation. 

33. Councils have an important role to play in shaping their local care market and stabilising it. The current system however, has had resources weighted towards residential and nursing homes, additional resources are needed to ensure that all those people who remain in their homes are able to access safe quality services from the care market. For example, technological developments have helped to contribute to some stability in the sector. Technology has the potential to help people live more independently for longer, supporting the focus on prevention. Many of councils are increasingly adopting smart technologies around the home and increasingly homes are being designed in a way that can both meet but also adapt to our everyday needs delaying or preventing the need for care homes.

34. A sustainable care market requires the right balance of both home care service, residential services and nursing homes. Whilst also recognising the important role that informal carers play in the sector.    

35. Therefore, government can help to address some of the instability in the sector by moving away from the funding the sector through one-year allocations or the one-off allocations that have been made over the past three years.

36. There will be greater certainty in the sector enabling longer term strategic planning to be made by providers and the sector and the sector as a whole if government moved towards a three to four-year funding allocation model for the sector.

37. In comparison to the health sector the adult social care sector requires more support in a number of ways to incentivise and gain further improvements in quality and innovation.  For example the following steps can help to incentivise the market:

38. Investing in the workforce: The social care workforce is currently going through a challenging period characterised by high vacancy rates and difficulties in recruitment and retention of the workforce, particularly amongst regulated professions such as registered nurses, occupational therapists and social workers. Some of the causes for the high turnover rates are due to some of the conditions that characterise the sector for example, there are higher numbers of workers on zero-hour contracts and there limited opportunities for progression in the social care sector in comparison to the health sector. The workforce in London is particularly challenged due to a number of factors including:

• The higher cost of living and working in London
• The higher cost of land has cost implications on the care provided
• Due to the wide scale budget reductions that social care departments have made over the past few years invaluable staff knowledge and experience has been lost following restructures and redundancies resulting in an increasing overworked workforce.

39. Steps should be taken to ensure that conditions in the care workforce are improved and comparable to the health workforce with similar benefits. This will help to address the challenges faced by the sector making recruitment and retention in the sector easier. 

40. Provision of long-term funding: Uncertainty over the long-term sustainability of funding has made it difficult for local authorities to plan how much care, and at what price, they will be able to purchase beyond the current financial year, constraining innovation and investment.

April 2021