Long-term funding of adult social care

The covid-19 pandemic has had a severe impact on adult social care. People have received less care and often care workers have been compelled to deliver only the basics. More people are going without care and many people’s needs are increasing significantly. Social care workers and unpaid carers are burnt out. Covid-19 has exacerbated the need for more immediate funding for the sector.

The Government provided vital additional funding to the adult social care sector during the pandemic, and we appreciate that the additional covid-19 funding cannot continue indefinitely. However, the Government’s own guidance that care workers should self-isolate if they test positive for covid-19 indicates that the risk to the sector is not over. We do not accept that controlling covid-19 infections is analogous to other types of infection control, since Ministers were unable to name any other sector whose employees the Government is still advising to self-isolate. Given the huge financial pressures on the sector and acute challenges with retaining staff, the Government should extend the Infection Control Fund for as long as the public health situation requires it to advise care workers to self-isolate with covid-19.

The Government is focused on long-term reform of adult social care, but in order to get to the future it needs to save the sector from the brink of collapse. Covid-19 has highlighted the underlying structural challenges of rising demand, unmet need, and difficulties recruiting and retaining staff, and has also exacerbated them. On top of that, there are severe current pressures arising from increases in the National Living Wage and the National Minimum Wage, and from rising inflation. We strongly disagree with the former Minister for Local Government, Faith and Communities that adult social care has adequate funding currently, having received compelling evidence that there is an immediate need for additional funding. The Government should allocate additional funding this year through the adult social care grant, cover inflationary pressures and unmet care needs, and should announce this as soon as possible so that local authorities can plan how to cope best with the pressures they are facing.

The Rt Hon Boris Johnson MP said as Prime Minister that he would fix the crisis in social care once and for all. We commend the Government for attempting to prevent unpredictable and catastrophic care costs for people and introducing reforms to the sector where previous Governments failed to act. But it should be under no illusions that it has come close to rescuing social care, and needs to be open with the public that there is a long way to go. Ultimately, all our lines of inquiry returned to the same fundamental point: there is a large funding gap in adult social care that needs filling. This is not new information. In October 2020, the Health and Social Care Long-term funding of adult social care 73 Committee estimated a funding gap of £7 billion to cover demographic changes, uplift staff pay in line with the National Minimum Wage, and to protect people who face catastrophic social care costs. We have not yet received an updated estimate of the funding gap to take into account immediate pressures and the Government’s various policy reforms. £7 billion was just a starting point and would not address the growing problem of unmet need nor improve access to care, with the full cost of adequate funding likely to run to tens of billions of pounds.

The covid-19 pandemic had the effect of raising public awareness of adult social care. It also achieved general support for a tax increase specifically to plug the long- standing funding gap. However, the Government has missed this opportunity. It has done so firstly by allocating the vast majority of the proceeds of its Health and Social Care Levy to the NHS, and secondly by in theory ringfencing what little funding it has allocated to adult social care for reforms rather than for cost pressures. Members of the public are seeing taxes on their payslips going to health and social care, yet we heard the money going to social care “won’t touch the sides”.

We do not wish to pit the NHS and adult social care against one another. The two systems are interdependent and each needs to be adequately funded to reduce pressure on the other. Wherever the money comes from—from allocating a higher proportion of levy proceeds to social care, or from central government grants—the Government urgently needs to allocate more funding to adult social care in the order of several billions each year, at least £7 billion.

We do not accept the Government’s position that care providers should not be compensated for employer National Insurance Contributions in relation to the Health and Social Care Levy simply because they are, on the whole, private businesses. We heard again and again that there should be parity of esteem between the NHS and social care. Compensating the “health” component of the “Health and Social Care Levy” because it is a public sector employer while not doing so for the “social care” component only serves to reinforce the strongly felt notion that social care is the poor relation of the NHS. It also introduces unfairness between public and private care providers. The additional cost to private providers will make it harder for them to increase wages. This may lead to more care workers leaving the sector, many for jobs in the NHS. Furthermore, it is a perverse logic that care providers should have to undergo further financial strain by paying a tax that is supposed to be helping to relieve their financial strain. Since the Health and Social Care Levy is supposed to benefit both health and social care, private care providers should be compensated for employer National Insurance Contributions to the Health and Social Care Levy.

While the Government has provided funding for its charging reforms, we received many concerns that it has underestimated the combined cost of introducing a new cap and more generous means test, commencing Section 18(3) of the Care Act 2014 in respect of residential care, and the fair cost of care. It has since expressed its intention to stagger the rollout of Section 18(3), which may help to avert the worst-case scenario in terms of local authority capacity pressures and market sustainability. The 74 Long-term funding of adult social care Government should re-evaluate the combined impact of its charging reforms, Section 18(3), and the fair cost of care, to take account of the staggered rollout of Section 18(3). It should regularly monitor take-up of Section 18(3) and update its models accordingly. The Government should provide further funding to local authorities, if necessary, on top of additional funding for underlying pressures.

It is nevertheless disappointing that people currently living in and paying for residential care, whose payments before October 2023 will not count towards the cap, will now not be able to access local authority rates until 18 months later than they were originally told. The Government should put every effort into heeding its commitment to rolling out Section 18(3) for those currently living in residential care earlier than April 2025.

While the changed timetable for rolling out Section 18(3) will help to stagger the additional assessments local authorities will need to conduct, we are nevertheless concerned about local authorities’ capacity to conduct tens of thousands of additional assessments, particularly given the size of the backlog that already exists. We are further concerned that the Government’s proposed workarounds will place additional strain on those requesting care and care workers, and could lead to an inconsistent service being provided and an increase in complaints. The Government’s re-evaluation of the combined impact of its charging reforms, Section 18(3), and the fair cost of care should include a revisiting of the recruitment and training needs of assessors.

The Government should publish real-time and regular evaluation, both of the trailblazer scheme and of the charging reforms when they are rolled out more widely, so that local authorities can apply insights quickly and so that the Government can provide further funding in a timely manner where necessary should its modelling prove inaccurate to prevent further market instability.

Given the Government’s investment in the fair cost of care, and our calls for further funding and for care providers to be compensated for their employer National Insurance Contributions of the Health and Social Care Levy, it is all the more important that the additional funding reaches the frontline. However limited tax avoidance and financial transparency in certain parts of the market are, they must be tackled. The Government should bring forward proposals for both improving the financial transparency of providers and giving consumers transparency in respect of what the price for their care covers.

While achieving a fair price of care is vital, price should not be the driving factor in commissioning care. Reforms in relation to improvement and market shaping should include a dedicated focus on outcomes-based commissioning, drawing on existing good practice by local authorities.

As well as the desperate human impact on those needing, receiving, and providing care, the underfunding of adult social care has led to many councils having to cut other public services in order to do their best to meet their care duties. The Government should address three core issues to improve the sustainability of Long-term funding of adult social care 75 adult social care funding: the balance of funding sources, long-term planning and forecasting, and geographical distribution.

We recognise the benefits of raising a proportion of funding for adult social care locally. As we have argued in previous reports, we support greater fiscal devolution. In finding the right balance of funding sources for adult social care, however, we are concerned by the increasing reliance on locally raised tax revenue as currently constituted. In our previous report on local authority financial sustainability and the section 114 regime, we recommended a variety of ways in which the mix of funding to local authorities could be improved, including: resetting business rates, implementing the Fair Funding Review, 75% business rates retention with additional funding put towards an equalisation grant, and revaluing council tax. For this inquiry, we heard that the amount that areas can raise through council tax is not related to need: often the places with the lowest income from council tax have a higher proportion of adults who are eligible for state support for their care. We also recognise that the decision to raise social care precept will become a harder sell for councils when residents have already seen their National Insurance Contributions increase to pay for health and social care. In deciding how much additional funding to provide from the centre for adult social care, the Government must proceed with the aim of rebalancing the sources of funding so there is not such a reliance on council tax.

One-year funding settlements and short-term grants are hampering local authorities’ ability to plan and to deliver value for money, which in turn affects local care markets as it makes it more difficult for local authorities to enter longer term contracts with providers. The Government must provide a multi-year funding settlement to give local authorities the visibility they need both for their own sustainability and also to help shape sustainable local care markets. It should also aim to make announcements about grants and social care precept at an earlier stage in councils’ budgeting cycle.

The geographical inequity of relying on council tax to provide the majority of funding for adult social care is compounded by an out-of-date adult social care relative needs formula. The Government must update the adult social care relative needs formula by the next financial year. This should be implemented alongside the Fair Funding Review and council tax equalisation. Geographical fairness should also be taken into account in future allocations of Health and Social Care Levy funding.

The Department for Health and Social Care is drip-feeding numerous policy changes in adult social care, many of which are welcome, but many of which will have a significant impact on local authorities in terms of their spending and capacity. These include the cap and new means test, commencing Section 18(3) of the Care Act 2014 in respect of residential care, the fair cost of care, reforms in the People at the Heart of Care White Paper around housing, data, and assurance, and reforms in the Joining up Care for People, Places and Populations White Paper around health and care integration. We understand that local authorities are working closely with central government on these reforms. But we are concerned that the Government does not have a handle on what the total impact on local authorities will be. The 76 Long-term funding of adult social care Government should publish a new burdens assessment by the end of the year to determine the level of resource needed by local government in terms of staff, expertise, and funding to deliver the full package of adult social care reforms.

Stakeholders have called for adult social care reform for years, and we commend the Government for introducing many welcome initiatives such as around housing and data that could make a significant difference in the long-term. We are also pleased that many stakeholders welcome the Government’s vision for what good care looks like and how care is experienced by those receiving care and their families. However, the Government currently has nothing more than a vision. We are alarmed that so much of the detail within the People at the Heart of Care White Paper has yet to be worked out, and that there is no roadmap, no timetable, no milestones, and no measures of success. We note that the Health and Social Care Committee has called for a 10-year plan for adult social care in three separate reports since October 2020. The Government should publish a 10-year plan for how its vision in the People at the Heart of Care White Paper will be achieved, taking into account how the different policies interweave and affect one another. The plan should be co- produced with people with lived experience of receiving care and providing care, paid and unpaid. The Government should manage this set of reforms, alongside charging reforms, as a programme, and identify a Senior Responsible Officer. It should publish key milestones, a timetable, and measures of success, and report annually on progress to Parliament.

The lack of information about how the reforms add up to £5.4 billion, why each reform was allocated the amount it was allocated, and how funding will be distributed, does little to instil confidence that the Government has thought through its plans. We have expressed our concerns numerous times about the unrealistic demands of requiring councils to compete for relatively small pots of funding, which larger and better funded authorities can win. The Government’s response to our report should include a full breakdown of how the £5.4 billion from the Health and Social Care Levy will be divided between the different reforms with a rationale for each amount, including why some amounts are “at least” and others are “up to”. It should also set out how each pot of funding will be distributed, avoiding using bids as a means of allocating grants as much as possible, and providing justification for any element of competition.

Given how fundamentally social care policies made by DHSC affect local authorities’ capacity, budgets, and residents, it is vital that DHSC and DLUHC work together closely on developing and delivering such policies. We were struck by the discrete division of answers to questions by Ministers, who rarely supplemented one another’s answers, and the separate follow-up letters that we received. The Government’s 10- year plan should be developed jointly between DHSC and DLUHC, with relevant input from the Department for Work and Pensions. We expect the Government response to our report to show clear evidence of joint working from the departments, rather than discrete sections according to the departments’ separate remits.

We welcome the Government’s commitment to “making every decision about care is a decision about housing”, but we are concerned that currently the Government is not putting this into practice. The detail on the housing policies in the People at the Heart of Care White Paper and how their funding will work have not been shared. We welcome the creation within DLUHC of a taskforce for housing for older people, but it is not clear what the read across will be to policies in the People at the Heart of Care White Paper. We are also concerned by an apparent lack of joined-up working both between DHSC and DLUHC—and within DLUHC—on housing, planning, and social care. This is not intended as a criticism of Ministers, but of the siloed working that this suggests both within DLUHC and across DHSC and DLUHC.

The Government should create a separate taskforce for housing for working age disabled adults alongside the taskforce for housing for older people. Both taskforces should be accountable to both DLUHC and DHSC and should report to the Senior Responsible Officer for the People at the Heart of Care programme. Their terms of reference should be developed with input from the Local Government Association and housing stakeholders and should set out the taskforces’ interconnection with housing proposals in People at the Heart of Care.

Despite guidance from the Government on planning for housing for older and disabled people, not enough councils are producing plans or conducting sufficiently robust housing needs assessments. The Government should consider introducing statutory requirements for local authorities to produce plans for housing for older and disabled people based on assessments of housing need. These plans should contain a range of types of accommodation.

The Government should consult on whether one or more Use Classes or sub-classes should be introduced in order to unlock more development of different types of accommodation that is suitable for older and disabled people, and meets the demand within communities.

The Minister for Care and Mental Health asserted that the chapter on the workforce in the People at the Heart of Care White Paper is the Government’s social care workforce strategy, but the number of further calls for a social care workforce strategy that have been made since the White Paper’s publication clearly indicates that the contents of that chapter do not amount to a strategy, or are not what the sector expected to see from one. The Government should publish a 10-year strategy for the adult social care workforce. It should develop the strategy in collaboration with care workers, providers, local government, the NHS, unpaid carers, and people receiving care. The strategy should not just be a wish-list but needs to be a clear roadmap with core milestones, outcomes, and measures of success. We agree with the Government that retention should be a key performance indicator, but it is important that measures of success also include opportunities for progression, reduced prevalence of zero-hour contracts, and whether care workers feel valued for the highly skilled nature of their work.

We heard repeatedly that an absolutely critical lever for stabilising the adult social care market was tackling staff shortages and low retention. This would widen access to care and help to give unpaid carers a much-needed break. There is also the very real risk that the Government’s charging reforms do not immediately improve matters, for instance by drawing more people into the care system without having enough workers to deliver the care for which these people will now be eligible. We were repeatedly told that the solution is to increase wages. It is little consolation to hear from the Minister for Care and Mental Health that only a fifth of the workforce is on the National Minimum Wage when we know how many workers are leaving the sector for higher paid jobs in other sectors, and that the sector struggles to compete with the NHS. While increasing wages would come at a cost, we were encouraged to see this as an investment because of the connection between wages and quality of care, the extra spending in our economy by better paid care workers, and the cost savings of retaining staff over having to hire more expensive agency staff. The Government’s proposals for health and care workforce integration in the Joining up Care for People, Places and Populations White Paper are welcome, but they must include a requirement to work towards achieving parity of pay for comparable roles across the NHS and social care. The Government’s guidance for fair cost of care exercises should require councils and providers to move towards pay rates for care workers that align with the NHS and that reward more senior staff with meaningfully higher pay than entry level workers.

We welcome the addition of care workers, care assistants and domiciliary care workers to the Shortage Occupation List, acknowledging that these roles are in short supply within the UK resident labour market. The Government should monitor the impact of adding care workers to the Shortage Occupation List on vacancies and be prepared to extend the visa period beyond 12 months, to lower the salary threshold, or both.

Our broken care system is held up by unpaid carers doing vital work out of love and pride. The cost to them can be financial, physical, and emotional. The cost to our economy of carers leaving the workforce is over £3 billion each year—money that could be invested in adult social care. We recognise that some of the proposals in the White Paper will benefit carers, such as around technology and innovation. However, we think that £25 million over three years is a totally inadequate amount to allocate to initiatives to support carers, whose contribution to the UK economy is estimated by Carers UK at £132 billion a year. £25 million will do little to assure carers that their contribution is valued by the Government.

The Government claims “the money is there” to support carers’ breaks, but the evidence we received is that not enough carers are getting a break. There are many carers who have not had a break since the start of the pandemic. Providing intimate care, under pressure, for such a prolonged period, is bound to have an impact on a person’s mental and physical health. It is imperative that the Government announce additional ringfenced funding to enable more carers to take a break this year.

We recognise that it is not always easy to engage with people who do not identify as “carers”, but more must be done to ensure that carers receive the support to which they are entitled, and that the support they receive is useful to them. All carers are legally entitled to a carers assessment, but under the current arrangements it seems that only 1 in 4 has received one. This is not acceptable. The Government should carry out a review of carers assessments, including of the terminology, co-produced with carers. The new assurance framework should include a requirement to report on the number of carers assessments conducted by local authorities, from which targets should be set in alignment with the workforce strategy we have recommended. Consideration should also be given to how the new data framework can help to identify carers.

During this inquiry we heard about a proposal for a national care service, under which health and social care would be delivered by the same organisation. This would be similar to systems in place in Northern Ireland and Wales. This proposal was roundly dismissed by our witnesses. We support the Government’s policy of getting health and care to work better together at a local level, which is far more preferable than a massive reorganisation to create a national care service.

We welcome the Joining up Care for People, Places and Populations White Paper and commend the Government for making the integration of health and social care a policy priority. We particularly welcome the Government’s ambitions around shared outcomes, workforce integration, and ensuring every citizen has a shared care record by 2024. However, we are concerned that inconsistent geographical boundaries could result in gaps which could also hinder the successful pooling of budgets. In Spring 2023 the Government should review how many places have established governance and accountability models and their geographical footprints, and should work with local partners to modify boundaries if necessary to ensure all citizens can benefit from effective arrangements. The Government should also publish without delay its review of the arrangements that govern pooled budgets under Section 75 of the NHS Act 2006. The Government should seek to enable localised place-based arrangements between the NHS and individual councils, and pool budgets on that basis.

Integration strategies should seek to integrate not just health and care but health, care and housing. Ensuring there is holistic care that fits around a person’s needs includes preventing care needs from arising by having suitable housing, enabling people to live independently in their own homes, and ensuring that people receive the right care and support in the right setting, recognising that most people who receive care do so in their own home. Getting housing arrangements right for people is an essential part of the equation. We recommend that integrated health strategies have proper regard to a person’s housing needs as part of their care provision.

Barriers to data-sharing between health and social care have been a long-standing challenge, so we particularly welcome the Government’s ambition to have shared care records for all citizens by 2024. It is vital that this ambition becomes a reality. 80 Long-term funding of adult social care The Government should set up pilot schemes for shared care records, co-produced with people receiving care, carers, and care workers, and should report regularly on progress towards its 2024 target. Beyond 2024, the Government should publish annually the proportion of citizens who have shared care records and take steps to address any areas with particularly low take-up.

We are not reassured by the Director General for Adult Social Care’s comments that some places have found ways to continue discharge to assess funding from their own funding streams, not least by her admission that these workarounds are only short-term and only “for the bits of it they think are vital”. The discharge to assess funding was an excellent example of effective health and care integration. Given the fragile state of adult social care and the magnitude of the NHS elective backlog, discharge to assess funding should be continued in order to help build back better.