Adult social care needs £6.1bn funding boost to end ‘low cost, low value, low outcome’ approach

Adult social care in England needs £6.1bn of additional funding to overhaul a ‘low cost, low value, low outcome’ approach and realise its full potential, a study has found.

The money is needed to tackle market failures that result in unmet need, inadequate services and high vacancies, said the report for Skills for Care by consultants KDNA.

It said £2.3bn should be found to improve access – boosting the volume of care funded by local authorities by 15% – while £3.8bn should be allocated to improve quality. This would necessitate a 25% boost in council fees to providers, to provide higher wages to more staff in order to improve the quality of care.

Market failures

The report found that adult social care was characterised by three market failures:

• Local authorities used their dominant position as purchasers of care to hold down fees.
• Families found quality of care hard to assess, particularly as they often had to choose services in a crisis, resulting in quality of care being undervalued and under-provided for in the market.
• The value of adult social care in benefiting the wider economy, for example by preventing emergency hospital admissions, was not captured in its price.

It said in combination these failures reduced quality and meant demand for care was not met.

Persistently high vacancies

It also said they resulted in the sector having vacancy rates – at 6% – that were double the average for the economy for the past five years.

In an efficient labour market, employers would raise wages to clear these vacancies, but this did not happen in adult social care due to low local authority fees.

The report found that adult social care vacancies tended to be higher in local areas the better paid people were in other low-wage sectors and the higher the level of qualifications in the locality.

It cited benchmarking research showing that equivalent roles in the NHS were paid £25,142 on average, compared with £17,900 for support and outreach workers and £16,900 for care workers, a gap of 45% for care staff.

It also cited the compression in adult social care wages that had resulted from increases in the national minimum and national living wages over the past decade, which meant that care staff did not gain from progressing in their careers. In 2013, the median care wage was 12% above the legal minimum, while this had shrunk to 3.5% in 2019.

Link between staff investment and quality

The report also found a relationship between investment in staff and quality, with providers with better Care Quality Commission ratings tending have higher wages, lower vacancies and turnover, higher proportions of staff to service users and higher rates of staff with entry-level qualifications.

Oonagh Smyth, chief executive officer of Skills for Care, said the 1.5m social care staff make “a significant and growing contribution to the national economy.”

Smith added: “This report offers decision makers real insight into just how important that contribution will be to the nation’s economic recovery and offers ideas about what we can do.”

Stephen Chandler, president of the Association of Directors of Adult Social Services, said: “We are urging the chancellor to make a major investment in social care in his forthcoming budget and in the spending review that will follow.”

He added: “This research shows how that would reap dividends while extending care and support to millions of disabled and older people who need it to live their lives more fully.”