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Alex Morton is Head of Policy at the Centre for Policy Studies.

It is hardly news that the most controversial part of the 2017 Conservative manifesto was its proposals on social care. Indeed, they virtually destroyed the entire Conservative election campaign.

But at the same time, we can’t simply put social care in a box labelled “too difficult” and leave it there to fester. The current system is not sustainable – and will become still less so as demographic pressures mount.

There are two major tests that any social care reform needs to pass. The first is that, while we have to ensure that all those who need it receive good care, we should not penalise those who work hard and save. Whatever system we adopt, we need to avoid the “dementia lottery” – and people being forced to sell the homes they have worked all their lives to own and pass on, in order to fund their care.

But there is another test, which is barely even talked about. The current system of funding massively disincentivises the construction of much-needed social care facilities and retirement housing – because the councils that pay for social care see the elderly as a burden on their resources. That, too, needs to change.

Today, the Centre for Policy Studies launches a report by Damian Green MP, Fixing the Care Crisis. We believe it is hugely important contribution to this debate, setting out a way forward that can command genuine consensus.

The essence of the proposal is that social care should copy the state pension, a model that is both sustainable and universally accepted. Everyone gets a decent level of support, but this is topped up with private funding, as people do with their pensions.

Obviously, to relieve the cost pressures on Government you might suggest that people should pay for their own care full stop – but given that 80 per cent of people think social care should be funded by the state, we believe this is a compromise on which everyone can agree.

Green’s model proposes creating a Universal Care Entitlement, a national level of good care that everyone who needs it would receive. This could then be topped up by a Care Supplement for those who want extra, more expensive top-ups. After all, as his report notes, some people prefer care homes with top of the range gyms and bistro bars – it is not the job of the state to pay for these for all!

We envisage the Care Supplement being supported by an insurance system, which could bring in very large sums each year – we estimate £4 billion to £13 billion – since most people will want both better facilities and the peace of mind of ensuring that their family can still inherit most of their assets, especially their homes.

This ends the unfairness of the current system, without creating an unaffordable system where the Government ends up paying for “care elements” which are essentially luxuries. The Universal Care Entitlement does require an injection of government money – we believe around £2.5 billion a year – but we also offer suggestions on how this could be funded.

Under this system, if you pay in more, you get out more – but everyone has a good level of care.

It’s not just about demand, but supply

But there’s another issue that the paper addresses – one which is very rarely talked about, but is utterly vital.

We all know that a big problem with the current model of social care is the massive knock-on effect that it has on the NHS. This new structure would help fix that. But we don’t talk nearly as much about the interaction between social care and the housing market.

Because councils currently worry about attracting older people to their area, they are not keen to build new care homes or provide new retirement housing. This then hits their local NHS – to the tune of at least £1 billion a year in delayed transfers out of hospitals alone.

In the 1980s, when social care was essentially provided nationally, care provision grew by 84 per cent. But once responsibility for funding was transferred to the local level, care home provision basically stagnated – even as the number of older people has steadily grown.

There has also been a fall in social care productivity of around 20 per cent since 2000 – which is equivalent to £3.4 billion a year in higher costs – of which the Government bears nearly £2 billion a year (equivalent to a 25 per cent share of their spending on social care for older people). There is serious evidence most care homes are too small for modern needs, and unable to modernise, but because of the issue around provision, we are trapped in a system where new facilities are not approved.

It’s not just about care homes, but retirement housing. In the UK, this makes up around 0.6 per cent of all homes. This is a fraction of what other similar countries like Australia and the USA achieve – around one-tenth in fact.

When I worked in Number Ten, some council leaders would quietly admit, embarrassed, that they avoided meeting their ageing population’s needs, because they worried that new facilities would draw in older people and this could blow a hole in their budgets.

But the cost of this is high – a year spent in a retirement home saves, on average, £3,500 per person, per year. And the lack of retirement housing means that people have to go from an unsuitable home into a very expensive care home setting rather than a more suitable retirement home with independence, which they prefer and costs less – so everyone loses!

If we built the retirement homes we need, it could save over £1 billion a year within a decade. It also helps fix the housing crisis, by ensuring that more people are moving out of larger homes they no longer need, which growing families can then move into.

By changing the structure of the system from locally funded to nationally, we can encourage councils to draw up proper social care plans, and build the retirement homes we need, without fearing this will destroy their finances. Today’s report proposes to do this by requiring councils to have a target for older person housing and a use class for retirement housing, as well as coordinating social care needs.

The time for this is now

All too often, the “solutions” offered in social care are just asking people to stump up more money without fixing the system or thinking about what is fair. What is needed is a holistic, fair, and politically workable solution.

We think this report’s solutions are something there could be a cross-party solution acceptance of, just as there is a cross-party acceptance for the current pension model.

Each year, the social care crisis becomes more acute and the costs mount to society and individuals. The imminent Green Paper has been kicked down the road over and over again – but in Fixing the Care Crisis there is a potential solution that can put the system right.

37 comments for: Alex Morton: We urgently need to fix the social care crisis

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