IN THE NEWS
After months of debate following its announcement, and calls for its introduction to be postponed owing to the current cost of living crisis, the Health and Social Care Levy came into effect on the 6th of April. Promising £39 billion of raised funds over the next three years, including £5.4 billion for social care, the Prime Minister called the levy a “necessary, fair and responsible next step”.
As outlined in December’s People at the Heart of Care White Paper, £500 million will go towards workforce improvement, as well as £1.36 billion going to local authorities to pay fairer rates to adult social care providers.
Too slow to reach social care?
Despite any promise of additional funding welcome for a sector that has been starved by years of underfunding, general rection to the levy is ‘not enough money, not quickly enough’.
Mike Padgham, Chairman of the Independent Care Group, feels the £500 million injection into the social care workforce won’t help authorities pay an “accurate price for the care they deliver”, and that the Government needs to invest more to show the social care workforce is as respected as their NHS counterparts. Caroline Abrahams of Age UK believes that recruitment and retention of staff will continue to be challenging until staff in the sector are paid a decent wage.
Professor Martin Green, Chief Executive of Care England, went further in his criticism of the levy. He believes that funding “will not touch the sides of the need in our sector”, calling it “a confidence trick”. This is echoed by Jan Tregelles, Chair of Access Social Care (see this month's In My Opinion), who feels that less than £2 billion extra per year for the sector is “woefully inadequate” and that “this isn’t just about money. The whole system needs reforming.”
Scepticism of funding strategy isn’t new
Worries surrounding the adequacy of the Government’s strategy for funding social care are nothing new. When the levy was first announced as part of the Government’s Build Back Better plan for health and social care, Richard Murray, Chief Executive of The King’s Fund argued that on its own the levy “will not deliver the goods”, while his colleague at the King’s Fund Simon Bottery argued that additional provisions would be needed to plug the funding gap.
The evidence that £5.4 billion will not be enough can be found as far back as 2018, when the Health Foundation conducted research into funding options for the sector. Even before the extensive financial instability brought about by the pandemic, the Health Foundation predicted the overall funding gap in the sector would be £5.5 billion in 2020/21, and £11.9 billion in 2030/31. The impact of failing to fill this gap was clear:
“…a decline in access and quality of services, which would likely lead to a fall in quality of life for many people, as well as additional costs for other public services, particularly the NHS.”
Interview
In the first of our two interviews this month, Nadra Ahmed OBE, Chair of the National Care Association, argues that the priority of the levy is clearly not the social care sector, and that it will do little to rectify issues in the sector that stem from decades of neglect.
In the immediate future. what will the impact of the levy be for adult social care?
Absolutely nothing! Sadly, I don’t think it will have any impact on the adult social care sector because the way it has been muted we are looking at this money becoming available in the future.
And actually for the social care sector that means absolutely nothing. We haven’t got time. We need something that is sustainable right now that will support the sector.
So there is absolutely no point telling us, ‘there is money for you in the future’, when we are already chronically understaffed and the current climate when you look at cost of living, when you look at energy costs, when you look at the pitiful increases that are being promised by local authorities to providers it just doesn’t help the adult social care sector become a sustainable option.
So on reflection, is this levy really the right policy at the right time, or should the focus have been solving more immediate issues such as workforce shortages?
The levy may be a long term strategy, but in the short term we need to recognise two decades of neglect of social care, something which has become much more chronic over the last ten years or so. The evidence has been produced time and time again. So this is not about trying to see what is going wrong, this is about fixing it. We have no need to rehearse what we already know.
That time has passed and the pandemic has crystallised the fragility of the sector in such a way that it has impoverished it further. The impact is now something that we have been saying for years and years in that the impact is now being felt by the NHS as well.
As a result, rather than feeding the root of the tree – truly trying to get to the heart of the problem – we are trying to just pick the apples and go for the NHS. The thinking is almost ‘the NHS is suffering because social care isn’t sustainable, so let’s fix the NHS first and then we will concentrate on social care.’ It makes absolutely no sense at all.
Do you think that £5.4 billion over 3 years for the sector is enough?
It’s not going to be enough. We have either got to look at this and decide what it is we can and cannot provide anymore or we have got to fund it properly.
You can’t keep raising the bar, raising the expectations of a public that feel social care is properly funded when the reality is that it is not funded. You can’t raise the expectation to hotel-like accommodation with a regulator expecting the best – which is what we want to provide – and then choose not to fund it.
This isn't about fixing social care; its about stabilising the NHS
And it is a choice. I think it is really important to say, it is a choice that government has made not to fund it properly.
They have the means, the wherewithal and the evidence to do it. But what they have chosen to do is not to go down that route.
Is there an alternative measure to the levy that you feel would have a greater impact on funding for the sector?
We understand that this money has to come from somewhere and the route they have chosen is national insurance. But is that the right route?
It would be interesting to know what is raised through national insurance by social care itself, by our employees and our businesses. Is that the sum total of what is coming back to us because that just seems madness? We are potentially paying for our own funding.
Income tax might have been better, but I’m not sitting in Number 11. The important thing is that we recognise the money has been arranged somehow and this is the way that it is going to be raised. The choice now is how it is distributed.
We understand the NHS needs to be able to reduce waiting lists, along with other priorities. But there are two questions that need to be asked: is the NHS being run in the most effective way that it could be? And what if social care had been at the heart of the initial stages of this funding?
This isn’t about fixing social care; it’s about stabilising the NHS. That is the reality. We are stabilising the NHS and then we are going to look at how we can support social care to support the NHS. I don’t have a problem with that because we always have seen ourselves as a sector that can support the NHS so that they can deal with required acute care.
But it currently costs around £2000 per week to support a hospital resident who could be in a care setting at a cost of £600 per week. Think of the savings that could be made if you paid the social care sector an even £1000 to take those thousands of people sitting in NHS hospitals that don’t need to be there.
What have you have heard from the providers you represent regarding the levy?
The vast majority of people that we talk to about the levy (we represent small to medium sized providers) shrug their shoulders because they don’t expect to see it.
If this is something for the medium to long term a lot of providers are of the opinion that it would be too late.
We’ve got a staffing shortage right now. The virus is still out there. We’ve got no funding to support us to pay people when they are isolating. That has all been stopped and providers are expected to pay for that out of what is already an underfunded team. So I think there is a bit of shrugging the shoulders and thinking ‘what does this actually mean for us’. This is at the same time as the fair funding for care discussion that is going on, the involvement of private and local authority providers in arranging care, lots of things that are going to have a huge impact on the sector.
Interview
In our second interview this month exploring the new Levy, Camille Oung of the Nuffield Trust outlines exactly what revenue raised will be used for in the sector, but feels that the amount promised simply won't be able to keep up with predicted funding needs.
In the immediate future what will the impact of the health and social care levy be for adult social care?
The 1.25 per cent national insurance (NI) increase will raise £36 billion for health and social care across the UK over the next three years, of which £5.4 billion will go to adult social care in England. While the Nuffield Trust welcomes policies that have the potential to increase access to social care, we have been very concerned about the limited investment into the sector to solve the amount of problems that it is facing now.
£3.6 billion will go towards: extending the means test, which means that people with assets under £100,000 have the potential to access financial support for care; the £86,000 care cap from October 2023; and measures to move towards paying a fair cost of care. When the cap kicks in in October 2023, the majority of the funds that have been raised from the levy will go towards funding these elements of reform. Over time, as more people become eligible, the cap and the means test especially will make up a greater proportion of the funds spent.
The remaining £1.7 billion will go towards wider reforms including just £500 million for workforce development. In immediate term we are not likely to see a big impact in terms of the quality and the amount of social care that is available.
So on reflection, is this levy really the right policy at the right time, or should the focus have been solving more immediate issues such as workforce shortages?
It’s important to distinguish between the levy (the revenue raising mechanism) and the policy (how revenue is spent). The policy needs a much bigger focus on the workforce, stabilising providers and all of the other things that really go with that.
Pre-pandemic, the sector was on its knees, yet it has managed this while continuing to provide vital care and support. Many providers now are concerned about their viability. Our research highlighted that there were significant numbers of staff leaving the sector - as many as 42,000 in the six months leading up to October last year.
More than 400,000 people are on waiting lists for assessments or services, and providers are having to navigate other rising costs such as energy. Even if the government provided winter funding, we are still hearing the sector is struggling. A recent survey from HFT found that three quarters of surveyed providers have had to turn down new admissions, with one in three closing services. It is concerning and without decisive government action, we will continue to see providers close and people lose out on care and support, with consequences for family and friends in caring roles.
Is £5.4 billion over three years for the sector enough?
The short answer is probably no.
Some organisations have estimated what the gap is for additional funding that would be necessary to tackle the current challenges at play and keep the sector afloat. The Health Foundation estimated the gap for 2022/2023 as £7.6 billion, rising to £9 billion for 24/25. That’s on top of what’s included in the spending review. Councils will be forced to increase their local taxation mechanisms through council tax and social care precept. That will be an issue as people will see they’ve got the levy on their payslip, but also additional council tax. Why is one funding social care and the other also funding social care?
And what is clear is the additional funding through the levy is just not enough to keep up with current demand, let alone transforming the sector, which is ultimately the ambition that the government has set out.
Should social care providers have been exempt from the levy? In effect they're having to partly pay for their own funding.
It is a tricky question. The social care market is very diverse, so the impact of the levy will be felt very differently across the different types of providers. So some providers who are smaller could be exempt. The government have raised the threshold at which people start paying so that might help as well with the impact.
But overall we are concerned about the rising costs across the board that providers are having to face. So on top of the NI rise the current energy crisis, the cost of fuel, the labour shortages, all of these things are jeopardising the financial health of providers, especially the smaller organisations who might have less financial resilience than the bigger ones.
The additional funding through the levy is just not enough to keep up with current demand
We do expect that many providers will struggle to maintain their services and that will lead to market instability and most importantly uncertainty for the people who are drawing on care and support.
Are there alternative measures to the levy that you feel would have a greater impact on funding for the sector?
A couple of years ago we did some work when we looked at all of the different funding proposals that had been discussed over 20 years of this debate.
And they came up with four tests that we would like to see in a revenue raising mechanism for social care:
Does it raise money now and in the future?
Does it pool financial risk, sharing risk across society?
Is it understandable? Is it clear who pays and how money is allocated?
Finally, is it fair? This is where the NI increase stumbles and there are lots of dimensions to this, including income, age, regions.
The levy has some merits but it also has been criticised for not necessarily being as fair as it could be. It is not just about how you raise the money but how you allocate it and I think we’re seeing the sector be very disappointed about getting only a fraction compared to how much the NHS is getting.
There are some difficult choices about how to spend that money in the future if it is going to transform the sector, as there was an ambition to do so.
One thing I would stress is that social care isn’t just about how money is raised or how money is allocated, it’s about a much wider set of things. We’ve done some research into other systems outside the UK (Germany and Japan, and we are currently working on France) who have successfully looked at reform in its entirety. Not just tinkering at the edges of the system but really thinking about the workforce, providers, access and eligibility. So we really need to think about those things if we are going to properly see a transformation.
Opinion
This month’s opinion comes from Janine Tregelles CBE, CEO of Revitalise and Chair of Access Social Care. She explains why the Health and Social Care Levy is inadequate and what needs to be done instead to protect adult social care.
Last September, the PM announced a brand-new health and social care tax to be levied across the UK. This manifesto-breaking tax, said Johnson, would raise £36 billion over three years, tackle the backlog in the NHS caused by COVID-19, and pay for reforms in social care.
Raising taxes at a time of soaring inflation when the cost-of-living crisis is squeezing household incomes to breaking point was a hugely controversial move and was fiercely resisted by many, especially by organisations such as ours which are at the sharp edge of the social care sector. But regardless of objections, at the start of this month the Health and Social Care Levy arrived with a 1.25 per cent increase in National Insurance payments.
Has the Government managed to solve the crisis in the health and social care sectors at a stroke? Sadly, we don’t think so, and by assuming everything has been fixed, we are just storing up greater problems in the future.
When it comes to adult social care, the Government has allocated less than £2 billion of new money per year for the next three years into health and social care reform. This is woefully inadequate. The Health Foundation estimates that in the next financial year, the sector will need an additional £3.7bn just to meet demand and improve access, while an additional £7.9bn will be needed to ensure everyone has the social care they so desperately need.
It all feels like an opportunity missed
Worryingly, the Government is relying on outdated figures when it comes to allocating spending in this vital sector. Without an up-to-date understanding of how much needs investing into social care, the Government is flying blind. Effective and efficient policymaking will be impossible.
It all feels like an opportunity missed. To implement social care reforms, more social care workers are needed, but there is already a significant shortage. Many workers, though still passionate about their work, are facing no choice but to leave for unskilled roles in sectors such as retail which pay more competitively, because the lack of funding from the Government makes it extremely difficult for providers to raise wages.
At Revitalise, we have been able to respond by increasing pay this year but like most in the sector, we cannot continue doing so without the sector receiving far more funding. Social care must be placed on an equal footing with the NHS so that workers feel valued in the same way we value our doctors and nurses
We also urgently need to know how NI revenue will be split between the NHS and social care. The current lack of clarity has given rise to fears that the NHS will receive the majority to offset the huge COVID backlog, whilst social care will be left under resourced and ignored.
This must not happen. Figures from the TUC show that annual adult social care spending in England is still £600 million lower than in 2010, with 112 of 150 local authorities spending less per head than a decade ago. If the sector is squeezed even further, we expect a huge rise in safeguarding issues, hospital admissions and vulnerable people being left to fend for themselves. Unless adult social care funding is given the priority and protection that it so desperately needs, we will be facing a far worse situation in the years to come.