Spending review puts squeeze on social care

Reactions within the adult social care sector to last week’s government announcement on public expenditure for 2008-11 have mixed despair about the present with optimism about the future.

The comprehensive spending review settlement for local government, and hence adult social care, has been widely criticised as inadequate to cope with the high and mounting pressures on authorities from the growing number and expectations of older and disabled people.

Yet, in promising to consult on and produce a green paper next year on the long-term funding and delivery of adult care, the government has held out the hope of a brighter future and acknowledged the challenge of demographic change.

But the next three years look set to be tough for councils in a context in which they are already under pressure on adult care. A Community Care survey of half of the 150 English councils in July found 30% had either raised eligibility criteria in the past 18 months or were reviewing thresholds with a view to increasing them.

Chancellor Alistair Darling announced councils would receive 1% real terms annual growth in funding, from £23.9bn to £25.8bn, from 2008-11, compared with 4% a year for the NHS.

Additional money for adult social care from the Department of Health will rise by £190m to £1.5bn, equivalent to 2.3% real terms annual growth, although the DH is yet to specify how this will be spent. On top of this, councils will be mandated to make 3% annual efficiency savings, which the government believes will release £4.9bn for local authorities to redirect into frontline services.

This combination prompted DH director general of social care David Behan to tell sector stakeholders the settlement “provides adequate funding for local government to meet the demographic and inflationary pressures in the social care sector”, in a letter last week.

But few of his audience would appear to agree.

The Local Government Association dubbed it the worst settlement for councils in a decade of Labour government. LGA chair Simon Milton said: “A 1% real terms funding increase is not sufficient to provide current levels of social care to an additional 400,000 older people who will turn 65 during the period of the next CSR.”

Before the settlement, the LGA estimated spending on adult care would have to rise from £13.8bn to £16.8bn by 2010-11 to meet rising demand and costs – an increase greater than the total rise in government funding of local authorities.

Councils’ ability to make up any difference through council tax is limited by the government’s threat that it will cap increases above 5% a year.

Town halls have not been alone in criticising the settlement. Critics include charities such as Mencap, Help the Aged and the Alzheimer’s Society user-led groups, such as the National Centre for Independent Living and Radar provider bodies, such as the UK Home Care Association, and think-tanks such as the King’s Fund.

Reflecting its policy of reserving criticisms of government for more private settings, the Association of Directors of Adult Social Services has described the CSR as a “good start”.

Meeting demand

But Adass president Anne Williams says councils will struggle to meet demand over the next three years.

Anne McDonald, programme director for community well-being at the LGA, challenges Behan’s claims that the three elements of the settlement – funding for councils, direct DH funds and efficiencies – will suffice.

She says that the direct DH funding makes up a small proportion of adult care spending, and adds: “In general, the LGA would question whether 3% a year efficiency is deliverable.”

McDonald believes that at least some more councils will increase their eligibility threshold over the next three years.

Williams says councils will need to harness resources from other parts of the council and from partners, such as primary care trusts, to support preventive provision for older and disabled people, which may be supported by the new public service agreement on older people (see box).

She also says councils need to adopt a “reablement” approach to social care, which involves providing intensive support for people who enter the social care system enabling them to regain independence, and providing ongoing services only for those who really need them. But she adds: “We knew that this CSR would never ever solve the pressures.” Instead, she points to the green paper as an acknowledgement from government that the funding of adult social care is a pressing issue – a view shared by social care’s champions within the government.

The DH hosted a post-CSR reception for social care leaders last week at which Behan and care services minister Ivan Lewis were described as being in “bullish” mood about the green paper announcement. In his letter to stakeholders, Behan described the green paper as an “historic advance”.

Change in funding

While confirming nothing, the government has dropped hints it may back a shift away from the current means-tested funding system, which has been criticised for penalising people with modest means and for being overly complex.

Its replacement could be the partnership model proposed in last year’s report for the King’s Fund by Derek Wanless, under which all service users are guaranteed a minimum level of free care and can top this up with state assistance.

A Treasury statement on the green paper said any new system must promote independence, be affordable for the public purse and “be consistent with the principles of progressive universalism”.

This piece of New Labour jargon suggests a system where at least some state-funded services are available to all in need, with more support for the most disadvantaged. The partnership model fits that bill, with its promise of full state funding for the least well off through the benefits system.

Health secretary Alan Johnson spoke warmly about the Wanless model in the House of Commons last week, contrasting it positively with the free personal care system in Scotland. He also spoke of the need to develop a “cross-party consensus” for reform, as happened with pensions reform.

Such a consensus could be on the cards. Conservative shadow health minister Stephen O’Brien told a fringe meeting at his party’s conference last month that “we are heading down the road of the partnership model”.

The Liberal Democrats remain committed to free personal care but the partnership model is being considered as part of a policy review that will report later this year.

Yet, the model is more expensive for the taxpayer than means-testing, while Wanless estimated that demographic change means overall public and private spending on older people’s care would have to rise from £10.1bn in 2002 to £29.5bn in 2026 to provide good-quality services.

The debate around the green paper should start to provide answers to these questions, which many in the social care sector have been posing for years. But the answers depend on whether the political will exists to back the necessary level of investment, or in particular whether the public will back increases in taxation.

As part of the CSR, the government issued 30 public service agreements, laying out its top targets for the next three years, including tackling poverty and promoting greater independence and well-being in later life.

Progress will be measured against five indicators: the employment rate for people aged 50-69, the percentage of pensioners in relative and absolute poverty, healthy life expectancy at age 65, the proportion of people over 65 who are satisfied with their home and neighbourhood, and how far older people are being supported to live independently at home.

The PSA’s delivery will be co-ordinated by the Department for Work and Pensions. Though there will be no mandatory targets for councils and their partners, they will be expected to address its goals as part of their local area agreements, negotiated with government.

Related articles
Comprehensive spending review special report
Essential information on older people’s services
The Inspector – Jam tomorrow for adult social care? Unlikely.

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Mithran Samuel