The current adult social care system penalises people who have saved all their lives, but how will the government rectify this without breaking the bank? A coalition of 15 bodies believes it has pointed the way, as Niall Dickson of the King's Fund explains

Buried deep in the pre-Budget report and absent from most of the ensuing headlines was a statement that may have profound implications - more significant than the inheritance tax reform which caused such a furore.

In a modest green box on page 100, the government committed itself to reforming the funding of social care. In private ministers have described this as a once-in-a-generation opportunity. If they are true to their word, this will affect not only hundreds of thousands of frail older people and their families, but also the way healthcare itself is delivered.

Social care funding is one of the great pieces of unfinished business of the Blair era - he came into power in 1997 promising a Royal Commission to settle this matter once and for all. Unfortunately the commissioners failed to produce the answer the government wanted and instead, with some embarrassment, the system in England was tinkered with and the issue kicked firmly into the undergrowth, where it has remained until now.

Its disappearance from political debate over recent years is hardly a surprise - like other Cinderella areas of health, social care has always been a relatively unloved child of the welfare state. The beneficiaries are vulnerable and relatively powerless, and it does not help that local government is responsible for its delivery, making it one step removed from national political concerns.

The whole business is fiendishly complicated. Not only do solutions look expensive, but to discuss it openly is to touch sensitive emotions and expose fundamental values which define our obligations to one another.

This is not just about how much tax we pay, or how hard we save - it is about what we should do for elderly people in our families, what they expect from us and what we expect from them.

Call for courage

Nearly two years ago the King's Fund asked Sir Derek Wanless to lead a team to review the funding of social care for older people in England. At the time, the general view was that for politicians to disturb this issue would be 'politically courageous'.

When it came to social care the government's position was that reform was not required and indeed that the level of funding was satisfactory or at least defensible.

However, the resulting report, Securing Good Care for Older People, reached a very different conclusion. It found a system that was ill defined, under funded, and with no long-term view of what was required. The relationship between social care and the benefits system was so bewildering even the experts found it incomprehensible. Most important of all, it warned that the current system was unsustainable.

As demand grows, local authorities have raised eligibility thresholds. Care is now offered only to those in the greatest need.

The number of over-85 year olds is set to increase by two-thirds in the next 20 years - and the report predicted that as well as having more healthy years of life, there will be an ever faster growth in unhealthy life years, many caused by the inexorable rise in dementia.

To the purists the only just solution is free care for all. This would remove the artificial distinctions between health and social care. But the drawback is obvious - it would be extremely and increasingly expensive. The chancellor, among others, has made it clear this is not an option.

On the other hand few would argue that the entire cost should be placed on individuals and their families, irrespective of their means. The answer, found in just about every other developed nation, must be to try to find a fair balance between the contributions of the individual, the family and the state.

The current system is largely based on means tests linked to assessments of need. For residential care there are national rules - put crudely you have to pay the lot until all your savings are used up, bar the last£21,500. If you are being cared for in your own home, the local authority will usually have a scale of charges linked to a means test and a set of eligibility criteria.

The evidence from the King's Fund report and work by the Joseph Rowntree Foundation is unequivocal - the current system penalises those who have saved and is particularly hard on those with moderate means. It also fails to meet the needs of thousands of frail older people with serious problems who do not pass the 'severe' levels of need test to qualify for help.

The debate, which the government has signalled should now get under way, must seek a consensus for a new settlement which addresses these failings, but which is also seen to be affordable.

That may not be as difficult as it seems. This year the Caring Choices coalition, made up of 15 organisations and led by the King's Fund, Joseph Rowntree Foundation, Help the Aged and Age Concern England, has sought to stimulate informed debate and encourage the government to act. In roadshows around the country it has engaged those who commission, provide and use social care in the three big questions:

  • Who should pay for personal care?

  • How do we encourage people to contribute to care costs?

  • How do we support the provision of informal care?

The final roadshow took place last week. Participants at this and every other event overwhelmingly supported the principle that responsibility should be shared between individuals, families and the state.

Greater control

There was also enthusiasm for the idea that the state should support individual effort and contributions, for example by making equity release or insurance products more viable and above all by supporting families in their caring role. There was genuine support for the notion that people should contribute and many argued that this would help empower older people, giving them a greater sense of control over their own care.

There is an almost infinite variety of schemes which could be adopted and you can be sure the Treasury is already busy costing some of the options and that none will be cheap.

The King's Fund report calculated that the cost just to maintain the existing system would more than double by 2026 to£24bn. It also argued that free personal care would lead to levels of support beyond what could be economically justified.

Instead it favoured the so-called partnership model, similar to that originally developed by Julian Le Grand at the London School of Economics, in which everyone would be entitled to a proportion of their care free from the state. In the King's Fund's report this was set at two-thirds of the cost of the package of care. Beyond that the state would pay one pound for every one pound paid by the individual up to the full amount. The maximum amount the individual would pay would be half the top-up or just over 16 per cent. Those on low incomes could apply for a benefit to fund their top up element.

The cost though would be substantial - up to an extra£4.2bn of public money spent annually on social care for more older people. Much of this -£2.5bn - could be offset by savings in the benefits system, but that will be controversial and there is no guarantee the government will adopt this approach. So far the commitment has been to a green paper, to consider replacing the existing system and to having some element which is universal and some element which requires individuals to contribute. The pre-Budget report and comprehensive spending review said: 'The government believes that there are real opportunities for reform within a system that shares the cost between the individual and the state and that provides both universal and progressive elements.'

All of that is consistent with the partnership model but could differ significantly from it. For example the government could choose to fund a much smaller proportion of each care package (say a half or a third) or it could restrict the universal element to something very small and then apply a means test to the remainder, as a way of making the whole package more affordable.

The other complication is that at the last minute the government decided it wanted to include social care for all adults and not just older people. At one level this seems a great opportunity but the issues facing those who are younger are different and even more complex. The danger is that the whole enterprise ends up being in the too-difficult-to-tackle box.

We have come a long way though. At the final meeting of the Caring Choices coalition both shadow health minister Stephen O'Brien for the Conservatives and Liberal Democrat spokesman Norman Lamb commended the partnership model and said their thinking had changed - health minister Ivan Lewis was understandably more cautious but accepted the need for reform and all three promised to work for consensus.

The minister has promised a genuine consultation and that is right. The government is wise too to have identified some principles and set some limits on expectation. This is hardly the best time to be having this debate - public spending is being squeezed - the settlement for social care (1 per cent in real terms) was miserable given the scale of what is needed.

But there is a wonderful opportunity to create a fairer system which not only delivers better care and puts users in control but also supports those who have saved and those who provide informal care - in other words a system that works with the grain, not against it.

For more analysis from this week's HSJ, click here

Information about the Caring Choices initiative and reports from all the roadshows can be found at