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The long-term funding of adult social care

29th June 2018

On 27 June 2018 the Health and Social Care and Housing, Communities and Local Government Committees (the “Committee”) published its first joint report on the long-term funding of adult social care. This report has been published ahead of the Government’s Green Paper on the care and support for older people which is expected this summer.

The report highlights the issue that, due to rising demand and costs of social care, coupled with the fact that funding has been reduced, the care system, in its current form, is under increasing pressure. The report provides a high-level description of the funding challenges facing the sector. Examples include the increase in life expectancy, the growth in population and the introduction of the National Living Wage. The report also states that it is estimated that the funding gap will be in the region of £2.5billion by 2019-20. The report recommends that spending on social care needs to rise to ensure future demand is met and to improve the quality of care provided.

The report goes on to state that discussions about how to improve social care should be driven by the following principles:

  • Providing high quality care;
  • Considering working age adults as well as older people;
  • Ensuring fairness on the ‘who and how’ we pay for social care, including between the generations;
  • Aspiring over time towards universal access to personal care free at the point of delivery;
  • Risk pooling – protecting people from catastrophic costs, and protecting a greater proportion of their savings and assets;
  • ‘Earmarking’ of contributions to maintain public support.

In principle, the Committee believes that the personal care element of social care should be delivered free to everyone who has the need for it, but that accommodation costs should continue to be paid on a means-tested basis. The report explains that, at present, social care is not free at the point of delivery. Anybody with assets over £14,250 will need to make a contribution, and anybody with assets over £23,250 will have to fund it themselves (until their assets drop to below that level). People with assets below the threshold may qualify for free social care, however, not all their needs are always met.

The report highlights the fact that a number of different revenue-raising options will need to be implemented in order to bridge the current and predicted funding gap and that these need to be implemented at both a local and national level. Options include:

  • Reforming council tax valuations;
  • Having an additional earmarked contribution – the report suggests naming this a ‘Social Care Premium’. It is proposed that this additional funding should be placed in a dedicated fund which is regularly audited. The report also recommends that those under the age of 40 be exempt from paying the premium and that persons over the age of 65 should be required to contribute;
  • Introducing a specific additional amount of Inheritance Tax on estates over a certain amount.

The Committee has published this report in order to hold a short enquiry to assist in identifying funding reforms to hopefully enable the Government to make swift and tangible progress in this area. In particular the Committee has invited submissions from organisations and individuals on the following:

  • How to fund social care sustainably for the long term (beyond 2020), bearing in mind in particular the interdependence of the health and social care systems;
  • The mechanism for reaching political and public consensus on a solution.

Read a full copy of the report.

Mundays’ Healthcare team offers technical excellence across a comprehensive range of transactional, regulatory and advisory matters and has in-depth sector specific experience in mergers & acquisitions, joint ventures, real estate, intellectual property, employment, shareholder and partnership agreements, commercial contracts and dispute resolution. If you would like further information please contact Howard White, Senior Associate.

The contents of this update are intended as guidance for readers. It can be no substitute for specific advice. Consequently we cannot accept responsibility for this information, errors or matters affected by subsequent changes in the law, or the content of any website referred to in this update. © Mundays LLP 2018.

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