Recently in funding Category

We've reported today on Age UK's research showing a £500m increase in the funding gap for older people's social care in the past year. The news story gave no indication as to how they reached this figure so I thought I'd do it in a blog post. Forgive the Q&A format for those who find that irritating

What is the basis for the £500m figure?

It is the gap between how much councils needed to spend on older people's social care in England in 2011-12 to maintain services at the same level as in 2010-11, and the amount that they actually did spend. In this case, between £7.8bn for spend required and £7.3bn for spend delivered. (All of the comparisons below between 2010-11 and 2011-12 show changes in real terms i.e. inflation has been taken account of the equation by basing all figures on 2011 prices).

How was the £7.8bn figure reached?

This was based on research carried out for Age UK by the Personal Social Services Research Unit at the London School of Economics, specifically Julien Forder and Jose-Luis Fernandez who are recognised experts on adult social care economics.
The £7.8bn figure is split into two parts: service costs (£7.0bn) and care management (£0.8bn). Forder and Fernandez calculated that service costs needed to rise from £6.8bn to £7bn from 2010-11 to 2011-12 to keep pace with rising demand/need for care due to demographic change. With a nod to the very tight financial environment that councils are in, they calculated that this could be achieved while massively cutting spend on care management, by 27%, from £1.1bn to £0.8bn. We'll return to this cut later.

How was the £7.3bn figure reached?

This is a bit more complicated. Government figures (from the Department for Communities and Local Government) show councils spent £7.645bn on older people's social care in 2010-11 and are on course to spend £6.961bn in 2011-12. The latter figure excludes the £648m transferred to councils from primary care trusts to spend on adult social care, as mandated by the Department of Health. Age UK has assumed that all of this money has gone on adult social care and been allocated between clients aged over 65 and under 65 in line with existing spending patterns. This mean 51% has gone on older people, boosting council spending on the group by £330m, which, when added to £6.961bn gives you the £7.3bn figure.

Has Age UK overestimated the decrease in spending on older people's social care?

It quite possibly has. I would be very surprised if the £648m transferred from PCTs has been spent as Age UK assumes. This funding is intended to be used to support services at the boundary between health and adult social care that help keep people out of hospital or enable them quicker discharge from hospital. Spending on these services - reablement, falls prevention, intermediate care etc - is concentrated on older people to a greater extent than adult social care as a whole. Therefore you would assume that more than 51% of the £648m has gone on older people.

Moreover, the NHS was allocated £150m in addition to spend on reablement services. We have no idea how this money is being spent. But it is a fair assumption that most of it is going on social care for older people. Also, a further £150m was allocated to PCTs in January to spend in conjunction with local authorities in a very similar way to the £648m figure.

All of these point to Age UK overstating the decrease in funding on older people's social care, so the £7.3bn figure could be, say, £7.5bn.

Has Age UK overestimated the increase in the funding gap?

No, not necessarily. The £7.8bn target spend figure is based on the assumption of a 27% cut in care management costs for older people from 2010-11 to 2011-12. While care management has been cut back, a reduction of this magnitude is highly unlikely. A more modest decrease in care management costs, from £1.1bn to £1bn, would leave a target spend for 2011-12 of £8bn. Were actual spending to be £7.5bn, you'd still be left with a £500m increase in the funding gap.

The £8bn and £7.5bn figures are totally notional. They are just designed to explore the assumptions used by Age UK and to suggest that any risks in these may cancel each other out.

Bit of a news round-up this morning rather than one of my lengthy rambles:

Adult social care funding

The government has been urged to implement the Dilnot commission's proposals on care funding reform by chiefs of 41 councils across the South and Midlands, amid ongoing concerns that it won't, reports The Daily Telegraph.

Meanwhile, the Local Government Association has awarded £1m to 50 councils in a bid to generate £50m in efficiency savings in adult social care. Under its adult social care efficiency programme, the authorities will be supported to implement measures that have been proven to release savings.

Sacked sheltered housing manager

A sheltered housing manager - sacked for breaching moving and handling policies when helping an incontinent resident on to a commode so she could wash her - is seeking to appeal against a tribunal decision that she was not unfairly dismissed, reports The Evening Standard. More than 3,400 have signed a petition in support of Sue Angold.

Direct payments, fraud and abuse

This Guardian article on the risk of financial abuse and fraud from personal budgets and direct payments (and this related one about how poor direct payment monitoring was identified in a serious case review of a service user's murder by his son)  is generating quite a lot of chatter. Top social work blogger Ermintrude2 has done a strong blog post on this topic today, arguing that it is wrong to link risk and abuse to any particular method of delivering social care (i.e. personal budgets) and there is no evidence to suggest that personalised methods of delivery are more risky.

Carers charities merge

The Princess Royal Trust for Carers and Crossroads Care are to merge in April. The charities - two main providers of services for carers - have long worked closely together and, in the current climate, the merger is no surprise. Princess Anne - president of the trust - will be president of the new, as yet unnamed, charity.

(Blog updated 3.45 16 Jan 2012)

Lots about care funding in the news today so it's worth trying to unpick what's going on. Here are the main lines in descending order of importance:-

• The government is considering imposing a cap of between £50,000 and £60,000 on people's lifetime care costs, with the state picking up the bill above this point, reports The Daily Telegraph. This is significantly above the £35,000 cap proposed by the Dilnot commission last year and hence quite a bit cheaper for the public purse.
  
• Cross-party talks on forging a solution on care funding are due to start tomorrow, reports the BBC, the first such talks since the acrimonious breakdown of discussions before the 2010 election over Tory allegations of Labour plans for a "death tax" to fund care.
• Three-quarters of people support a cap on lifetime care costs as proposed by Dilnot, an Age UK survey has found, reports The Daily Mail.

The latter is hardly a surprise: who would not want more rather than less help from the state?

As for cross-party talks, who knows? Labour's current position on care funding is unclear and expecting health secretary Andrew Lansley and care services minister Paul Burstow to come together with Labour's Andy Burnham and Liz Kendall on social care when they are at daggers drawn on the government's NHS reforms may be asking too much. But let's be optimistic.

The idea of a £50,000-£60,000 cap is more worrying. Andrew Dilnot (left) was not theological about having a £35,000 cap but instead proposed a range of £25,000 to £50,000. However, he said that £35,000 was "fair and realistic" and that anything above £50,000 would not be fair, on the basis that people with lower levels of wealth may not receive adequate protection from the risks of needing social care.

A £60,000 cap would cut down the bill to the Treasury of implementing Dilnot from £1.7bn a year to about £1bn a year.

However, it would mean the reforms would fail a key test: namely, protecting people from the risk of high levels of care costs in older age.

£60,000 is a considerable sum (and it's worth noting that the cap excludes living costs in residential care, which would be additional to the £60,000); a cap of this level would make people far less likely to save or take out products to insure themselves against future care costs (another key goal of the Dilnot package), meaning that a market in such products would fail to emerge; and while making little difference to wealthy families, would hit those with moderate levels of wealth (for whom the difference between £35,000 and £60,000 is most significant).

(Updated bit) The DH has now distanced itself from the £50,000 to £60,000 figure in a statement to this Guardian story. The story also provides a useful link (see emerging findings on this page) to the source of the story: a paper in November by one of the groups feeding into the government's engagement process to shape the forthcoming White Paper on care reform. 

Contrary to what I have said above, this group, which was looking at the role of financial services in the care system, suggested that a cap of this level could stimulate people to save for their care and encourage the financial services sector to develop suitable products to enable them to do so. However, it's also clear that this figure was also given with a nod to making care funding reform more affordable for the public purse.

The group, which included civil servants and representatives from the social care and financial services sectors, also said more analysis was needed on the impact of different levels of cap. Hopefully, this is being done now and the results of this - rather than efforts to keep the overall bill to the state down - which shapes the White Paper.

It's a big day tomorrow for campaigners against the government's benefits reforms/cuts as the Welfare Reform Bill comes up for debate in the House of Lords.

One issue that has united charities across social care in condemnation is the planned abolition of the discretionary Social Fund, which provides grants and loans to people in crisis. Though the budget for crisis loans and community care grants is being devolved to councils, this will not be ring-fenced, nor will authorities face any statutory obligations to use the money as it is now used.

Now 20 charities from the worlds of disability (Scope), family support (Family Action), children's services (Barnardo's), homelessness (Crisis) and domestic violence (Women's Aid) are urging peers to back an amendment to effectively ring-fence the money.

They say: "As charities, working hard to respond to the needs of vulnerable children and adults in already desperate circumstances, we fear these changes could be catastrophic for some, such as those who resort to illegal moneylenders or high-cost credit, or women who return to live with a violent partner because they have no money to furnish another home for their children."

Let's see if the House of Lords hears this message.

Happy New Year! I returned to work today to see social care at the top of the news headlines.

Social care's great and good have written an open letter to the prime minister (in the Telegraph) urging that he and his fellow party leaders deliver on social care funding reform this year to put an end to indignity and isolation for older people, dependence for disabled people and the denial of life opportunities for carers.

It's great to see social care on the front pages and at the top of news bulletins, and you cannot fault the timing: this is, of course, the year in which the government publishes a White Paper setting out how it plans to reform social care, including its funding. Moreover, cross-party talks are due to start.

Before Christmas, we predicted that the government would not deliver on social care funding reform, specifically that it would not implement the proposals of the Dilnot commission to put a £35,000 cap on lifetime care costs for all because of the £1.7bn bill.

An optimist might argue that we made the wrong call, and that the festive period showed that both government and opposition were up for making social care funding reform work.

On this line, Labour has shown how much of a priority it puts on social care by putting out research over Christmas showing how much charges for home care and other community services had risen in the past couple of years (6% for home care). Releasing the research, shadow minister for care and older people Liz Kendall urged Cameron to engage in serious cross-party talks on reform. The positive narrative would also point to action from government in the shape of a £170m injection of cash into social care services for people discharged from hospital to manage winter pressures over the coming months.

This money - one-tenth of the cost of Dilnot - was found from Department of Health savings but meeting the full cost of Dilnot is a call that only the Treasury (and Number 10) can make. Moreover, whatever the pros and cons of the Dilnot package it doesn't, in itself, purport to solve all or most of the problems outlined in today's letter to Cameron.

This is because Dilnot is about expanding the existing publicly-funded social care system to cover self-funders (who would benefit from the cap); it is not about filling the funding gap in the existing system (put at £2bn to £4bn), which manifests itself in rising charges and eligibility criteria, squeezes on providers and inadequate quality.

This £4bn-6bn black hole (Dilnot plus funding gap) is not the whole story. As the government, councils and the sector know, the way social care operates needs fundamental reform  through better integration with health and housing, more personalisation (in the widest sense) and more intelligent commissioning. This should generate efficiencies that would reduce the Dilnot plus funding gap black hole from £4-6bn a year to something less than this.

However, I very much doubt that even the reduced figure would be something the Treasury would stomach, particularly in the current economic climate.

That is why I remain a pessimist - though I would be beyond delighted to be proved wrong.

Is care funding being delayed until 2025? That's what the Telegraph and the Mail are reporting today, the latter in quite high-pitched terms ("Families betrayed over care funding reform").

Andrew Dilnot, who produced a report for the government on funding reform earlier this year, said he envisaged his proposals - or something like them - could be implemented in 2015, following government legislation (to recap Dilnot's central proposal was a cap on lifetime care costs for service users of £35,000).

There have been rumblings ever since the report was published that the Treasury has got cold feet because of the estimated bill of £1.7bn a year to implement Dilnot. However, the government is committed to some reform of the funding system, whether Dilnot, Dilnot lite or something else altogether, through a White Paper next year followed by legislation. If the implementation of this was to be delayed until 2025 that would be a very serious matter.

But are the Telegraph and Mail right to make this claim? The story originates from a briefing given by health secretary Andrew Lansley to journalists yesterday, attended by, among others Jeremy Hughes, chief executive of Alzheimer's Society. Hughes has been advising ministers on the shape of the White Paper.

A - if not the - key piece of evidence for the 2025 claim is this quote from Hughes (taken from the Mail story):

"One of our pieces of work was looking at what would it take over time to develop insurance schemes that would be marketable and would actually deliver results,' he said. "For all those factors to be in place, we thought 2025 was a realistic timescale."

Now, this seems to be a reference to the development of a market in insurance products to enable people to cover the costs of care that the state will not pick up the bill for (i.e. the £35,000). This, of course, is a matter for the private sector, not the government. So it is not a comment on when the government might implement funding reform. Indeed, the development of a private sector market in insurance is necessarily consequent on the government setting up a new funding system.

Don't get me wrong, there is a real danger that Dilnot - or indeed any substantial reform of care funding - will get kicked into the long grass or shelved, and what we will be left with is some tinkering. But the timetable for government action, whether big or small, is likely to be far swifter than what is implied by today's stories.