An expensive Cinderella: Accounting & Business

Posted on April 9, 2009 · Posted in Accounting & Business

 

Social care is frequently described as the ‘Cinderella’ service – unglamorous, out-of-sight and never given enough love and affection. But this Cinderella certainly isn’t cheap these days. Costs have risen to such a degree that they are the single biggest inflationary factor pushing at the budgetary doors of local authorities.

 

Something must be done about the burgeoning cost of social care, which is why in the late spring or early summer the Government is scheduled to publish a green paper. If there is a sense of deja vu, this is understandable. It was only in 2005 that the last green paper, Independence, Well-being and Choice, presented a vision of social care delivery for the following 10 to 15 years.

 

The trouble is that wonderful service-led visions are one thing: finding the money to pay for them is quite another. The focus now is to work out how to pay for a social care system that is becoming, literally, unaffordable.

 

As the NHS becomes more effective and people live longer, then the costs of social care spiral. There is no doubt that the demography is severely damaging, financially. By 2036, there will be an extra two million people aged over 85. Between 2001 and 2021, the number of people over 50 with a learning disability will rise by over 50%. And over the next 30 years, demand for long-term care will double.

 

So who is going to pay for all this extra cost? As more of the population passes the traditional age of retirement, the burden might be expected to pass to the young – yet for the first time in history there are now fewer children under 16 than there are adults over 75. This is the reality behind the often heard glib phrase, ‘the demographic time bomb’.

 

There are opportunities to make savings by running social services more effectively. In the space of three financial years – from 2005/6 to 2007/8 – councils made savings approaching £800m. And the Department of Health has established a Care Services Efficiency Delivery unit that is helping councils to make even more savings and learn from best practice around the country.

 

The simple cost saving measures have now been adopted. Social care has already been overwhelmingly privatised – in the space of 25 years the provision of publically-financed social care has, roughly speaking, moved from being 90% in the public sector, to being 90% in the private and voluntary sectors. The most expensive provision – residential care – has become less readily available, replaced by cheaper (and more popular) alternatives based in people’s own homes. In the last 15 years, the percentage of elderly people in care homes has halved.

 

But no amount of efficiency improvements can address the fundamental challenges of an aging population and a much higher survival rate of children born with profound disabilities and high levels of dependence. “Unsustainable” is the word used time and again by policy analysts who examine the current system of means-tested support, which is largely the responsibility of local authorities.

 

There is also the politically important issue of a comprehensive mis-match between the population’s expectations of what will be available to them when they become infirm, compared to what is actually previded free of charge. There are failures to understand what constitutes social care, or that most care is means-tested. This creates the potential for disappointment and frustration for elderly people who are told they must use their savings and perhaps sell their house to pay for the care services they expect to receive.

 

“The majority of people believe that social care is provided free by the NHS,” David Behan, the director general for social care at the Department of Health said last year. It is only when people grow old or infirm that they will typically learn the uncomfortable truth.

 

Moreover, social care is one of those services which varies massively in terms of quality, quantity and cost across the UK. It is subject, typically, to means testing, with nearly 75% of councils only providing any social care services to people assessed as having ‘substantial’ or ‘critical’ needs. A few authorities adopt a much more generous approach.

 

Cllr David Rogers, chair of the Community Wellbeing Board at the Local Government Association, suggests that something has to change. “The number of over 65s is predicted to increase by more than three million people in the next fifteen years,” he says. “There is also going to be a big rise in the number of people who need support because of conditions such as dementia.

 

It’s the sad case that town halls have found their hands are tied. The increased demand for social care was placing a huge strain on council budgets even before the recent financial downturn, leaving many councils with little option but to withdraw basic services such as help with shopping or eating. Councils want to provide the help vulnerable people deserve, but the resources available are letting them down. As those born during the baby boom reach old age, there’s a danger this situation will only get worse unless there is a revolution in how social care is provided and funded.”

 

Moreover, there are serious immediate pressures, both on adult and children’s social care. Following the publicity over the ‘Baby P’ case – and what many social workers see as a vilification in the press of the profession – there has been a more interventionist approach by social workers, with more children taken into care.

 

Ian Johnston, chief executive of the British Association of Social Workers, says there is “no doubt about it”, that social workers have responded by taking a more risk averse attitude. He accepts that this, in turn, is leading to a further acceleration in spending on social care. “The pressures are growing,” he says. “As we get more into recession it will get worse and the social problems will increase.”

 

Graham Chapman, deputy leader of Nottingham City Council, shares this analysis. “Demography is probably the most important [factor] in the long-term,” he says. “But there’s also the issue of responding to the current climate of child protection. And there is the downturn, as well. Those three things are increasing pressures quite substantially in social care.”

 

Chapman adds: “More unemployment creates more pressures, with more people hanging around the house – and it gets more and more difficult.” This results in higher numbers of children taken in local authority care. “The other element is that people are more cautious because of the climate at the moment,” he adds. “If it’s 50/50, they will make the cautious judgement.” That in turn has a snowball effect on local authority costs. “As more authorities do that, the more pressure it places on existing places and costs go up.”

 

The New Local Government Network – which has probably become the most influential think-tank in its field – believes that only social insurance can solve the squeeze. Nothing less than a “radical transformation” is sufficient, it says. Not least, it warns, because the green paper is not about to release extra public funds for social care.

 

We believe that the only option is to move to a nationwide social insurance model, with a transitional phase involving a voluntary ‘first charge’ on home values for those facing care needs before 2030,” says NLGN director Chris Leslie. “However, we also believe that a new role for local government should be set out – less reliant on the council taxpayer to fund social care, but more reliant on elected councils to shape how the money is spent and how services are commissioned.”

 

When John Major previously tried promoting social insurance for care, the result was comprehensive apathy. Local authorities and the Government may have to persuade the public to share their growing sense of panic over the cost of social care it that mood is going to change.

 

Fast facts

 

£13.8bn – total social care spending by central and local government.

£5.3bn – the current cost to local government of providing social care.

£6bn – the extra social care cost by 2030 that is unfunded.

£43bn – the projected annual cost of social care by 2041.

65% – increased local government spending on social care from 1994/5 to 2004/5

14% – increase in central government funding to local authorities for social care since 1997/8.

 

Cutting costs

 

Local authorities aree adopting a variety of strategies to constrain or cut costs.

 

Telemonitoring of vulnerable people can prevent residential care admissions. A pilot scheme in North Yorkshire found half of 42 at-risk participants stayed in their own homes at a saving of over £90,000 a year. Councils are also turning to electronic monitoring of home care to avoid being overcharged by contractors for domiciliary services.

 

England’s Regional Improvement and Efficiency Partnerships – formed by the merger of the Regional Improvement Partnerships and the Regional Centres of Excellence – have developed costing tools, enabling care commissioners to control costs. Staff can refer to best practice in what works for high cost placements and compare providers’ costs.

 

Councils are being encouraged to regularly retender contracts. One consultant estimates that councils spend £100m more a year than they need through their failure to buy children’s fostering services at the lowest market price.

 

More savings are available by promoting good health and early prevention of ill-health. GPs and councils are encouraging people to make more use of leisure and community services, to optimise physical and mental good health and prevent isolation. Spells of hospitalisation for strokes and hip replacements are increasingly followed by short term ‘re-ablement’ care support in the home. Sending in care workers to support patients returning home to assist them to look after themselves can achieve significant long-term savings.

 

Partnerships for Older People Projects are piloting early interventions that reduce longer term dependency and social care support. Preventative help can be low cost yet effective – information, improving social contact, guidance on improving lifestyles. POPPs are proving effective in reducing hospital admissions and speeding-up discharges.

 

Extra care housing is another successful use of ‘invest to save’. Extra care is much cheaper than residential care, allows individuals to live largely independently and cuts demand for residential care. Training of family and other carers can delay for several years patients with dementia having to move into residential care.

 

Box two

 

Who provides what?

 

Most social care in Britain is provided by local authorities, funded partly by central government grant and partly from the council tax. Some social care is provided by the NHS.

In England, social care is a responsibility of London boroughs and metropolitan, unitary and county councils. District councils have no social care responsibilities.

In Wales and Scotland, most social care is provided by the unitary councils.

Northern Ireland has a system of integrated health and social care, provided by health trusts.

In England, Wales and Northern Ireland, people with savings above a set amount – £22,000 in Wales, £22,250 in Northern Ireland, £22,500 in England – must pay in full for their residential care.

In Scotland, residents only pay for the ‘hotel accommodation’ element of their care services.