How a radical social work-inspired ‘whole system’ reform could fix the social care crisis without raising NI

Published by Professional Social Work magazine, 10 March 2022

The Health and Social Care Bill is currently progressing through Parliament and receiving a mixed reception.

Some believe that it will lead to further privatisation and others oppose the 1.25 per cent precept on National Insurance, particularly at a time when the cost of living is rising.

The reforms in the bill aim to:

• sort out the under-funding of social care
• remove the need for people to sell their houses to pay for their care
• promote joined-up service delivery
• replace the competitive model with a collaborative one

Sadly, it appears to be a quick-fix response to a whole systems problem. There is little point putting more and more money into the first aid camp at the bottom of the cliff without building a fence at the top.

Radical reform and re-structuring is required and unless government does something about rising income inequality and poverty the additional money will never keep pace with increasing demand.

The cap on the amount which can be spent on care home fees will favour the rich in that people who do not have sufficient savings will still have to sell their house to pay for their care.

The bill does not address the anomaly where someone with cancer gets free terminal care whereas for someone with Alzheimer’s Disease or dementia their care is means tested.

The Integrated Care Systems and Integrated Care Partnerships proposed by the bill will be very costly, bureaucratic and cumbersome. They appear more concerned with preserving the current configuration of local government and NHS trusts and the purchaser/provider split and promoting the mixed economy of care than the provision of integrated care.

Organisational streamlining

Successive governments have tried to get health, social services, police, education and housing to work together, from joint funding in the 1970s to the pooling of budgets. None, however, has grasped the nettle of different geographical areas, different funding streams and different lines of accountability, which have always been the main impediments.

Repeated re-organisations over the last 30 years have added to the cost and fragmentation of services.

There are now 24 county councils, 181 Ddistrict councils, 58 unitary authorities, 36 metropolitan boroughs and 32 London boroughs in England and 22 county councils in Wales, 223 NHS trusts and 43 police authorities. All serve different geographical areas, with different funding streams and different lines of accountability.

These 619 organisations could be merged into around 120 unitary authorities – based on the 1974 county council, or police authority, areas. This would return the NHS and police to local democratic scrutiny within central government direction and, in many cases, take out a tier of local government.

It would remove the need for the proposed integrated care systems and save millions on the cost of democracy, and management, while making services more democratically accountable.

Perverse incentives, privatisation and 'contract culture'

Prior to 1980 the majority of care homes were provided by local authorities under Part III of the 1948 National Assistance Act. Margaret Thatcher extended choice by enabling people to have their fees in private and voluntary care homes paid by the then Benefits Agency subject only to the availability of a place and a means test.

This led to a rapid growth in privately run care homes and the cost escalated to billions which Sir Roy Griffiths termed the “perverse incentive” as the money was not available for home care and it was thought there were people in residential care who neither wanted nor needed to be.

The money was transferred to local authority social service departments by the 1990 National Health Service and Community Care Act which had to carry out an “assessment of need” and “verification of wishes”.

What had been an “open-ended entitlement” became a “cash limited allocation” with social service departments charged with “managing the market”. The majority fixed their “contract price” below the cost of their in-house provision (so much for the level playing field) which hastened the demise of in-house provision and meant that private and voluntary homes struggled financially and had to subsidise local authority placements from the fees of private residents. Currently ten per cent are in financial difficulty and under threat of closure.

The 1990 Act included the funding for nursing homes, which had previously been a health authority responsibility, so that for the first time they became means-tested, although the nursing element was subsequently disregarded.

The money transferred from the Benefits Agency was also available for home care. Prior to 1990 there were very few private domiciliary care agencies and those there were, were very expensive. Domiciliary care agencies grew like topsy and the imposition of the purchaser/provider split brought the prices down and, with prices, the wages.

This transfer from public to private sector provision has continued under its own momentum unchecked ever since so that there is now very little public sector residential or domiciliary care for older people left.

There are probably very few people still working in health and social care who remember when most provision was directly managed and local authorities bought into specialist independent provision if it would better meet the needs of the older person and grant aided the voluntary sector.

Since the 1990 National Health Service and Community Care Act the “contract culture” has led to:

• a “minding” rather than a “mending” service with social workers increasingly used to assess the eligibility to specific services, rather than using relationship, therapeutic techniques and counselling to resolve problems
• providers being left with little discretion to respond in situ to changing need
• greater fragmentation with different components of a “package of care” bought from different providers
• “self-funders” (a dreadful term) being waived away, denying them an “independent verification of their wishes” and their families the help and support they need

Link between income and health

There is a wealth of empirical evidence on the social determinates of health which have demonstrated the correlation between income and demand upon the NHS.

At just £7,430 (£9,568 with pension credit), Britain has one of the lowest state pensions in the western world. The national living wage is £18,278 and average earnings £30,212. The definition of poverty is less than 60 per cent of median household income. 

There are two million older people living in poverty in Britain – many of whom, prior to the abolition of the default retirement age in 2012 – were forced into retirement and condemned to spending the rest of their lives in poverty.

As they retired before April 2016, they are not entitled to the new state pension either. The government, in its wisdom, has reduced their income further by stopping the free television license and reneging on the “triple lock” which was introduced in 2010 to reverse the 30 years of erosion since the earnings link was removed.

Between 2000 and 2010, earnings went up by 41.7 per cent, pensions linked to RPI increased by 32.4 per cent and CPI a mere 26.6 per cent. Low interest rates, over the last decade, have meant that lifetime savings have not kept pace with inflation.

It is therefore hardly surprising that 80 per cent of the expenditure of the NHS is on older people. The Netherlands, with the highest state pension in Europe, spends 60 per cent of its health budget on older people. Rising food and fuel prices will hit the poor disproportionately.

Occupational pensions have also been eroded, due in part to Gordon Brown’s 1997 tax raid on pension funds, with defined benefit schemes being replaced by defined contribution ones. Many of the defined benefit schemes which have survived have gone from final salary to average salary schemes.

Over the last 50 years the index linking has gone from earnings to RPI to CPI – even for pensions in payment. Auto-enrolment into pension schemes has done more to reduce the demand for pension credit than it has to increase income due to the small contributions made.  

Over the last decade the rich have got richer and the majority poorer. As a result of this widening income inequality there are now 3.9 million children being brought up in poverty, two thirds of whom have a parent in work.

These parents are no more able to increase their income than are older people who have no earning or borrowing power. According to a report by the Paris-based World Inequality Lab, 2020 saw the steepest increase in billionaires’ wealth on record, while the majority got poorer.

An estimated 1.3 million older people in the UK suffer from malnutrition costing the NHS £19.6 billion per year. There are five main causes of malnutrition: lack of money; lack of motivation; incapacity; lack of support and social isolation.

How can one of the richest countries in the world allow its older citizens to virtually starve to death or die from hyperthermia during the winter?

The alternative

So, what might the outcome have been had the government used the £57.5 billion it has already committed to health and social care differently, to pump prime radical reform based upon a “whole systems review” by:

• bringing all services together on the 1974 county council, or police authority areas in order to achieve shared geographical areas, common funding streams and common lines of accountability: returning health and police to local democratic scrutiny within central government direction and taking out a tier of local government, making collaboration easier and saving a minimum of £1 billion on the cost of democracy and senior management.
• removing the purchaser/provider split and specialist commissioning, replacing it with a statutory, voluntary, private sector partnership.
• Freeing up social workers to practice their skills in using relationship and therapeutic techniques to resolve problems and reduce the demand for state funded long term care.
• making other requisite organisational, leadership and cultural change to:

1. liberate professionals and organisations working directly with people from the straight jacket of the contract culture enabling them to respond in situ to changing need, innovate and develop. The contract culture has meant that the private and voluntary sectors have been micro-managed – the voluntary sector was renowned for innovation and development which the statutory sector was only too pleased to grant aid
2.  remove functional divisions along patient/client pathways by the creation of whole task, right sized, multidisciplinary, inter-agency teams, co-ordinated by the most senior employee from the lead agency in each team, with key workers at case level. These teams should be able to plan, do and evaluate their own work which completes the learning cycle of constant improvement
3. enable these teams to operate out of a shared base as communication is best within groups and worst between groups. This does not mean in open-plan offices as professionals need a room to themselves for diagnostic thought, report writing and to make a differential use of home and office-based contact. Provide shared staff room to enable catharsis after stressful contact and facilitate team building
4. move from a constraining management culture to an enabling leadership culture, recognising that staff are working in their chosen vocation and the role of management is to train and enable
5. agree a strategy with the trades unions to end the use of agency staff to save money and ensure greater continuity of care

     Any savings from these changes can be used to improve the quality and quantity of services and improve salaries.

• work with housing associations and the private sector to develop extra-care sheltered housing with nomination rights and a base for multi-disciplinary teams
• ensure all older people have a “verification of wishes”, help in considering the alternatives before being admitted to a care home and their carers the support they need
• extend National Insurance to all working people by removing the upper threshold of 66 years of age after which NI is currently not paid. This will raise £4.1 billion. The state pension should be paid on retirement under phased arrangements. For example, if you work one day a week you get four-fifths of the state pension. This would save a further £8.24 billion
• Raising the state pension to 60 per cent of average earnings or £18,127 would lift older people out of poverty. It would still be lower than much of Europe and slightly less than the living wage. This will cost £102 billion but make savings elsewhere. It would absorb pension credit worth £4.9 billion which only had a 63 per cent take-up, housing benefit and council tax relief worth £20 billion, and the winter fuel allowance worth £248 million. At least a fifth of this increased pension would be clawed back from people with other income through taxation (£19 billion). Therefore, the net cost would be £45,51 billion after the changes in NI and pension entitlement. Free prescriptions and bus passes, which encourage older people to get out and are effectively a subsidy on less profitable routes combating global warming, would continue
• Reconfiguring housing benefit. Currently someone on pension credit gets their rent paid whereas an owner occupier on pension credit doesn’t get anything towards repairs or maintenance. The wide variation in rents, from the medium rent of £495 per month in the North East to £1,425 per month in London, makes it impossible to totally absorb housing benefit in the increased pension. Therefore, it is necessary to retain a limited means tested housing benefit so that no individual has to pay more than £250 per month rent, or mortgage interest (£500 for a couple) out of their new increased state pension. The cost of this would be £5 billion.    

If this increased income, together with the other changes proposed, were to reduce malnutrition by 90 per cent it would save £17.85 billion. And given the correlation between income and demand upon the NHS, there could be a further reduction in demand of between ten per cent and 15 per cent as a result of lifting all older people out of poverty. This would save £34.85 billion on what would otherwise have been spent.

There are currently 416,000 older people in care homes, many of whom will be “self-funders”, and it is anticipated that the number might decrease by up to 20 per cent, as a result of this radical reform based upon a “whole systems approach”, to 332,000.

The average cost of a care home place is £35,000 per year. People would hand over their income up to the cost of the home, less their personal allowance of £24.90p per week, as now.

With an increased pension of £18,127 the minimum residents could contribute would be £16,883 leaving a maximum of £18,117 for the local authority to find.

Some people with occupational or private pensions may, with this increased state pension, be able to pay the full cost while still retaining their personal allowance.

It has not been possible to find out exactly how many people have other income or how much it is. The only reliable figure we have is the 1.5 million people claiming pension credit which, given the poor take up, is 63 per cent of those who would require the full £18,127. That is £8,559 per person less than now.

The best estimate, based on retirement income surveys, to totally disregard capital (including one’s house), given this increased pension, is that it would cost an additional £1.5 billion. At current pension levels, implementing the social care cap of £86,000 – the maximum individuals have to pay fore personal care - would cost £5.4 billion.

The total cost of these proposals is £51.01 billion and the eventual savings £35.85 billion (plus that redeployed from organisation changes to increase output and effectiveness) giving a long-term cost of £15.16 billion.

Therefore, had the government chosen to use its £57.5 billion differently to pump prime radical reform based on a whole-systems review it would get £42.34 billion of its money back to increase provision and reduce the tax burden on working people with no need for the 1.25 per cent precept on National Insurance which will only raise £12 billion. It would also not need to raise the age of eligibility to the state pension.

Chris Perry is a former director of social services for South Glamorgan County Council, a former non-executive director of the Winchester and Eastleigh Healthcare NHS Trust and a former director of Age Concern Hampshire