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LGA response to "Build Back Better: Our plan for health and social care"
This briefing sets out the LGA's response to different parts of the government's plan for health and social care. While there have been potentially positive developments, we have serious concerns and question whether they make the kind of progress needed to help adult social care deliver for people.
Introduction
On 7 September, the Government published ‘Build Back Better: Our plan for health and social care’ (the Plan). The Plan sets out a number of Government initiatives designed to strengthen the NHS and social care as we move forward and recover from the pandemic and its consequences. These initiatives will be funded through the centrepiece of the Plan; a new 1.25 per cent Health and Social Care Levy (the Levy), ringfenced for health and social care from April 2023, and based on National Insurance (NI) contributions.
We have a number of questions relating to the Plan’s content and are seeking more detail as a priority. This briefing will therefore be updated as we get further clarity on the issues raised below.
Overall LGA position
Adult social care and support is a vital public service that supports people of all ages, with different needs and in different settings, to live the life they want to lead. It helps support people’s independence, wellbeing, relationships and contribution to their local community. In this way, it helps strengthen the places in which we live, our economy and the capacity of other local services. Funding and reform are needed to bolster social care’s potential to best support people and communities in the way described. This is the context in which we consider recent developments and we are keen to work with Government to find a long-term sustainable solution for adult social care and support.
We recognise that protecting people from ‘catastrophic care costs’ and having to sell their home to pay for care is a Government commitment. This is a potentially important first step in changing the way social care is paid for and funded, which we acknowledge is an important issue. It is also helpful that the Government has looked beyond just this issue, outlining action on, for example, the workforce and supported housing. The Government has also committed to publishing a new adult social care white paper by the end of the year.
While these are all potentially positive developments, we have serious concerns and question whether they make the kind of progress needed to help adult social care deliver for people.
• We question the adequacy of the Levy to fund all of the Plan’s adult social care commitments and need to know what proportion of the Levy will reach adult social care beyond the three-year period covered in the Plan.
• We are alarmed that the Government’s solution for tackling social care’s core pressures appears to be the use of council tax, the social care precept, and long-term efficiencies. We estimate that an annually recurring cost pressure of £1.5 billion needs to be funded to stabilise the care provider market. We also estimate that core pressures (inflation, demography and National Living Wage) total £1.1 billion per year to keep services running at 2019/20 levels of quality and access.
• We are disappointed by the absence of any action on a number of other crucial issues that all need addressing if we are to deliver a social care system that best enables people of all ages to live the lives they want to lead.
• We are alarmed that the Government’s solution for tackling social care’s core pressures appears to be the use of council tax, the social care precept, and long-term efficiencies. We estimate that an annually recurring cost pressure of £1.5 billion needs to be funded to stabilise the care provider market. We also estimate that core pressures (inflation, demography and National Living Wage) total £1.1 billion per year to keep services running at 2019/20 levels of quality and access.
• We are disappointed by the absence of any action on a number of other crucial issues that all need addressing if we are to deliver a social care system that best enables people of all ages to live the lives they want to lead.
There is currently a real lack of detail on the Plan’s initiatives and we are seeking to gather this information as a matter of urgency.
The Health and Social Care Levy
What is the Levy?
- A new 1.25 per cent, UK-wide Levy ringfenced for adult social care and based on NI contributions.
- This will raise around £36 billion for health and social care over the next three years across the UK (approximately £30 billion for England). Of this, £5.4 billion will be invested in adult social care.
- An increase in dividend tax rates by 1.25 per cent.
- A staged approach:
- The Levy will be introduced from April 2022 at which point NI contributions will rise by 1.25 per cent and the additional tax take will be added to the existing NHS allocation.
- The Levy will be formally separated out from April 2023 and ringfenced for health and social care. It will apply to people working above state pension age and NI rates will return to 2021/22 levels.
- Public sector employer contributions to the Levy will be funded from the tax take and the £36 billion figure is after that has been taken into account. This is to avoid a reduction in the spending power of public services.
How will the Government use the Levy for adult social care?
- A cap on maximum care costs that people are required to pay themselves, effective from October 2023 and set at £86,000.
- An increase in the financial means test thresholds, so that: people will not have to pay anything towards the cost of their care from their assets if they are less than £20,000 (up from the current threshold of £14,250); people will only be required to pay for the full cost of their own care if their assets are more than £100,000 (up from the current threshold of £23,250). People with assets between £20,000 and £100,000 will be required to contribute towards the cost of their care.
- Funding to enable councils to pay providers a ‘fair cost of care’ (with new guidance to be developed) and to help also tackle the problem of self funders paying more for their care than people funded at the council level by enabling self-funders to access social care at the council rate.
- Investment of £500 million for new measures to support the care workforce.
- Action to ensure unpaid carers have the support, advice and respite they need.
- Investment in the Disabled Facilities Grant and supported housing and exploration of other innovative housing solutions.
- Improved information for people who draw on social care and support.
LGA view
We have a number of concerns about the Levy that broadly fall into two categories: financial planning; and sufficiency.
Financial planning
- There is nothing concrete in the Plan about the profile of the £5.4 billion over the three-year period. One reading of paragraph 60 is that there will be nothing for adult social care until April 2023. If this is correct, it is deeply disappointing given the very real pressures social care is facing right now.
- In its Plan, the Government states that “health and social care challenges are interrelated” and that “social care is an integral part of our society and economy”[1]. We agree and are clear that the NHS backlog cannot be cleared without tackling the immediate pressures facing social care. However, while the NHS is receiving funding to sort out the challenges it has here and now as well as in the future, there is no funding from the Levy to address the current issues facing social care.
- We have serious concerns about what will happen to the funding beyond the three-year period particularly if, as we are left to infer, the Government’s intention is that social care will become the main beneficiary of the funding over time once the NHS clears its backlog in elective care. If this is the Government’s intention it should be spelled out. This might go some way to alleviating concerns about how likely and realistic it is that funding for the NHS will be diverted to social care in future years. As the Nuffield Trust has said, “Taking money away from the NHS is a task that has not been done before.”[2]
The Government must urgently provide: a breakdown for social care’s allocation for the coming three years; an explanation for why none of the funding is targeted at addressing significant current pressures (unlike the NHS); clarification of the intention for allocations beyond the three-year period and a guarantee they will get through to social care.
See paras 7 and 5 respectively:
Sufficiency
Other than the £500 million earmarked for measures to support the care workforce, none of the initiatives funded by the Levy are itemised. This is unhelpful and makes it difficult to have any confidence in the adequacy of the £5.4 billion. On charging reform, the Plan states that the funding for social care covers the costs of, “implementing the charging reforms, including the cap, the increased capital limit, moving towards paying a fair rate of care and the associated implementation costs”. Below we consider the different components of the charging reforms and other linked issues.
- Care costs cap and changes to means test thresholds: we understand from Government that £2.5 billion of the £5.4 billion will be allocated for these aspects of the reforms under Part Two of the Care Act. When a previous government was preparing for the implementation of Part Two of the legislation, their Impact Assessment set out costs amounting to £1.2 billion. It is impossible at this stage to estimate the costs of these reforms because we do not know how the taper will work (ie people’s level of contribution to care costs between the new lower threshold of £20,000 and the new upper threshold of £100,000), or what will be put forward in terms of ‘living costs’ for residential care (ie food and accommodation costs) and how, it at all, people will be supported with these. If the estimates of the previous Impact Assessment were uprated by inflation and demand changes, we estimate the costs would be £1.62 billion over the three-year period. We do know from past experience that preparing for implementation of these measures will constitute a huge undertaking for councils and they must be supported with whatever is needed to deliver the Government’s commitments.
- Paying a fair rate of care: as with much of the Plan, there is no detail on this aspect of the reforms, although a ‘Stakeholder Q&A’ notes that the £5.4 billion includes funding to enable councils to move towards paying providers a fair rate and that new guidance on this will be developed. We infer from the Plan that the Government believes providers should be paid more and that this will help address the current situation where self-funders often pay significantly more than people who are fully or partially funded by councils, effectively cross subsidising public services. Through existing legislation that has not yet been turned on (Section 18.3 of the Care Act), the Government will enable self-funders to ask their council to arrange their care at the rate the council pays. To make this change sustainable for providers, rates paid by councils would need to increase. Our own estimate of the provider market gap (the difference between what providers say is the benchmark cost of providing care and what councils pay) amounts to £4.5 billion over the three-year Spending Review period. We believe this would be a minimum starting point, with potential for significant increases depending on take-up of the option for self-funders to request their council arrange their care at the council rate. It is unclear – and probably unlikely given the various commitments the £5.4 billion is expected to fund and the high cost of those commitments and other existing pressures – that moving towards a fair rate of care will fully address the cross-subsidy issue. It is even more unlikely that it will give providers additional income with which to, for example, improve the quality of care or care worker pay.
- NI and spending power: it is helpful that the Plan makes clear that public sector employers will be compensated for their increases in higher NI contributions so as to avoid a reduction in their spending power. However, just in the realm of adult social care, councils routinely commission from a range of partners from the private, independent and voluntary sectors, all of whom will likely want, or expect, to see an increase in their fees to reflect their higher NI contributions. The Plan says nothing about these relationships and potential associated costs, nor the Government’s expectations of councils on this issue. Our very initial analysis suggests that if councils were to cover this additional pressure, it would cost in the region of £100 million per year. This is just for adult social care; the cost pressures arising from commissioned activity across all council services would clearly be considerably higher. We need urgent clarity from Government on this important issue.
The Government must urgently provide: itemised allocations from within the £5.4 billion for the different components of its charging reform initiatives; and clarity on how much of the £5.4 billion is set aside for its other initiatives, such as investment in the Disabled Facilities Grant and supporting housing, improving information for people who draw on social care and taking steps to ensure unpaid carers have the support, advice and respite they need.
Addressing social care’s core pressures
At paragraph 36, the Plan states:
“The Government will ensure local authorities have access to sustainable funding for core budgets at the Spending Review. We expect demographic and unit cost pressures will be met through council tax, social care precept, and long-term efficiencies; the overall level of local government funding, including council tax and social care precept, will be determined in the round at the Spending Review in the normal way.”
LGA view
It is deeply troubling that the Government’s solution for addressing social care’s core pressures appears to be the use of council tax, social care precept and long-term efficiencies. This is wholly unrealistic.
As above, we estimate that an annually recurring cost pressure of £1.5 billion needs to be funded to stabilise the care provider market. We also estimate that core pressures (inflation, demography and National Living Wage) total £1.1 billion per year to keep services running at 2019/20 levels of quality and access. Councils will of course continue their tireless work to be as efficient as possible, but realism is needed, and lessons need to be learned from the past. Over the previous decade, during which council tax increased by nearly 22 per cent and the social care precept generated £1.8 billion (2019/20), adult social care had to meet a funding gap of £6.1 billion. £4.1 billion of this was met by making savings to adult social care and a further £2 billion was diverted from other council services, cutting them faster than would otherwise have been the case.
For illustrative purposes, to meet the costs outlined in the paragraph above through council tax alone, council tax income would have to rise by about 9 per cent in 2022/23 and by a further 4 per cent in each of 2023/24 and 2024/25, without factoring in wider cost pressures on councils.
A continuing reliance on council tax, the precept and efficiencies will further destabilise social care and other vital council services, many of which contribute to people’s wider wellbeing. As we have repeatedly said, council tax (and therefore the precept) raises different amounts in different parts of the country; councils with higher levels of deprivation tend to have a lower potential amount to raise.
It also has the potential to create confusion and frustration among the public. On the one hand people are being told that the new Levy will fund adult social care, on the other hand people may see potentially significant increases in their local taxes to fund the very same service. Rather than create a simpler system of funding, the Plan paves the way for entrenching the complexity of funding that has beset social care for so long.
The Government must move away from thinking that council tax, the social care precept and long-term efficiencies are the solutions for social care’s core pressures.
The Spending Review must inject genuinely new funding, direct to local government, to both stabilise the system in the short-term and enable progress to be made in tackling unmet and under-met need, investing more in prevention, improving care worker pay and better supporting unpaid carers.
The Spending Review must inject genuinely new funding, direct to local government, to both stabilise the system in the short-term and enable progress to be made in tackling unmet and under-met need, investing more in prevention, improving care worker pay and better supporting unpaid carers.
Adult social care white paper
The Plan makes several references to a planned adult social care white paper that will be published by the end of 2021 and “commence a once in a generation transformation to adult social care”.
LGA view
The Government’s first main development in the arena of social care reform, as introduced in the health and social care white paper, was the announcement of a new system of adult social care assurance – a process by which councils’ performance against their Care Act duties will be assessed. With the new Plan, the Government is now setting out significant changes to the way social care is paid for and funded. By the end of the year, the promised white paper will, we hope, set out a vision for the future that is centred around people who draw on social care and the steps needed to ensure they are best supported to live their best life.
While there may be practical reasons for this sequence of developments, it is unhelpfully back to front. The process of reforming care and support would have benefited from starting with a clear vision centred around people who draw on social care. The level of investment needed to achieve that vision, along with proposals for how investment could be spent, should then have been calculated in order to shape proposals for how social care should be funded and paid for. With these pieces of the puzzle in place, a system could then have been designed to provide assurance that councils were playing their part in achieving the vision and the new system of care and support developed to deliver it.
It is frustrating to be working in reverse order and therefore crucial that the Government follows through on its promise to work with local government, people with lived experience and the many other valuable stakeholders who are all connected to social care. From right across the sector, partners have published a wealth of invaluable material spanning a vision for social care, principles for reform, priority issues that need to be addressed, and ideas for how investment could best be spent, such as funding for innovation and prevention. This includes the LGA’s own 2018 green paper on the future of care and wellbeing and subsequent publications [1]. We urge the Government not to start from a blank sheet and to instead draw upon this material to ensure its white paper reflects the issues, concerns and ambitions of everyone connected to social care and support. Real, radical and tangible change – and not tinkering at the edges of social care – will cost additional money and the Government must provide new funding for its wider reform objectives.
While it will be helpful for the white paper to focus primarily on adult social care, it must also draw the right links with other services. The Plan is notable for making no reference to the role of public health in supporting and improving the wellbeing of local people, despite its enormous contribution to people and communities over the last 18 months. The white paper, as well as the national plan on integration announced in Plan, must consider the interrelationships between social care, public health and the NHS and the role they play – individually and collectively – in wellbeing, prevention and independence.
The Government must honour its commitment to publishing a white paper by the end of the year and it must be informed by, and reflect, the considerable body of work that partners across social care have done in recent years. Proposals for reform must be backed up by new additional funding.
Next steps
As we have set out throughout this briefing, the Plan is extremely light on detail. Over the coming weeks we will be seeking to fill this void through on-going discussions with Ministers and officials. There are also many links to be made with the upcoming Spending Review and we will be raising the issues and concerns set out above in all of our work on this agenda. We are keen to work with Government to deliver a sustainable long-term solution for adult social care and support.
We recognise that councils will have their own concerns and questions following the publication of the Plan and we want to ensure that our work best reflects those. Therefore, if there are points you wish to raise with us, please contact us at: [email protected]