THERE are two urgent tasks when it comes to the social care system: to stabilise the current financial situation and build a workable framework for the decades to come, around which a new political consensus can emerge.
The best model for social care, I argue, is the pension system – a guarantee of a reasonable universal safety net, but with extra individual provision encouraged on top.
It is simple to grasp, fair in its operation and solves all of the major problems facing the social care system, as well as those other areas it impacts.
Under these proposals, the state would provide a Universal Care Entitlement, which could then be topped up by private support for those who want it via a Care Supplement.
The Universal Care Entitlement would be at a flat rate level of support adjusted for need, whether or not the care was provided at home or in a residential setting, and wherever the care home was located.
This would involve moving from the existing system – in which the state provides care via local authorities – to a nationally funded model, where the state pays this set amount for each week or month that an elderly person needs support.
This would not end councils’ involvement in delivering social care, but would free them of a significant and increasing financial burden – as well as transform the incentives which currently prevent the construction of enough care homes and retirement housing.
We must also face up to the fact that the system requires additional funding. This report proposes a range of alternatives to fill the immediate funding gap, including taxing the winter fuel allowance; diverting savings from the Spending Review; and as a last resort imposing a one per cent National Insurance surcharge on those over 50 in exchange for a guarantee that their personal finances will not be exhausted by the costs of social care, and that they will be looked after whatever their condition.
Together these add up to an extra £2.75bn, which would represent a 25 per cent increase in the state funding coming into social care.
But in the longer term, we need to bring more private money into the system – not least to fund those who want more extensive or expensive care provision beyond the state-provided entitlement.
We therefore argue that people should be able to purchase a Care Supplement – something similar to an annuity or insurance policy – which ensures that money for more expensive care is available if needed.
This money could come either from people saving small amounts across their working life; through the payment of a lump sum upon retirement, either from savings or existing pension pots; or via equity withdrawal from people’s homes, which could potentially be realised through downsizing or a deferred payment when the property is sold.
It is estimated that the financial gain an individual realises when they sell their family-sized home and move into a retirement apartment is typically in the region of £60,000, and often more.
Taken together, these measures would put billions more into the social care system, and give further confidence to care providers to expand provision.
They would also ensure that everyone received a good standard of care, that the “dementia lottery” came to an end, and that no one would be forced to sell their home or exhaust their savings in order to fund their care.
It is not enough, however, simply to put more money into social care – wherever it comes from. We also need to reduce the cost and increase the quality of care, and thereby make the social care market work for the benefit of all who use it.
Back in the 1980s, care was a significant success story. Because it was supported via national rather than local funding, it meant councils were happy to see more retirement and care homes built. Provision of care beds nearly doubled between 1980 and 1990.
Once funding was localised, however, the total largely stagnated – because councils started to see the elderly, and facilities to support them, as a drain on their resources.
Similarly, retirement housing’s share of total housing is almost 10 times smaller in the UK than in other, similar countries such as Australia and the United States.
The proposals here would encourage a similar success story – by increasing the provision of retirement homes, and holding down the costs of care.
A properly funded Universal Care Entitlement would mean that hospitals could discharge into social care much faster, because there should always be care beds available – and the expansion of care home provision would help address the capacity problems in the sector.
Damian Green is a Conservative MP and was previously Theresa May’s deputy. His report, Fixing The Care Crisis, has been published by the Centre for Policy Studies.