Comprehensive spending review 2007: Julien Forder looks at why the elderly should get a better deal

With a rapidly ageing population and a growing number of people with disabilities services are coming under more pressure. The author examines the evidence, including the Wanless review, for more money from the comprehensive spending review for older people’s services. 

The Wanless report has shown why the comprehensive spending review must allow more money for older people’s services, writes Julien Forder. The alternative is the prospect of unmet need and low-quality provision

Commitments to health and education, as well as pressures on defence spending, suggest limited scope to increase social care funding in the comprehensive spending review. Yet the case is now strong. The Wanless review of social care identified two groups of “pressures” on social care funding with a focus on older people’s services.

(1) The first concerns unavoidable cost pressures associated with demographic changes and ageing; the second is the level and quality of care. These pressures relate to the total public funding available. There is also the question about how much private individuals should contribute and in what ways.

The population is ageing. Over the next 20 years the government’s projections suggest a 40 per cent rise in the number of people 65 and older. The number of over-85s will grow by 65 per cent. In assessing demand for social care services, the relevant factor is not age directly but the number of people with disabilities. People are living longer, but those extra years may be spent in poor health.

Despite medical advances, these interventions might simply delay the onset and severity of disease. Evidence suggests that in western Europe there will be a relatively higher proportion of older people with a disability. Wanless reported that the number of older people with a disability is growing nearly 10 per cent faster than those without one.

So, in 20 years, demand could rise by nearly 50 per cent. Even by 2010, a year covered by the next comprehensive spending review, demand could rise by 5 per cent from this demographic pressure alone. Another important demographic factor, adding to this pressure, is the change in the number of older people living alone and without carers. Rates of spousal care could rise, but care by children is likely to reduce. Less informal care will add to the demand for formal services.

Compounding the demographic pressures is the expected rise in the unit costs of services.

Certainly in recent years the growth in the price of social care services for older people has been running ahead of general price inflation, a trend that looks set to continue. On the basis of post-war experience, wage rates generally rise at 2 per cent faster than inflation, although some of this increase is offset by productivity gains.

Combining an annual 1.5 per cent increase in unit costs of care services with the demographic pressures would increase funding requirements by more than 10 per cent in real terms to 2010 and a doubling in real terms to 2026.

So far in considering these pressures the nature of the care system is treated as unchanged. In other words, the support a person could expect from the system now is what they might expect in the future. But is this the right assumption? Certainly the anecdotal evidence is of mixed quality, limited availability and rushed services, and high thresholds for eligibility. Only the most dependent and relatively poor segment of the older population can expect council-supported help for core services.

This raises the spectre of unmet need and low-quality care. Are we doing enough by focusing resources mainly on this group?

There is evidence that people outside current eligibility are securing care at lower levels than they could benefit from. This finding, on its own, is not enough to justify a greater public spend.

Almost anyone could benefit from more support, but do the extra benefits justify the extra costs?

Spending more on social care means either less money for other public services or less money for individuals through higher taxes. The question is whether society is willing to make more money available to social care – with the consequences this entails – to provide support for people who are not now eligible.

The answer is difficult to establish. The Wanless review used a similar approach as for the financing of health care. The NHS is guided by the National Institute for Health and Clinical Excellence, which approves new interventions if they cost less than £30,000 a year for each extra full quality-of-life year gained. The review came up with an equivalent for a person using social care. It turned out that, for situations where they could be compared, the two indicators measured an improvement in outcome of equivalent value.

Wanless found that, even allowing for a lower willingness of society to pay for social care outcomes – say interventions costing £20,000 as opposed to health’s £30,000 – many of those older people not currently eligible ought to receive support.

Improvements in the quality of care could be justified on the same basis. Potentially also, a low use of services by less dependent people could store up problems for the future if any preventative effect of lower level services is undermined.

Even without demographic change, funding levels at present look low – at least compared with health. Only if we were content that a comparable improvement in quality of life for a person receiving social care was worth considerably less to society than that from health care would we claim that current level of funding was right.

Wanless developed expenditure projections in a first scenario where the system is unchanged and only demographic and unit cost pressures apply. A second scenario added the pressures of a £20,000 threshold. In the first, required expenditure – both public and private – on care for older people was estimated at £12.8bn in 2010, up from £10.1bn in 2002 (all in real terms, removing nflation). Public spending – mostly through councils – would be about half (£6.3bn), up from £5bn in 2002, or £5.5bn in 2004-5. Moving to the second scenario would add a further £2.8bn to the public spend in 2010 (£9bn). These are significant sums at face value, although moving from £5.5bn to £9bn in 2010 is equivalent to 0.3 per cent of gross domestic product.

The financial burden on older people who fall outside the current means test and receive no financial support from local  authorities is substantial. Many such people delay seeking care, deterred by the high charges they face. Resentment of the means test and its “Poor Law” heritage is often voiced. The Wanless Review recommended a partnership model of financing between state and individual. Individuals still make a contribution but all people are entitled to at least some state support. The Joseph Rowntree Foundation also recommended reforms to the financing system, citing the unfairness, poor coherence and prospect of unmet need.(2)

All the options available call for more social care funding from the public purse, beyond the pressures already outlined. But this would be money well spent.

JULIEN FORDER is professor of social policy at University of Kent and London School of Economics. He was also project manager of the Wanless Review.

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(1) Securing Good Care for Older People: Taking a Long-term View, King’s Fund, 2006
(2) Paying for Long Term Care: Moving Forward, Joseph Rowntree Foundation, 2006

This article appeared in the 8 February issue of the magazine, under the headline “The pressure’s on”

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