Labour must be bold in confronting the challenge of social care, argues Rick Muir

England’s system of personal care for older and disabled people has been undergoing a quiet crisis for years. Despite multiple reviews and commissions, the system remains underfunded, difficult to understand and, in important respects, unfair.

When people encounter the adult care system for the first time they are often surprised that it is not free at the point of use like the NHS. When care is required it is often at a time of great personal upheaval, with people suddenly finding themselves faced with a confusing mix of entitlements, charges and service providers. They find that if they have assets worth over £23,250 then they will receive no financial support from the state and must fund their own care. They discover that there is no cap on these potential costs: one in 10 of us are exposed to lifetime care costs of over £100,000 for which few of us have made any personal provision. Those entering residential care are very often forced to sell their homes to pay for it.

People seeking to access social care will also find a system that is chronically underfunded relative to the demands upon it. Although funding rose under the last Labour government, demand for older people’s care outstripped expenditure, in the last four years by around nine per cent. This is because the numbers of frail older people have grown massively, as have the numbers of working-age people with physical and learning disabilities. These pressures will only increase: under the current system social care costs are projected to rise by 50 per cent in real terms between 2010-11 and 2025-26. The huge cuts to local authority budgets since 2010 have made matters worse, with £1.9bn being taken out of social care. This will have knock-on consequences for the NHS: we know that local areas that spend less on social care spend more on delayed discharges from hospital and emergency readmissions.

Added to the funding crisis there is a postcode lottery in service provision which the public rightly see as unfair. There are, in effect, 152 different adult social care systems in England with each local council offering wildly different entitlements to services. While local variation may be desirable in many service areas the public find this unacceptable when it comes to something as important as caring for the elderly and disabled. People are often shocked to find that if they want to move into a different local authority area they lose their care packages entirely until a fresh assessment is made against a different set of entitlements.

None of this is new and yet little has changed. We had the Sutherland report in 1999, the Wanless report in 2009, Andy Burnham’s white paper in 2010 and most recently the Dilnot report of 2011. Unlike in other areas of public services Labour lacked a focus on social care: not enough money was put in and there was no systematic attempt to reform the way services were delivered. The coalition government will shortly publish a white paper in response to Dilnot but few expect it to tackle the problem adequately.

There are a number of reasons why we have not faced up to this crisis: its victims are old, vulnerable and lack the ability to organise; the Treasury does not want to pay the upfront costs; the political parties fear going into an election promising new taxes to fund a better system; and the system is diffuse, commissioned by hundreds of local councils, with no single institutional advocate.

So, faced with these long-standing obstacles, what should be done? First, we need to achieve a cross-party agreement on funding. Almost everyone now accepts that a system of private voluntary insurance will not work: despite the certainty of getting old, not enough of us save for a pension, never mind for social care, where there is great uncertainty about the level of care we might need. Dilnot proposes a mixed model combining greater state and private contributions. Dilnot seeks to cap costs at around £35,000, after which care will be free. He also raises the means-test threshold so that no one will be charged unless they have assets of over £100,000. It is still questionable whether people above that threshold would, as Dilnot hopes, invest in private insurance schemes to pay for care below the £35,000 cap, but nevertheless this would represent a welcome pooling of potentially catastrophic risk.

In approaching the funding problem, Labour must make a big political choice. The first option is to come to an agreement with the government that patches the system up for the moment, postponing a more comprehensive solution until the deficit has been dealt with. This could involve taking some funding out of the comparatively much larger NHS budget and putting it into social care. To ameliorate the pressure on families it could also involve spreading deferred payment schemes, whereby local councils defer any charges until after death and then get first call on people’s estates.

Alternatively, Labour could call now for a comprehensive solution to the problem and challenge the government to agree to it. Such a bold offer might involve a larger increase in funding, paid for by spending switches from elsewhere, possibly backed up by some form of wealth tax. The Strategic Society Centre estimates that a capital gains tax of five per cent on estates over £25,000 would bring in an extra £3bn a year. Labour would need to be prepared to go into the next election defending what the Conservatives dubbed at the last election ‘Labour’s death tax’.

Second, we need a step-change in the quality of the services provided to older and disabled people. Services need to be much more integrated so that they are intelligible to the public and so that people do not have to go through numerous assessments by a bewildering array of local agencies in order to access care. One solution is simply to merge social care into the NHS, but this would massively weaken local authorities by taking out a core component of their budgets. It is also supremely difficult to merge a system of universal free entitlement with one in which there are myriad means tests and charges. Another option is to insist on joint commissioning of services locally, which has already been introduced successfully in some parts of the country. This should be in the context of much clearer national minimum standards of care to improve the equity of provision.

Social care is also a service ripe for the development of more ‘relational’ services in which citizens and professionals work together to achieve a much better deal for elderly and disabled people. Currently most residential care homes are provided by large private companies that are not accountable to local communities and fail to engage the wider community in supporting care. The private sector has also been poorly financially regulated, as we saw with Southern Cross, and has provided disappointingly little innovation in how services are provided. Telecare has not spread fast enough despite its potential and there is too much being done through big care homes rather than helping older people stay in their own homes. Personal budgets have helped to empower disabled and older people by giving them greater control over their care, but they can also run the risk of fragmenting provision. One possible solution is to look at whether direct payments could be mutualised, with service users putting their budgets into community care mutuals based around housing estates or across towns and boroughs.

This crisis in social care looks set to continue. The political incentives mean that there is little real pressure on politicians to grasp the nettle. They must instead face up to their, and our, moral responsibility to act.

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Rick Muir is associate director for public service reform at IPPR