Can Wales fill the social care funding gap?

Joseph Ogle and Michael Trickey on how a long-term funding strategy needs to be underpinned by an agreed methodology for assessing the funding gap in social care

The funding of adult social care has moved centre stage. There is wide agreement that more money is needed and various figures are quoted. But how do we get a fix on exactly how much and whether this is affordable?

As Chris Giles noted recently in the Financial Times, the economics of social care are not complicated. He argues that although today’s elderly need a little less care, the growth in numbers mean that the bill will inevitably escalate.  In Wales, the number of older people (those aged 65 and over) receiving residential care services is projected to have increased by 82% between 2015 and 2035, and the numbers receiving community based services by 67% when 2015 population prevalence is uprated for forecast population growth in older people (note 2).  

The challenge this poses is not new, after all we have had various inquiries and studies in the last decade – such as the side-lined Dilnot report in England and detailed research commissioned by the Welsh Government linked to its strategy for older people. So why has it surfaced now and with such force?

Two things seem to have happened. The winter and subsequent pressures on the NHS, especially in England, have been blamed partly on the rise in delayed transfers of care (less so in Wales) and the crisis in social care. Alongside, there is growing evidence that independent organisations providing residential and home care are struggling, and in some cases failing, to remain viable. They are caught between the squeeze on local authority funding available for care contracts, the challenge of recruiting and retaining the staff they need, and increasing workforce costs (national living wage, pensions and national insurance employer contributions). Thirteen of Wales’s 22 local authorities told the BBC that they had seen contracts handed back to them by providers not wishing to bid.

But if keeping things as they are looks untenable, do we know exactly what extra funding is needed? Adam Roberts has drawn attention to the range of calculations for England from social service directors, the Local Government Association, the IFS, health think-tanks and others. These are all compiled in different ways and, not surprisingly, come up with a range of figures, all pointing to the need for significant new money.

The picture in Wales, where social services spending has more or less been protected, is different but the pressures are mounting here (e.g. see WLGA paper).  The Health Foundation concluded that adult social care funding in Wales as a whole (i.e. younger adults as well as older) would need to rise by 4% in real terms each year, amounting to a near doubling by 2030 and pushing spending up to £2.3 billion. This is broadly consistent with our calculations, at Wales Public Services 2025, that local authority spending per older person has declined over the last seven years by around 13% and that £134 million a year more would be needed by 2020-21 to get back to 2009-10 per-capita levels.       

These figures are not the last word. The Health Foundation analysis is based on modelling for England because equivalent data for Wales is not available. Analysis needs to take account of factors such as the complexity of care (linked to the rise in numbers with multiple chronic conditions), the rise in employment and other costs, quality pressures and levels of unmet need.

Of course the social care economy is not just about public money given that, unlike the NHS, social care is funded both through the public purse and charges to individuals. The political challenge is finding a sustainable balance between the two which takes account of a person’s ability to pay, their needs and what the state and tax-payer is able (or willing) to pay.  The actions in Wales on capping home care charges and increasing the savings threshold for residential care reflect an attempt to reconcile these.  

In judging the balance, it is important to keep the figures in perspective. In Wales, the core NHS day-to-day budget is over £6.5 billion. The latest figures for annual local authority spending on social services for the over-65s is less than 10% of that at just under £0.55 billion (2016-17 prices). In normal times, putting the funding onto a long-term viable trajectory would surely be within the realms of possibility. But austerity is posing tough, even unpalatable, choices for national and local government.  

The Chancellor’s new injection of £2 billion over the next 3 years will help, but the modest overall additions to the Welsh block from the Spring Budget suggest that it will not be enough, given other pressures.

A long-term funding strategy needs to be underpinned by an agreed methodology for assessing the funding gap. We have methodologies for the much more complex requirements for the NHS, we need something equivalent for social care.

 

 

Notes

  1. https://www.ft.com/search?q=social care (16/3/17)
  2. Data sourced from the Daffodil care data archive: http://www.daffodilcymru.org.uk/

 

Joseph Ogle is Research Assistant, and Michael Trickey is Programme Director at Wales Public Services 2025

2 thoughts on “Can Wales fill the social care funding gap?

  1. Can Wales fill the social care funding gap? No, Wales has an economy running a ~50% annual deficit with little sign of anything other than more of the same.

    Will English taxpayers keep funding the social care gap in Wales? Maybe, but the signs are that they’re getting mighty fed-up with propping up Wales and Scotland in return for little other than grief from the significant minority who call the shots and top-slice public finances for their own benefit while delivering little but decline in essential front-line services in return…

  2. People who retire to Wales having worked in England bring with them the usual entitlement to social care but they do not necessarily bring the resources with them to pay for it. If they moved within England there would be some tendency for national health allocations and local authority revenue support grants to reflect the movement. With the Barnett formula that does not happen so given net migration of retired people to Wales the country in effect delivers a hidden subsidy to England.
    Wales does indeed run a large deficit on its public sector of £12-15 billion. Since Welsh GDP is some £60 billion the deficit is in the 20-25 per cent range. Far too large for comfort but not 50 per cent.
    John Walker may get his wish and see Scotland and Northern Ireland depart within a few years. They both run large deficits too.

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