The IPPR budget for social care

Across western welfare states, economists are fretting about pressures on budgets for a growing “dependent” group of older and disabled people, and an increasingly “unwilling” group of unpaid carers, writes Sophie Moullin.

But, as social workers have long suspected, investing in social care could boost the economy by improving the health, well-being and participation of older and disabled people and those who care for them.

In England, we have an Ikea-style social care system: with a low price-point and tight specification of social care, councils simply have to build a service that will fit. The result is many people left to “do-it-yourself”: 80% of older people rely exclusively on unpaid (or informal) care and only those with property and savings worth £22,000 or less receive local authority support. And the situation is not about to improve: 72% of councils anticipate they will provide support only to those with “critical and substantial” needs next year.

We have in effect, then, set the price before thinking about what the product could be. And what seems cheap is simply not sustainable.

To start afresh, we need to flip over the Ikea-style pricing policy for social care. Rather than being a distraction from the funding question, reform of the system of social care would be a chance to raise the public profile of care – and, in turn, its public budget.

Continuing to frame the problem simply in terms of the cost of social care ignores the impact of the hidden costs of not having the right social care services in place – namely the cost of carers who are unable to combine work with care, the cost of additional pressure on health services, and the economic and social cost of rendering older and disabled people dependent.

The cost to carers

Care provided in families is not free. Where formal care services are not provided, partners or family members become carers, taking on intensive unpaid caring roles. And although their efforts do not show up on any council’s accounts, they come at a cost to our economy as people doing intense unpaid care work can’t do paid work at the same time. This not only shapes patterns of poverty and inequality, but can also slow productivity.

Research by the Institute for Public Policy Research think-tank suggests that the loss in earnings of working age people out of work caring for 20 or more hours a week is £5.47bn a year. This equates to 63% of the cost of replacing that care with formal care services on a similar basis. In addition, those who have taken early retirement and are caring for more than 20 hours a week lose out on an estimated £1.85bn a year – two-thirds of the costs of replacement formal care services. The total potential lost earnings of all those out of work and providing any number of hours of care is £9.46bn, some 91% of the cost of replacing that informal care with formal care services.

This analysis looks only at the loss of annual potential earnings, not indirect costs in terms of health services and welfare support for carers. The absence of adequate service support results in the economic exclusion of carers and those they care for, which comes at a public as well as personal cost. Moreover, the cost is cumulative. As social care costs spiral, so too do the costs of failing to retain skilled women and older carers in the labour market.

The costs to health services

Spending on social care can result in savings on health care. Early evidence from the Partnerships for Older People Project pilots, in which councils and their NHS partners have jointly developed systems of care for older people, shows that, on average, for every £1 spent on older people in the community, £1 is saved on hospital bed days.

Similarly, the National Beds Inquiry found that 20% of hospital bed days for people over 65 would be unnecessary if alternative care services were available. And Wanless’s review of social care found that hospital re-admissions fell with appropriate investment in social care services.

So skimping on social care hikes health costs. But the preventive argument for social care versus health spending is difficult to make when the two systems ­contrast so sharply. We have a national health service, free at the point of need, while social care is means-tested and delivered through locally accountable authorities. We need to think about how we better align the systems of social and health care before we re-balance their budgets towards preventive and empowering services.

The costs of ‘dependency’

If disabled people cannot access the care package and support they need, the cost will be the potential social and economic contribution they could have made. As the independent living movement has long shown, it’s when people have control and choice over their own lives, and their care needs met through service support, that older and disabled people are enabled to participate in and make a full, positive contribution to our society.

The potential for this has increased. The government has committed itself to rolling out personal budgets through a £520m reform grant to local authorities. Evidence from the In Control pilots of individual budgets shows that users report feeling less isolated and depressed as a result of the scheme. Older and disabled people also seem to manage their costs better than local authorities: in the pilots, the average care package under individual budgets cost 10% less than it would have under a traditional service model.

The potential of the roll-out of personal budgets depends on the overall public ­budget to care. But the part individual budgets can play in enhancing the independence and contribution of disabled and older people shows the urgent need to rethink the debate on the costs of social care. Rather than angst about “dependency ratios” straining services, we should look at investing in social care as a way of boosting people’s independence.

The right service – at the right price

The costs of not investing more in social care – felt by carers, the health service, and by older and disabled people left dependent and unequal – clearly point to the need then to rethink the whole question of how, and how much, we should pay for care.

Considering what we want a social care service to achieve and for whom would stop us asking how much money should be spent on social care. It would make us ask instead what price independence, equality and inclusion for older and disabled people, and for those who care for them?

Sophie Moullin leads the IPPR’s work on care. Care in a New Welfare Society is available to download

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