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Adult Social Care: Long-term Funding

Volume 643: debated on Thursday 28 June 2018

Health and SoCial Care Committee

Housing, Communities and Local Government Committee

We now come to the first Select Committee statement. Mr Clive Betts will speak on the joint report of the Health and Social Care Committee and the Housing, Communities and Local Government Committee for up to 10 minutes, during which, I remind the House, no interventions may be taken. At the conclusion of his statement, the Chair will call Members to put questions on the subject of the statement and call Mr Clive Betts to respond to these in turn.

I begin by thanking the Backbench Business Committee for allocating time today for me to present the Housing, Communities and Local Government Committee and Health and Social Care Committee joint report on long-term funding of adult social care.

In 2017, the then Communities and Local Government Committee undertook a lengthy inquiry into adult social care. We concluded that spending on social care would need to rise significantly in the coming years, and that after successive failed attempts at reform, political parties across the spectrum needed to be involved in the process of reaching a solution. With that in mind, we returned to the issue in a joint inquiry with the Health and Social Care Committee, aiming to identify funding reforms that would be supported by the public and politicians, and to feed its findings into the Green Paper. I thank all members of both Committees for the constructive role they have played, and particularly the Chair of the Health and Social Care Committee, who is so knowledgeable on these matters and with whom it has been a genuine pleasure to work on this inquiry.

To find out the public’s views on how social care should be funded, we commissioned a citizens’ assembly, which I understand is the first held by the UK Parliament. Following a process of learning, deliberating and decision making, which took place over two weekends in April and May, a representative sample of nearly 50 members of the public was asked how best to fund social care. We have listened carefully to the assembly members’ views. They have been vital in informing our thinking, and are reflected throughout our report. We have taken the unusual step of specifically addressing our recommendations to both sides of the political divide, asking that both Government and Opposition Front Benchers accept them.

What are the challenges facing social care and what funding is required to address them? The critical state of social care and the very serious consequences for people who receive care, and those who do not, and their unpaid carers and families, as well as the NHS, is well documented. The evidence was clear that the combination of rising demand and costs combined with reductions in funding to local authorities has placed the social care system under very great and unsustainable strain.

Despite the welcome additional funding provided by the Government in recent years, local authorities face a funding gap of around £2.5 billion in 2020. This has been confirmed by the National Audit Office, the King’s Fund and the Nuffield Trust, as well as the Local Government Association. The consequences are extremely serious and widespread, leading to people going without the care they need, and the time and quality of care not being sufficient for many who receive it, leading to unpaid carers having to step into the breach and placing significant pressures on care providers and the care workforce.

A witness to the inquiry, Sir Andrew Dilnot, chair of the 2011 Dilnot commission, told us that the system was consequently now at risk of “fairly significant disaster”, which were very strong words indeed. We concluded that considerable extra funding in the order of many billions of pounds would be needed in the coming years for the following reasons.

We need to fill the funding gap that I just referred to and we then need to provide additional funding to meet future demand. The personal social services research unit at the London School of Economics projects that spending on both social services for older people and younger adults will more than double by 2014, even without the improvements to the service that we suggest. It is also important to meet the care needs of a wider group of people—not just those whose needs are critical or substantial, but those who have moderate needs that are currently largely unmet. Age UK estimates that around 1 million who need care currently do not get it. Finally, and very importantly, we need to ensure that the care provided is good care from a stable, well-paid and well-trained workforce and viable care providers.

The difficult question for the Government and the Opposition to grapple with is where the additional funding for adult social care and social care for people of a working age with disabilities should come from, what it should be spent on, and how the care should be delivered. On care provision, we are strongly of the view that the responsibility for the delivery of social care should continue to rest with local councils at a local level. Social care provision should not, however, be seen in isolation. There is a need for better integration at a local level particularly within the NHS, as well as housing services. After all, most people receiving care get it in their homes. Integration should be seen not as a matter of bureaucratic convenience, but as a way of improving the care that individuals receive. The integrated care partnerships and health and wellbeing boards have an important role to play in that.

Our citizens’ assembly members expressed strong support for a social care system that, like the NHS, is free at the point of use. We acknowledge that this would increase costs substantially and be unlikely to be affordable immediately. We believe, however, that it is an ultimate objective for the personal care element of social care to be delivered free to everyone who needs it, and that accommodation costs should continue to be paid on a means-tested basis. This direction of travel should begin with the extension of free personal care to those deemed to have critical needs.

Now for the important question: where should the funding come from? Given the scale of the additional funding that is likely to be needed, which I have explained, we recommend that a combination of different fundraising measures are needed at local and national levels. At a local level, there should be a continuation for the foreseeable future of the existing local government revenue streams. We recommend that, in 2020, this funding is enhanced through using the additional revenue from 75% business rate retention, rather than the Government’s proposal to use the money to replace grants such as the public health grant. In the medium term, we recommend a reform of the council tax valuations and bands to bring them up to date. As other funding streams develop, the contribution from council tax and business rates to social care funding could fall, allowing councils to better fund other important services.

However, local government funding will only ever be one part of the solution for social care, given the scale of the challenge. It is clear that extra revenue will also need to be raised nationally to be spent on local provision. The citizens’ assembly was strongly in favour of any extra taxation being earmarked, wanting the clear assurance that the money raised would be spent on social care. We therefore recommend that an additional earmarked contribution, described as a “social care premium”, should be introduced, to which employers, as well as employees, would contribute. For fairness, it would be paid on earnings above a threshold and with the current national insurance limit lifted. We suggest that this premium could either be as an additional element to national insurance, which would ensure the accountability desired by the public and the citizens’ assembly, to be placed in an appropriately named and dedicated fund, and regularly and independently audited, or be paid into independent insurance funds, similar to the German model.

We strongly believe that a funding solution must fall fairly between generations and therefore recommend that those aged under 40 should be exempt from the social care premium, and that it should also be paid by those who are still working after the age of 65. We also recommend that a specified additional amount of inheritance tax should be levied on all estates above a certain threshold and capped at a percentage of the total value. This is intended to avoid the catastrophic costs for some individuals, who currently have to lose the vast majority of their assets, including their homes, to pay for care costs. It would pool the risk and spread the burden more fairly, a key recommendation of the citizens’ assembly. My view is that, if everyone who can afford it pays something, no one should have to lose everything.

After successive attempts at reform, the forthcoming social care Green Paper must be the catalyst for achieving a fair, long-term and sustainable settlement. It also ought to recognise the care needs of those of working age with disabilities, as well as the care needs of the elderly. To ensure that, we recommend that our work should now be taken forward by a cross-party parliamentary commission.

I say, on behalf of both Select Committees, to Government and Opposition Front Benchers that if we, on a cross-party, cross-Committee basis, can unanimously reach difficult decisions and make clear recommendations, can they not do the same? Use our proposals as a basis for building the wider consensus that we need to create a long-term, sustainable funding solution for those who need care now and in the future.

I thank my co-Chair for the dedicated work that he has put into this joint report, as well as all members of both Committees and our wonderful supporting Committee teams. Like him, I thank not only all those who took part in the citizens’ assembly and those who advised and supported them, but the very many people, and their loved ones, who depend on social care, who wrote to us and whom we visited on our Committee visit. They told us moving stories about the level of unmet need and the consequences, both for themselves and their families.

The situation could not be more stark. As we approach the 70th anniversary of the NHS next week, would my hon. Friend say more about the impact on the NHS if we fail to address the unmet need in social care?

I thank the hon. Lady, the Chair of the Health Committee—I think on this occasion, my hon. Friend, because we have worked on a friendly basis on this inquiry. She is absolutely right. One of the important recommendations is about trying to extend the scope of care provision to include those with moderate needs. If we provide care for them, it is quite likely that we will stop them getting into the substantial and critical phase and ending up in hospital in the first place. In terms of the NHS, it is about stopping people getting into hospital by getting them proper care and having care available for people in hospital, so that they do not have delayed discharges. In those two ways, that can be beneficial. Of course, we can also join up services. Can the NHS district nurse who goes into someone’s home and looks at their needs not assess their care needs at the same time? Can we not get that sort of joined-up approach?

It was remiss of me not to thank the staff, as the hon. Lady did, and I will name Laura and Tamsin. The work they did on this was exceptional. To produce a report of this quality in the time available was absolutely first-class, and we should congratulate them on it.

I thank the Chairs and the members of the Select Committees for their work on the report, and my hon. Friend the Member for Sheffield South East (Mr Betts) for his statement introducing it. The key points from the report for me are that in its present state the care system is not fit to respond to current needs let alone predicted future needs, and that spending on social care needs to rise. Next week is the 70th birthday of social care, as well as of the NHS, but there is no funding settlement and no celebrations for social care. Does my hon. Friend agree that the time for a funding settlement for social care is now or at least soon, not years down the road?

Yes, I completely agree with that. We have got to get on with it. If we agreed everything now, it would probably take two or three years to put it in place. That is why we suggested the stop-gap measure of the extra business rates in 2020 being made available for local authorities. We thought that was a very important solution. If we get it right, we can have stability for the long term. The Germans did this over 20 years ago. They have a stable system and it works. They have just put extra money into it with general public support, because everyone trusts the system. That is the position we have to get to.

I, too, pay tribute to the hon. Member for Sheffield South East (Mr Betts) for the way he chaired the Committee; it was very collegiate and consensual, which really helped us in our deliberations. He may remember that when we visited a care home the residents and families of those receiving care accused this Parliament of a lack of courage for not having addressed this difficult issue for so long. Does he agree that there is a real sense of urgency? When the Government produce a Green Paper in the autumn, we need to get on with it. There is no reason why we cannot move this forward quite quickly. As he said, Germany has done it since 1994. Frankly, it shames this country that Germany has had a good system in place for so long, while we have not.

I completely agree. If we are still talking about this in two or three years’ time we will have failed. We have to get some decisions and get on with it. As politicians, we are often very good at coming up with ways to spend money. In this report we have actually come up with ways to raise money, which is the difficult part. We have done the heavy lifting for both the Government and the Opposition Front Benches. We now say, “We’ve handed the pass over to you. Get on and run with it and make it work.”

I, too, welcome this cross-Committee report and note that it aspires to provide free personal care, as we have in Scotland, and to extend it to those in need under 65, which we will start next April. While that has significant costs, does the hon. Gentleman agree with the assessment of the Scottish experience by the King’s Fund and the Health Foundation, which suggested that overall it saves money, because people can remain in their own homes rather than care homes and rather than being admitted to hospital?

I saw the King’s Fund report and I have seen the analysis. That was an aspiration eventually. However, the Select Committees’ felt that the immediate pressures of the funding gap, which will grow if we do not do anything about it—because of the demographics over the next few years, the fact that we are not meeting the needs of those with moderate care needs, the fact that we are not paying our workforce properly and that many care providers are in financial difficulties—mean that those issues have to be addressed and then, eventually, we can move on to the free care aspiration set out in the report over the longer period.

I congratulate the hon. Gentleman on his statement, and both Select Committees on their report. He said that if everyone contributes something, we should be able to sort out the funding problem. He put great emphasis on the need for a social care premium and praised the German model. In the report, he specifically says that under 40s should be exempt from the social care premium. The argument from the older generation will be that they have paid taxes throughout their lives, so why should they be unfairly burdened? What is the experience in Germany with regard to the social care premium? Does Germany exempt people under 40?

It is a difficult decision. Germany does not exempt people under 40, but there are other tweaks to the system. For example, people without children pay extra and people who are not working pay extra in retirement because they do not have an employer contribution. We have not just mirrored the German system absolutely. We have taken elements from it, which I think is quite right. Japan’s system is not dissimilar and it does restrict payments to those over 40. We have looked at different systems. It is a challenge, but in the end we felt that there were considerable pressures on younger people at this point in time: family pressures, housing pressures, job pressures. We therefore felt that to start at 40 was a reasonable benchmark, bearing in mind that for the vast majority of people it will mean that they will pay into the care system at some point in their lives.

Is it not remarkable, given the failure of successive Governments to grasp this nettle, that two cross-party Committees with Members holding widely different views and ideologies managed to agree a unanimous report? Does that not make it even more incumbent on the Government, given the acuteness of the crisis, to take this report very seriously and to implement its recommendations as quickly as possible?

I completely agree with my right hon. Friend. The fundamental question is: if we can do it, why can’t they? We have done the difficult part. We have set out a framework. Those on the Government Front Bench may not want to accept every detailed element of it, but it is there to work from. It should mean that we ought to be able to get to a consensus and an agreement about what should be done in a much shorter period of time than the years the Government were perhaps initially contemplating.

I thank both Chairs for the very constructive nature of the inquiry and the discussions around it, which have led to the report. We need to depoliticise this issue—that is critical—and I believe we have done that in the report. Does the hon. Gentleman agree that one of the most important parts of the report is not just the money it would raise, but how it would be delivered? Individuals who are in receipt of care can direct the payments to their loved ones, the people who know them best and can give them the best possible care. That care being delivered by the people who understand them best and love them the most will strengthen the social fabric of our communities.

Yes, I completely agree. I could not refer to every specific recommendation in my statement. The hon. Gentleman is referring to paragraph 78 of the report, where it states that instead of care being delivered to people, they could receive a cash payment so their family members could do it in a way that suits them best.

I congratulate my hon. Friend on the report and on the work of the Committees to deal with this very difficult subject. In my constituency, we have a problem with nursing care homes closing and being converted into residential care homes, because of a problem with recruitment and retention of nursing staff. I am glad he mentioned that the care being given has to be good quality. Will he say how the increased funding would help with that situation and give us the nursing home beds we need?

It is about getting a well-paid, well-trained workforce. NHS staff who do a similar job get paid about 29% more. I am not saying they are well paid, but clearly social care staff are not well paid. That funding gap has to be addressed and people have to be properly paid. The Committees signed up to the Unison charter for the workforce in social care.

I congratulate my hon. Friend and the hon. Member for Totnes (Dr Wollaston) on their leadership on this issue. The inquiry’s report provides incontrovertible evidence of the crisis facing social care funding. I particularly welcome the recommendation that social care should be provided to those who need it free at the point of delivery, and the very practical recommendations for raising the additional funding we so urgently need. I come to the House from a meeting of supported housing providers, which provide housing for older people in my constituency and elsewhere in Southwark. All highlighted to me the increasing numbers of referrals they receive from older people who are being made homeless and suffering problems in the private rented sector. This problem is growing. The report highlights the importance of housing for the delivery of a sustainable social care system and I wonder whether my hon. Friend might just say a little bit about that now.

Absolutely. Most people receive care in their own home. The Committee’s report on housing for older people looked at the nature of the home. It showed the importance of the warmth of the home and the ability to get around the home—trip hazards and so on. Means-testing for the disability facilities grant relates to means-testing for care provision and other benefits, so they need to be properly integrated. Another recommendation in the report was that where means tests exist, they need to be joined up together.

The economics of the sector are fluid. Does my hon. Friend agree that there has been a high turnover of ownership of care provider organisations? The Government need to monitor buyouts in the sector carefully, so that those living in care do not worry about who owns their home.

Absolutely. The Committee did not discuss the ownership of care homes, but we did discuss the number of homes that had gone out of business or had been contracted back to local authorities. This is an ongoing and very real problem. We need not just a well-paid and well-trained workforce but viable care providers, so the money needs to be there for the providers as well as the workforce.

I thank the Chairs, the members and the staff of both Committees, and congratulate them on producing an exceptional document. I also congratulate them on their extremely collaborative approach to their work, which is incredibly refreshing. For too long this issue has been used as a political football to be kicked around, but I am afraid it is too late for that now. We no longer have that luxury; we must reach a sufficient settlement. As other Members have pointed out, successive Governments have failed to address this issue. The Committees’ consultative, collaborative and constructive approach has been very positive and has been warmly welcomed, as, indeed, has been their engagement with the citizens’ assembly.

As has been made clear by the Secretary of State for Health and Social Care, we want to integrate plans for social care with the new NHS plan that the Prime Minister announced recently. It would not make sense to publish it before the NHS plan has even been drafted, so our Green Paper will be published at the same time as the plan. It will cover the Government’s proposals on a wide range of social care issues, including, but not limited to, the need for the social care market to be sustainable for the future. It will also build on policies such as our “Carers action plan”: we will, for example, consult on proposals to provide better support for unpaid carers.

The report will be incredibly valuable to our work. It will enhance our plans for the Green Paper, and will ensure that it can offer people a sustainable future and the knowledge that as they approach their later years, they will do so in security and safety and with quality provision.

Again, I thank all the members and staff of the Committees for their work. The challenge now lies with the Government and with Ministers. There should not be any more long grass out there to kick things into. We want to see Government and Opposition working together and starting to make the difficult decisions that need to be made for the benefit of the people who need the care, both the elderly and those of working age.