Who should pay for what, and where should the money come from?  Firstly, there is the question of what needs to be funded.  Conventional models generally separate areas of expenditure into care and support, housing and other ‘hotel’ and living costs.  Then there is the significant distinction between the funding streams that come from the state and the individual.  What should be state-funded and what should be funded privately?

Elsewhere, there are perennial questions about the relationship between state and private funding of older people’s services, where cross-funding remains the norm.  There are also questions around the dynamics of the domiciliary care market, where labour shortages are pushing up rates to levels which are not affordable to the state.  In learning disability services there is ensuring threat that since their services are entirely state-funded they will be the first to go if the drive to cut Social Care funding continues.

Our aspiration is for the Social Care sector to be appropriately resourced, sustainable, resilient and equitable, but how can this be achieved?

Current Issues & Problems

  • Lack of funding

It is widely accepted that social care in the UK has been underfunded for a number of years. This was well described in the House of commons report published in December 2021:

“Several organisations have estimated the size of the social care ‘funding gap’ based on the available resources on the one hand and demand and cost pressures on the other. However, estimates vary according to the methods and data used, and the assumptions made.

In its October 2020 report on adult social care funding and workforce the Health and Social Care Committee set out different organisations’ estimates of the adult social care funding gap. The estimates, which did not take account of the additional costs created by the Covid-19 pandemic, ranged from £1.4bn per annum to £12.2 billion.”

Further to this funding gap there is also a wide variance in the efficiency of local commissioners. For the best commissioners only 20p of each £1 spent on social care is spent on direct provision whereas in the worst this can be up to 40p in every £1. There are currently no measures or comparisons of efficiency between local authorities or attempts to improve distance that £1 of tax payer money invested will go.

  • Two tier care home market

Over the past decade as local authorities have been forced to makes savings the investment in services from state funding has dropped dramatically with spending on care dropping form 2010 onwards. The National Audit Office report from 2021 cited a Department of Health and Social Care assessment that most local authorities paid below the sustainable rate for care home placements for adults aged 65 and over and below the sustainable rate for home care. This has meant that many providers have stopped providing services to public commissioners, or have had to significantly lower costs in order to remain solvent in this market. In contrast the privately funded market has seen well above inflation fee level rises with increasingly luxurious offerings coming to market. Providers targeting the higher fee payers are able to offer better wages and conditions to staff, more amenities and activities of daily living to their residents and more luxurious surroundings in care homes. These two forces have led to a market of haves and have nots with care home providers that are majoritively local authority funded receiving poorer CQC ratings, a number going bust over the past decade and many others unable to invest in new facilities and equipment.

  • Cross-subsidy

As local authority funding levels have been lowered through below inflationary increases for many years providers have had to make up for this shortfall in income. This has increasingly led to a practice called cross subsidy where privately paying individuals are charged a higher fee to make up for the low fees paid for the state funded individual in the neighbouring room. This practice was formally confirmed by the Competition and Markets Authority during their investigation into the care market in 2017, however no action was taken to stop the practice. For those funding their own care cross subsidies are essentially an additional tax paid as part of their fees to support below-market fee rates paid by commissioners.

  • Misdirected commissioning practice

The Vast majority of social care is in the UK is now provided by private companies or charities rather than provided directly by local authorities. For Local Authorities this means that most care is purchased from others, rather than directly provided and the relationship between providers of care and commissioners can have a major effect on local care markets, where in some areas over half of all care packages are purchased by local authorities. With the recent cuts in  government funding commissioners across England have been placed under increasing pressure to make savings and this has had a dramatic effect on the relationship between commissioners and providers. Increasingly a commissioning role is seen as a need to lower costs and in most areas of the country individuals receiving care are now considered a “unit cost” rather than an individual. Commissioners have set up reverse ebay auctions where care packages are assigned to the lowest bidder. The vast majority of local authority commissioning teams have paid significantly below cost inflationary uplifts on care packages. In some areas local home care providers providing services for years have had contracts removed and offered to larger companies that have promised to deliver at lower costs.

These practices have led to ever worsening pay and conditions for social care staff across the country. Care assistants are now one of the lowest paid jobs in the country and there have been numerous lawsuits against care providers for infringing minimum wage laws. The number of empty jobs in social care has grown year on year and the number of staff that leave their job each year (staff turnover) has risen to unsustainable levels. These problems are now becoming increasingly visible with a number of reports linking low levels of funding to poor CQC results and poor care being provided.

Our Proposal

Increased funding in social care

The government’s recent announcement of increased funds for social care, paid through an increase in National Insurance is a welcome first step however the £1.8 billion per year is at the lowest end of the funding gap previously identified. Coupled with this the government has announced much more generous levels at which the state will start to fund an individuals care that are likely to use up most of the funds. As a society we need to choose what type of care we want to have provided to those unable to care for themselves at any stage of life. If we believe that these individuals deserve high quality care from fairly paid an motivated staff then further investment will need to be made.

Accountable Commissioning

The many years of austerity and cuts to budgets have led to increasingly impersonal commissioning practices focused entirely on price. These practices will often lead to poor decisions being made for individuals that lead to poorer outcomes. We believe that commissioners need to go back to focusing on individuals. In our current system commissioning practices are entirely unaudited and there is no accountability when things go wrong. In order to change this we believe that commissioners should be accountable to regulators, in the same way that providers are. Individuals and providers should have legal recourse to raise concerns through either a regulatory body or the local government ombudsman where poor commissioning has taken place.

Greater Transparency from providers

For many when trying to choose a care provider it is very difficult to understand what the full costs of care will be, or what the money is spent on. His could be much easier if providers were all required to share more information with potential customers or commissioners. In particular greater transparency on staffing levels within services would provide much greater insight into the levels of care provided within a service. As a minimum the CMA recommendations on having a price advertised on your website would not be a bad place to start.

More Efficient Commissioning

We believe that it would be possible to make the current funding in adult social care go much further. Across the country commissioners spend money on training, initiatives, management consultants and various other initiatives aimed at educating or improving provider services. Many of these initiatives, whilst well meaning, achieve little other than diverting money away from frontline services. We believe that central government should devise measures of efficiency that should then be compared between commissioners so that good practice can be shared and the investment that taxpayers make in our system can go as far as possible.

Commentary on ‘People At The Heart Of Care’: The Adult Social Care Reform White Paper (published 01/12/21)

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Best Practice Share

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Our Key Takeaways

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