Care homes: who should pay?
Never mind clapping the carers, the only solution to our crumbling adult social care services is to fix the broken system.
And before we can even start on that we need to address the single most formidable obstacle to change: almost universal public hostility to the measures required to fund meaningful reform.
At its heart is the mistaken belief that social care is the same as health care – ie free at the point of delivery, when it’s not. They only find out the reality when they, or a loved one need care. Given this any solution that involves cost is politically toxic.
When researchers from the King’s Fund carried out deliberative research into this issue they reported that people became angry when the current situation was explained to them.
It follows that reform will involve painful and deeply unpopular decisions. However the need is so desperate this cannot be put off any longer. We can only hope that the suffering of care home residents, their families and staff during the pandemic will be a catalyst to lasting change.
The Expert Panel Review Power to People is a brilliant summary of the challenges for adult social care in Northern Ireland, which it describes as a system “collapsing in slow motion.”
The crisis might be especially acute in Northern Ireland, but it is important to remember that this is a global problem which few countries have managed to crack. It involves that most difficult of dilemmas for politicians – risking short-term unpopularity for benefits which may not appear during their terms of office.
People are living longer, which is good news. But it simultaneously increases demands on social care whilst reducing the means to pay for it.
When the State Pension was introduced in 1948, a 65-year-old could expect to spend 13.5 years in receipt of it – around 23% of their adult life. This has been increasing ever since. By 2017, a 65-year-old could now expect to live for another 22.8 years, or 33.6% of their adult life.
This reduces the tax take to pay for public services.
Despite planned increases in retirement age it is expected that – for every 1,000 people of working age in 2039 – there will be 370 people of state pensionable age.
Therefore more money will be required in order to meet rising demand against a backdrop of a larger proportion of the population no longer working.
The Kings Fund has estimated the scale of this, UK-wide. It projects a funding gap of £6bn by 2030/31, at current prices.
Given that the current system is failing the report also looked at what it would cost to return to the levels of quality achieved back in 2009/10. This option would increase the funding gap to £8bn in 2020/21, and £15bn in 2030/31.
This is before we even consider the many other measures that are required, such as increased pay settlements for care workers and nurses and reforming the commissioning process so that the quality of care improves. The King’s Fund has looked at this as well and estimates a funding gap of £15 billion by 2030/31 to restore levels of quality to those achieved in 2009/10.
Potential solutions fall into three categories, all politically difficult, and time is rapidly running out for politicians to plump for one.
The first is an insurance model similar to that adopted in Japan. Up until 2000 the Japanese authorities regarded social care as a matter for families, not the state. This had two detrimental consequences. Hospitals were becoming choked with older people who would not have to be there if they had care available at home, and many people, especially women, were unable to work because of caring responsibilities.
It adopted the Long Term Care Insurance Scheme, which is partly funded by mandatory insurance for everyone over 40, and partly by the state. On turning 65, people become entitled to wide-ranging social care support, from home-based help with cooking and dressing to residential respite, intermediate and permanent care.
Social care insurance may be popular in Japan but it is unlikely to be so here, given the widespread confusion around health and social care.
The second is to tax people at the time it least affects them – after their death. This seems fair in two respects: there are even greater inequalities around wealth and property than income; and such a tax would mean people not having to sell their homes to pay for care.
This is what Labour thought in 2010 and the Tories in 2017 but both the “Death Tax” and “Dementia Tax” were vote losers which were ruthlessly exploited by their political rivals despite being fairer than the existing system. It’s hard to see any progress on taxing this without all-party support.
The third option is to introduce a special tax for social care. what economists call a hypothecated tax.
This is likely to be the most popular with the public but this kind of tax is rare, the nearest UK equivalent being the TV licence. Despite it being the least unpopular, it is not the fairest because one impact is that all of us will have to chip in to pay for wealthy peoples’ care so that they can pass on their estates to their children in their entirety.
A couple of years ago the Welsh government looked into how such a tax might work.
The resulting Paying for Social Care report is well worth a read.
It calculated that the demand for social care spending would rise by just over 85 per cent by 2035, at 2016-17 prices, comprising a 20 per cent increase in spending per head and an increase in numbers requiring care of over 55 per cent.
On that basis, even if the UK economy and the Welsh budget grows at 1 ½ per cent a year faster than care costs, the report calculated there would be a gap between demand and available resources of over 50 per cent of current spending by 2035.
The plan’s author Professor Gerald Holtham came out with a plan which would not just cover the shortfall but create a fund which might help meet care costs for the foreseeable future with no need for any more tax increases.
He suggests that a fair way of implementing a specific tax would be for younger people to contribute less than older ones. On that basis tax contributions ranging from 1 per cent of income for those aged 20-30 up to 3 per cent for those over 60 would be required. This would be enough in Wales to create a fund more than £3 billion in the 2030s, covering the shortfall with plenty to spare.
There’s also an interesting discussion about how English people who have not paid into the scheme but move to Wales to retire might be excluded from it.
It will be interesting to see how these ideas progress.
Our Executive does not have the fiscal powers to implement a similar scheme. However there is no good reason to suppose this could not be addressed if a similar scheme were to be introduced here.
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