WIREDGOV

The way that health and social care are currently organised and funded creates confusion, perverse incentives and much distress for individuals and families.

An independent commission established by The King’s Fund has concluded that a new settlement is needed for health and social care to provide a simpler pathway through the current maze of entitlements. The commission, chaired by Dame Kate Barker, proposes a new approach that redesigns care around individual needs regardless of diagnosis, with a graduated increase in support as needs rise, particularly towards the end of life.

The final report of the commission recommends:

• moving to a single, ring-fenced budget for the NHS and social care, with a single commissioner for local services
• social care for those whose needs are currently defined as ‘critical’ should become free at the point of use
• as the economy improves, free social care should be extended to those whose needs are currently defined as ‘substantial’
• by 2025, some support should be provided to those whose needs are currently defined as ‘moderate’ but this should continue to be on a means-tested basis.

It also recommends integrating Attendance Allowance, the benefit paid to older people with care and support needs (which would be renamed care and support allowance) within the single budget for health and social care.

Although mounting funding pressures are being faced in both the NHS and social care, the commission’s report challenges politicians to look beyond the deficit and engage the public in a debate about future care and how it will be funded. The commission calls on the government to plan on the assumption that public spending on health and social care combined will rise to between 11 and 12 per cent of GDP by 2025. These levels will be broadly comparable to current expenditure on health alone in many other countries.

A partnership model, in which the costs of social care will be shared between individual and the state, would be phased in over time to provide fairer, more consistent entitlements to social care. The move to make all care free for those with critical needs would end the confusing distinction between social care provided in residential care homes and NHS Continuing Healthcare, which is provided free of charge in nursing homes – a huge source of frustration under the current system.

After careful consideration, the commission rejected extending charges for NHS services, with the exception of prescription charges. Instead, to pay for these changes, the report argues that the bulk of the additional funding should come from the public purse, with wealthier people and older generations – the main beneficiaries of the changes – contributing more. To fund the initial roll-out of the new settlement, the report recommends:

• radical changes to prescription payments, reducing charges to as low as £2.50 but significantly reducing the number of prescriptions exempt from charges
• limiting free TV licences and the winter fuel payment for older people to those on pension credit
• requiring people working past state pension age to pay National Insurance at a rate of 6 per cent.

The report also recommends that new recipients of NHS Continuing Healthcare should pay the costs of their accommodation, as those receiving residential social care do now. 

As the more generous elements of the new settlement are phased in, the report recommends further measures to raise revenue:

• a 1 per cent increase in National Insurance contributions paid by those over the age of 40
• a 1 per cent increase in National Insurance paid by those earning more than £42,000 a year.

The report also recommends that a review of wealth and property taxation should be undertaken to raise additional funds.

The commission recognised that the Care Act and Dilnot reforms represent an important step forward but considered that they will not be sufficient to address the funding and service challenges that lie ahead.

Kate Barker, chair of the commission, said:

‘Our challenge was to look at the big and difficult questions about the kind of care system, and indeed what kind of society we wish for ourselves and our families. The prize, if this kind of change can be achieved, is huge – a more integrated service, a simpler path through it, more equal treatment for equal need, a better experience for people who need care and their families.

‘We have concluded, as others have before us, that our system is not fit to provide the kind of care we need and want. We propose radical change, greater than any since 1948, that would bring immense benefit to people who fall into the cracks between means-tested social care and a free NHS. This includes people at the end of life and those with dementia or other conditions where too often there is a conflict about who pays at the expense of what people need.

‘Our proposals would continue a system where costs are shared between the private individual and the state but with the taxpayer carrying a heavier load of that cost than at present. The cost of a more generous settlement, though large, can be afforded if phased in over time.’

Professor Chris Ham, chief executive of The King’s Fund, said:

‘We asked Kate and the commission to tackle some of the most difficult issues in public policy. They have delivered a robust and convincing report, which remakes the case for change powerfully and makes recommendations that could provide a better and more generous care system based on genuinely long-term thinking. 

‘The proposals as set out by the commission may not appeal to politicians fearful of commitments to greater public expenditure, but these issues cannot simply be ignored. The commission is clear – there is no “do nothing” option. As the costs of what we now classify as social care grow, these will increasingly fall to individuals and families, creating fear, uncertainty and inequity on a scale that the public would find completely unacceptable if applied to health care. The recommendations are therefore radical – tinkering around the edge of our systems of care is not enough to deal with the challenges we face.

‘The issue is not whether health and social care are affordable in future – they have to be paid for one way or another. The issue is how far they are publicly or privately funded and at what level of quality and decency. This report lays down a challenge to politicians of all parties to acknowledge the unsustainability of current funding for health and social care and to set out, ahead of the election, some of the difficult choices that need to be made.’

Notes to editors

For further information or to request an interview with Kate Barker, please contact The King's Fund press office on 020 7307 2585 (or 07584 146035 if calling out of hours).

Costs of proposals:

• current spending on social care for older people stands at £6 billion (2014); changes to provide free care for older people with critical and substantial need would require an additional £2.7 billion funding 
• costs of free care for critical and substantial need would rise to around £14 billion by 2025 – around £5 billion more than projections based on current entitlement. 

A full breakdown of the commission’s funding recommendations and the revenue each would raise is below.

• A reduction of prescription payments from the current charge of £8.05 per item to perhaps £2.50, retaining a cap on the amount any individual could pay in a year but with exemptions limited to those on low incomes (£1 billion a year).
• Limiting free TV licences for the over 75s and the winter fuel payment for older people to those on pension credit (£1.4 billion).
• Ending the exemption from paying National Insurance for people working past state pension age by requiring them to pay a rate of 6 per cent, instead of the standard rate of 12 per cent (£475 million).
• Requiring new recipients of NHS Continuing Healthcare to pay the costs of their accommodation on a means-tested basis up to a cap of £12,000 a year (approximately £200 million).
• A 1 per cent increase in National Insurance contributions paid by those over the age of 40 (£2 billion).
• A 1 per cent increase in National Insurance paid by those earning more than £42,000 a year (£800 million).

The Commission on the Future of Health and Social Care in England was established by The King’s Fund in June 2013. The commissioners are:

• Dame Kate Barker, business economist and former member of the Bank of England's Monetary Policy Committee
• Geoff Alltimes, chair of the Local Government Association multi-agency task group on health transition and previously Chief Executive of Hammersmith and Fulham Council and NHS Hammersmith and Fulham
• Lord Bichard, cross-bench peer and Chair of the Social Care Institute for Excellence
• Baroness Greengross, cross-bench peer and Chief Executive of the International Longevity Centre UK
• Julian Le Grand, Richard Titmuss Professor of Social Policy at the London School of Economics.

The commission's terms of reference asked them to explore whether the post-war settlement, which established the NHS as a universal service, free at the point of use, and social care as a separately funded, means-tested service, remains fit for purpose and whether, and if so how, the settlement should be re-shaped by bringing the NHS and social care system closer together.

The King's Fund is an independent charity working to improve health and health care in England. We help to shape policy and practice through research and analysis; develop individuals, teams and organisations; promote understanding of the health and social care system; and bring people together to learn, share knowledge and debate. Our vision is that the best possible care is available to all.