2. Conclusions and recommendations of the Commission on Funding of Care and Support The number of older people is increasing Growth in the number of older people in England 2010-2030
3. Conclusions and recommendations of the Commission on Funding of Care and Support Flexible societies are good at adapting Proportion of UK population aged 65 and over
4. Conclusions and recommendations of the Commission on Funding of Care and Support Social care is one element of state support Public spending on older people in England 2010/11
5. Conclusions and recommendations of the Commission on Funding of Care and Support Funding has not kept up with demand Expenditure and demand: older people’s social care (2009/10 prices)
6. Conclusions and recommendations of the Commission on Funding of Care and Support Care costs are uncertain and can be very high Expected future lifetime cost of care for people aged 65 in 2009/10
7. Conclusions and recommendations of the Commission on Funding of Care and Support Fear is the natural response to current system Maximum possible asset depletion for people in residential care
8. Conclusions and recommendations of the Commission on Funding of Care and Support A cap removes the risk of very high costs Expected lifetime costs for people going into care in 2010/11, by percentile
9. Conclusions and recommendations of the Commission on Funding of Care and Support And offers significant asset protection Maximum possible asset depletion for people with £150k residential care costs
10. Conclusions and recommendations of the Commission on Funding of Care and Support But we also need to reform the means test The effect of extending the means test on the amount of support people receive
11. Conclusions and recommendations of the Commission on Funding of Care and Support But we also need to reform the means test The effect of extending the means test on the amount of support people receive
12. Conclusions and recommendations of the Commission on Funding of Care and Support Extending the means test helps the poorest Maximum possible asset depletion for people with £150k residential care costs
13. Conclusions and recommendations of the Commission on Funding of Care and Support The reforms reduce the costs individuals face Initial level of wealth Maximum spend on care £40,000 £50,000 £70,000 £100,000 £150,000 £9,000 £12,000 £18,000 £28,000 £35,000
15. Conclusions and recommendations of the Commission on Funding of Care and Support All spending: £697bn NHS: £103bn Social security for older people: £85bn Education: £61bn Defence: £44bn The cost of reform: £2bn Social care and disability benefits for adults: £27bn
16. Thank you Commission on Funding of Care and Support www.dilnotcommission.dh.gov.uk
17. Conclusions and recommendations of the Commission on Funding of Care and Support Who benefits from the reforms? Public expenditure on social care, by income quintile Reforms Current system
18. Conclusions and recommendations of the Commission on Funding of Care and Support Who benefits from the reforms? Additional public expenditure as a proportion of income, by income quintile
19. Who could pay for the reforms? Additional tax paid, as a percentage of income, if reform were funded through direct taxes, by household income quintile Conclusions and recommendations of the Commission on Funding of Care and Support
20. Conclusions and recommendations of the Commission on Funding of Care and Support Care for people of working age Age Maximum spend on care Under 40 40 to 50 50 to 60 60 to 65 65 + Free care £10,000 £20,000 £30,000 £35,000
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Editor's Notes
The Coalition Agreement said: “The Government believes that people needing care deserve to be treated with dignity and respect. We understand the urgency of reforming the system of social care to provide much more control to individuals and their carers and to ease the cost burden that they and their families face.” The Commission on Funding of Care and Support was set up by the Government to make recommendations on how to achieve an affordable and sustainable funding system or systems for care and support, for all adults in England. We published our report on 4th July 2011.
There is no doubt that we need to spend more on social care and support. This is for two reasons: because the system we have currently is inadequate and because of the significant increase in demand, particularly among older people. This chart shows that over the next 20 years, the number of older people age 65 to 69 will grow by 40%. The number of people age 80-84 will grow by 70%. The number of people age 85 and over (the group that is the most likely to have care and support needs) will double in size. This is great – we are living longer than our predecessors.
That we’re living longer is nothing new. In 1901 there were 61,000 people aged 85 and over in the UK, and now there are nearly 1,500,000. It’s true that in the future the numbers will grow more quickly than in the past, however that is not the end of the world. We shouldn’t be frightened about this, as societies and economies are very flexible and very good at adapting. We can cope with these changes perfectly well, as long as we face up to them and make the right decisions. More resources will be needed: more public money, more private money and sustainable support from carers.
This chart shows the public spending on older people in England: £82 billion a year goes on social security benefits £50 billion a year in health services Only £8 billion on social care Need to look at social care spend on older people as a whole. Only 6% is spent on social care. If we had a blank sheet of paper, we wouldn’t start from here. When we add the budget spent on working age adults, the total is £14 billion a year. The social care slice is a very small slice compared to the much larger health and social security chunks. Interactions between social care and health spending are significant. If we get social care right, we are much more likely to do well in health.
So what’s wrong with the current system? There is evidence from King’s Fund and others that there is a lot of unmet need. The dark line in the chart shows the level of spending on social care since 2005. The other line shows how demand has increased. So unmet need that existed in 2005 will have become worse. Clearly the system has been under-funded in the past. It has failed to keep pace with demographic change, especially for older people services but also for working-age. We believe that over time there have been more people not receiving all the care and support they need and the pressure on carers has been increasing. The system for funding social care harks back to the Poor Law - it is not fit for the 21st century.
Average cost of future lifetime care for older people in 2009/10: 1 in 4 will spend very little on formal social care 1 in 2 will spend more than £20,000 1 in 4 will spend more than £50,000 1 in 10 will spend more than £100,000 The lifetime costs can be much higher for those born with a disability, or who develop a care need early in life. In all other areas of life people are able to protect themselves against the risk of high costs. Your house insurance protects you against the cost of your house burning down, your car insurance protects you against the costs of a car accident, and the NHS protects you against the costs of needing medical attention. So, the cost of social care is the only major area of our lives where we are not able to take some control. This is no way to run something as important as social care. The uncertainty over future care costs is too great for private insurers. The State only provides support for those who have used up all but £23,250 of their funds, or who had none in the first place. We don’t think that a state-funded free care system meets our criteria of sustainability and resilience. Experience from other countries suggest that had it been implemented, eligibility criteria would be tightening as costs rise. We need an affordable way for people to protect themselves against extreme costs. We need to take away the worry and give people peace of mind. People accept that they also need to make their contribution and we need a better way for them to do so. We think the best way of achieving this is through a partnership between the State and individuals. Both need to make a contribution towards the cost of care.
This is the proportion of your assets that would be lost under the current system. With high care costs of £150,000, the worst scenario is for people just below the median. They lose 86% of their assets. With care costs of around £100,000, the worst affected people lose 81%. With costs of around £75,000, the worst affected people are those at the bottom 10% of wealth distribution. This is not an issue about middle classes. These are ordinary people with low levels of income and wealth. Their lives are made difficult because of this system.
The pink area of this chart shows what the cap would do. It’s the proportion of cost we would take away from people and pool it through the social insurance. This would leave people with a maximum cost of £35,000 over their lifetime. This takes away the fear and uncertainty for individuals. It also creates a space where the financial services can get involved, and offer opportunities to people to plan and prepare for potential care costs. We also recommended improvements to the deferred payments system, to help people meet their contribution.
The light area of the chart shows how much people can end up spending under the current system, with care costs of £150K. The brown area shows the maximum costs they would face, if a cap is put into place. People who were losing 86% of their assets, with a cap would only lose around 20%. The 25th centile that were losing 85% of their assets, would now lose around 27%. There is still a group that is losing significant amount of wealth. So as well as dealing with the cap, we need to deal with the means-test.
If your assets are less than £14,000, the state would cover the whole cost of your residential care. If you have more than £23,251, you get no support. As you can see, there is a cliff edge that we need to get rid of. We know that not everyone will be able to afford to make their personal contribution, and those currently just outside the eligibility for means tested help are not adequately protected.
To address this, we recommended that means-tested support should continue for those of lower means, and the asset threshold for those in residential care beyond which no means tested help is given should increase from £23,250 to £100,000. Taken together, the cap and the increase in the threshold for state support in residential care, would mean that those with lower incomes and wealth receive greater protection.
The red area shows the impact of raising the threshold to £100,000. These two parts of our proposals (the cap and the increased means-test threshold) work together to ensure that the maximum anyone could lose is less than 30% of your assets, no matter how high their needs might be. They work together to help those at the bottom of wealth distribution.
Effects of our proposals This table shows the maximum spend on care that individuals would be subject to depending on their wealth: If you have less than £40,000 worth of assets, the maximum you could spend is £9,000. It rises steadily and the maximum you would spend would £35,000, if your wealth is over £150,000. These figures may seem low for those of us based in the South East, but there are other areas in the country with much lower house values, and our proposals would make a huge difference to people in those areas.
There are 697 boxes in this chart, representing £697 billion public spending.
Of those £697bn NHS costs £103bn Social security - £85 bn Education - £61 bn Defence - £44 bn Social care and disability benefits for adults - £27 bn The cost of our reform is tiny in comparison: only £2 bn. About one 400 th of public spending. Is this too much to pay for such a crucial issue that will affect almost all of us? No. Obviously not.
This is something that PSSRU helped us with. The bars in this chart show population quintiles – from the bottom fifth to the top fifth. The light colour is the current system and the dark colour the reforms we recommended. Most of the resources go to the bottom 3 quintiles. That continues under our system, but because we are moving away from an entirely means-tested system, some of the resources go to the top quintiles as well.
In the previous slide, it looks like most of the additional money would go to people on top quintiles. However, when you look at the additional spending as a proportion of people’s income, by quintile, you can see that the distribution is much more equal. So, everybody benefits. Also worth remembering that if this is paid through tax, most of that money comes from people on higher quintiles. Our objective was to create a system that we’re proud of and where people are looked after properly. We believe this is the way to achieve this objective.
Also worth remembering that if this is paid through tax, most of that money comes from people on higher quintiles. So in summary: Most of the resources would continue to go to people on lower incomes. Moving away from an entirely means-tested system, so some resources would go to people on higher incomes too As a proportion of people’s income , the benefit to all income groups is fairly equal Most of the money comes from people on higher incomes Our objective was to create a system that we’re proud of and where people are looked after properly. We believe this is the way to achieve this objective.
Many people have told us that it is perfectly reasonable to expect people to plan for and contribute to the cost of their care. After all, most of us expect to develop some care need as we grow older. Is it reasonable to expect working age adults to also plan for their care needs? We think that it would not for two reasons: Firstly, because during the first half of our working lives we tend to have a lot of financial commitments, such as cost of education, getting on the property ladder and raising children. Putting money aside for our potential care needs can be very difficult or impossible for this group. Secondly, the risk of developing a care and support need very early in life is very low, therefore we shouldn’t expect people to plan for it. We should pool that risk instead. We recommended that people who reach adulthood with and existing care need or develop such a need before the age of 40, should get free care. The risk should be appropriately pooled across the whole population. The cap should be set at zero. This could rise at £10,000 per decade, so: A 40+ year old pays £10,000 A 50+year old pays £20,000 A 60+ pays £30,000 A 65 year old pays £35,000 maximum. Universal disability benefits for people of all ages should continue as now. We recommend better alignment of benefits with the reformed social care funding system and that AA should be re-branded to clarify its purpose.
We’re keen to create a system that does not differentiate between different care settings, eg. residential care and domiciliary care. If you receive domiciliary care, you, of course, pay for your living costs yourself. You pay for your food, heating accommodations etc. We want people to carry on paying those living costs if the go into residential care. However, we want to ensure that care costs are not disguised as accommodation costs. We therefore recommended that the amount of contribution to general living costs be fixed at somewhere between £7,000 and £10,000 a year. This is because the minimum pension guarantee is just over £7,000, so this is affordable for everybody.
Government awareness campaign: Make people aware of the costs that people potentially face paying for care . Explain the reforms National information service – trustworthy, accurate, and up to date Covering – how the care and support system works, support for carers, care and support services, financial information, signposting Better provision of local information and advice New duty on local authorities to provide advice to their local population - supporting Law Commission’s proposal. Better support for self-funders – who are often poorly regarded Carers assessments need to improve – so that they always happen at the same time as the assessment for the cared-for; and they are acted on. Better information and advice for carers - so they know what support is available to them National eligibility threshold so that everyone, wherever they live, is entitled to support if they have needs above a certain level. Portable assessments so that people with care needs can move between areas without losing the support that they rely on Better integration between health and social care. W e are strongly supportive of pooled budgets, joint commissioning of services, and more joined up assessment processes across health and social care.
