Social care funding crisis

Who has the answer?

1 June 2017

Adam Roberts

The adult social care system in England is in a financial crisis, following a 9% fall in public spending between 2009/10 and 2014/15 in real terms. This has had a real impact on people’s lives, with 400,000 fewer people receiving care over this period. Manifestos from each of the main parties make promises on social care, but how far do these go towards fixing the problem?

The government committed new funding for social care in the 2015 spending review and in the March 2017 budget. Our analysis suggests these increases will enable funding for social care to rise by an average of 2.8% a year above inflation over the next few years. But with costs rising close to 5.5% a year (partly due to the new living wage), this still leaves a funding gap of £2.1bn by 2019/20 in today’s prices.

The pressures on social care will continue to grow. LSE and Kent University estimate a 40% increase in demand for local authority funded residential care between 2010 and 2030, and a 70% increase for home care. So any short-term injection of cash must be accompanied by a longer term, more fundamental solution.

Labour and the Liberal Democrats both offer immediate investment, around an extra £2bn a year by 2021/22. This appears close to our estimate of a £2.1bn funding gap in 2019/20, but demographic and cost pressures will continue to rise. So while the extra funding is welcome, it is still likely to fall short of rising need. OBR analysis of the long-term pressures suggests net public funding would need to rise from around £17bn in 2015/16 to £22bn in 2021/22 (in current prices) even before accounting for any Dilnot-style reform, additional wage costs, or the costs inherent in introducing a cap. 

The Conservatives have committed to increase the means testing threshold from £23,250 to £100,000, but other factors, such as the size of a spending cap and crucially how the additional increase in public spending will be funded, will be worked through in the green paper, to which they have recommitted. All three main political parties now seem to support a cap on care costs, with Labour offering to lay the ground work for an NHS-style national care system, but detail is limited and there will be much to work through after the election.

What is clear from the three manifestos is that social care will be a priority for whoever wins the next election. The manifestos provide clues to potential funding sources, but none on the scale needed to fund the substantial annual growth in cost pressures, and stabilise a provider sector that is at the tipping point following years of shrinking investment.

A challenge this complex is not something that can be solved quickly ahead of a snap election. It requires time, careful thinking and public engagement to provide a sustainable system that meets the needs of our most vulnerable.

Adam Roberts (@ADRoberts777) is Head of Economics at the Health Foundation

A longer version of this blog is available on the Municipal Journal website

Further reading

Briefing

Election briefing: NHS and social care funding

This is first of three Health Foundation briefings ahead of the 2017 General Election.

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