Adam Smith Inst - Revolution required to solve social care crisis
A new paper from the neoliberal think tank the Adam Smith Institute argues that the social care system is broken, unfit for purpose and cannot be fixed by new taxes.
- Social care system is characterized by perverse incentives and is woefully out of date.
- Taxpayers should pick up the ‘long-tail’ costs of those needing many years of care.
- Making social care free to everyone as part of the NHS is a non-starter and would be the largest nationalisation ever.
- Debate over the budget for social care is pointless when the money spent goes into a system that is largely dysfunctional.
- Public funding and long term care budgets should give much higher priority to younger adults with physical disabilities, mental health or learning problems, whose needs have long been under-resourced.
The UK social care system is broken, unfit for purpose and cannot be fixed by new taxes and spending or making more people eligible for free care, says a new report by the Adam Smith Institute.
While Covid-19 has focused attention on elderly people in care homes, half of social care spending actually goes on younger people with physical, mental health or learning problems, plus help delivered to people’s own homes. The whole system is in crisis, argues the Adam Smith Institute, distorted by perverse incentives, unfair and woefully out of date. While there has been much talk about raising public care spending and providing more free care, it argues, only widespread and disruptive change will solve the deeper problems and prevent future cases of neglect.
The think-tank calls for “disruption” to the system and for “new partnerships in new markets that embrace fundamental change.”
“People aren’t looking beyond how to get more money into social care,” argues the report’s co-author Eamonn Butler. “And more funding is seen as a magic bullet that would solve all the problems. But an arbitrary boost to care budgets will do little good. We can only solve the crisis in social care by looking at and radically reforming the whole system, not just one part of it.”
From 2017 onwards the Government promised a Green Paper, aiming to “ensure that the care and support system is sustainable in the long term” and to improve integration with health and other services and between different care providers. During the 2017 General Election campaign, former Prime Minister Theresa May said the proposals would include a lifetime “absolute limit” on what people pay for social care—though there was less agreement on how this would work, how much it would cost, and how it would be funded. After the 2019 election there was talk of a White Paper, before the Covid-19 outbreak cut discussions short.
Most care homes with residents funded by local authorities are over 20 years old and no longer up to modern standards, the free market think tank argues. Many are converted old hotels and houses, with narrow corridors, small rooms and no en-suite bathrooms. Equally, self-pay residents get a raw deal from providers and insufficient protection from regulators.
Meanwhile, live-in carers hired by families typically have no qualifications and many are paid less than the national living wage. And care delivered free to vulnerable people in their own homes by local authorities is usually selected on price, not quality, and there is very little use of modern information and artificial intelligence technology that could spectacularly raise its quality and efficiency.
“The idea of making social care free to everyone as part of the NHS, possibly funded by a new ‘care tax’, is a non-starter,” says Eamonn Butler, warning that “this would be the largest nationalisation ever. The NHS has 170,000 beds in 1,300 hospitals. Adding another 480,000 beds in around 20,000 nursing and care homes would overwhelm it completely.”
The Institute also thinks it unlikely that the government would stump up the hundreds of millions of pounds needed to upgrade residential homes, or that taxpayers would accept the extra burden. Instead it advocates a partnership with private pension and insurance investors to develop large numbers of new and upgraded facilities, and lease them to local authorities, giving local authorities a long term, whole-service package without having to find the capital to build new homes themselves.
And it says that there are other options, such as individual savings accounts or the Australian system, a mixture of voucher subsidies and refundable bonds, should be explored first before any hasty decisions are made.
On funding, the report’s authors say that insurance is not presently a viable way of people providing for the care they might need later on, because the insurance industry cannot cope with the ‘long tail’ risk—the risk that a few individuals might need a great many years in a residential nursing or care home. In order to create a viable insurance system and induce more families to contribute to their own care needs, the Institute proposes risk-sharing between individuals and government. If people insure themselves for six years’ of residential care, they suggest, the government would pick up anything beyond. This helps ‘pool’ risk and makes insurance affordable.
In return, public funding and long term care budgets should give much higher priority to younger adults with physical disabilities, mental health or learning problems, whose needs have long been under-resourced.
A more rational and affordable care system will involve disrupting the market, but will deliver better supply, sustainability and fairness in a more functional system. Without a radical overhaul of provision, increases in public funding will not avoid future crises.
Andrew Lansley, former Secretary of State for Health (under the Coalition)
“I welcome this further contribution to the debate on how we can sustain social care in the future. I do sincerely hope that this will encourage action now”.
Rt Hon Paul Burstow FRSA, Former Health Minister (under the Coalition)
“As we begin to contemplate the world after Covid the Government must spell out its plans for the renewal of the purpose, workforce and fabric of social care. This report is a timely contribution to thinking about how and what we pay for to secure the right care and support for all who need it.”
David Davis MP, Member of Parliament and former Chairman of the Conservative Party:
“Nationalisation or pseudo nationalisation of the care sector would only compound the mistakes that have led to too many deaths. We need creative solutions to deliver large-scale private sector investment into the system that would improve patient outcomes. If more state control is the answer than than someone is asking a pretty dumb question.”
Peter Carter, former Chief Executive of the Royal College of Nursing:
“This interesting paper provides a way forward on one of the most pressing issues facing society across the UK at this time. Social care is under huge pressure and the existing model of funding is not sustainable. I would recommend this paper as a way forward.”
Stephen Collier, Chair of NHS Professionals, Chair of Eden Futures and former Group Chief Executive of BMI Healthcare, says:
“This is an interesting and challenging read. Its proposals on funding of new care home capacity are both imaginative and deliverable, and if implemented would help the sector, and the broader economy at a difficult time. The proposals would help raise standards of accommodation for the care sector and the flow-through effect on service quality would be strongly positive.”
Andrew Lewer MP, Member of Parliament:
“I welcome this Report by the Adam Smith Institute into the future of Social Care. There has been agreement across the political spectrum that wholesale reform of care is necessary for the whole of this century and yet it has not happened. The issue must move from the “too difficult” column to the “too difficult to ignore” column and it must do so urgently. The ideas in this Report provide some well thought through ways forward.”
Notes to editors:
For further comments or to arrange an interview, contact Matt Kilcoyne: email@example.com | 07904 099599.
The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.
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