Jeremy Hunt says he wants to implement Dilnot’s proposals on care funding ‘as soon as we are able’. When exactly is that?
Despite a new set of health ministers, the party conferences revealed no change in the government’s position on funding of the care system in England. The new Health Secretary said at the Conservative Party conference that the government wants to implement the proposals of the Dilnot Commission on Funding Care ‘as soon as we are able.’
As a piece of political positioning, the government is providing cover for itself for doing nothing: touting its support for the Dilnot Commission proposals, but blaming the fiscal crisis for not acting.
However, this position conflates two separate issues. One is the ‘baseline gap’ that has opened up in spending by the local authority care system since 2010, which is widely estimated to exceed £1 billion. The other is the cost of the Dilnot Commission proposals, whose core recommendation of a ‘cap’ – which by now would have been uprated with inflation to £36,225 – would cost around £2 billion.
The confusion between these two issues is potentially causing serious harm. The government can make a case for delaying implementation of the ‘capped cost’ model: at a time of growing reliance on food hand-outs and homeless families living in B&Bs, there is a consistent case for not directing more public spending to protecting the assets of some of the wealthiest older households, as the ‘capped cost’ model would do.
However, cuts to care spending in the current system affect the poorest and most vulnerable in society, and are inexcusable, even as the government attempts to pay off the public debt.
Social care campaigners therefore confront a tricky balancing act. It is clearly valuable to argue a positive case for a more generous care funding system that is relevant to the large swathe of middle-income older voters and newspaper readers. But allowing the government to position social care funding as a low priority, given the dire state of the economy and eurozone crisis, risks pushing out of view the resources needed now to prop up the current system.
So, how is this situation going to play out? If the government is not able to reform care funding at present, when will it be able?
One scenario is that ahead of the next government spending review, Number 10 bows to pressure and finds the £2-3 billion required to both close the ‘baseline gap’ and implement the ‘capped cost’ model in full.
A more realistic scenario might be for a tough public debate to unfold that sees older voters accept a painful package of tax rises and spending cuts elsewhere in order for money to be directed into the care system in a way that would be cost-neutral for the Treasury and its deficit reduction plan.
However, recent debate has seen older households attacked for escaping the public spending axe. Much of this debate has been overly simplistic, selective in its use of the facts, or ignored glaring issues such as the fact that the system for means testing older people’s benefits is fundamentally broken.
It is perhaps best summed up by the Liberal Democrat announcement during its party conference that after the next election, it would seek to means test benefits for ‘millionaire pensioners’ – a proposal that is both unfeasible and irrelevant.
However, the result of this debate is that the Treasury will feel more and more confident about eventually pushing through tax rises and spending cuts for older households in order to pay off the public debt, rather than close the ‘baseline gap’ in the care system, let alone to pay for more generous care funding arrangements. This is one reason why social care campaigners are wary of calling too loudly for debate on options for raising money from older households.
So perhaps the most likely scenario is that the Treasury will give local government its budget allocation at the next spending review, and if there is money enough to close the ‘baseline gap’, anything left over will be used for a low-cost version of the ‘capped cost’ model, such as implementing the Dilnot Commission’s other core proposal: increasing the residential care means test threshold.
However, with deficit reduction and public spending cuts now forecast to last through to 2018, the outlook is not positive. Social care campaigners will have to fight hard just to maintain the baseline care system as the costs to the Treasury rise in the face of population ageing.
So is reform of long-term care funding now lodged deep in the long-grass? Not quite. One awkward truth is not going to go away. Throughout this period, it will remain both cruel and farcical that average older homeowners with hundreds of thousands of pounds of property wealth cannot use this wealth to protect themselves against the costs of care.
For while a dire fiscal outlook might make reform of care funding appear unaffordable to the Treasury, it is nevertheless true that as a society, we can afford a much better care system. It if wanted, the government could follow the example of other countries and set up right now a state-sponsored insurance scheme for care that is cost-neutral and risk-neutral for the Treasury, and would give households the opportunity to cap their care costs.
Such an approach was in fact floated in the government’s July ‘progress report’ on care funding. By explicitly recognising that older households could contribute directly to protecting themselves, it may yet just be the best way of keeping the care funding reform agenda going.
James Lloyd is director of the Strategic Society Centre.