Principles matter: reforming social care funding

Blog post

Published: 11/02/2013

There is almost universal agreement that the social care system needs urgent and fundamental reform. Despite this consensus the various attempts at reform over the last 20 years have all stalled.

Against that background Andrew Dilnot could have been considered either brave or foolhardy to accept the Government’s request to head the latest commission on reforming social care funding in 2010. Last year when it looked like the Government was planning to kick funding reform into the long-grass once again, the evidence pointed towards foolhardiness.

Against the odds however the Government has now announced that social care funding will be reformed. The new system is far from perfect – most people will worry that the cap is very high (over 20 per cent more than the upper bound of the Dilnot Commission recommendations) and it’s not clear that the Government has worked out how to pay for this in the longer-term.

Most importantly, the Government’s announcement does not address the fundamental gap between the amount of public money being spent on social care and the pressures on the system.

Despite all these caveats, the Government’s announcement is a really important milestone in the history of social care reform. It matters because it puts in place the system architecture which the Dilnot Commission proposed:

  • Sharing the cost of care between individuals and the state so that the state bears more of the costs if individuals have very, very high care needs for many years;
  • Providing more financial help for people with modest means through raising the means tested threshold; and
  • Great consistency across the country with a national eligibility threshold and nationally set cap on general living costs.

This establishes some important principles at the heart of the social care system.

Some people argue that implementing social care reform on the lines of the Dilnot Commission is the wrong priority at a time when public services and the welfare state are under such strain.

They argue that this is about protecting the inheritances of the well-off and is not progressive. But this is a very limited view of fairness.

In effect under the current social care system we have two rates of inheritance tax: one for people who do not need expensive levels of care at the end of their life and another for people who are unfortunate enough to become sufficiently frail or suffer from dementia so that they spend their last years in residential care.

This is not a good way to design a tax system. A capped system has the potential to share costs more fairly. Whether it does this in practice depends on how the money is raised to pay for Dilnot.

Andrew Dilnot hoped his proposals for a capped system of funding social care would lead to new private insurance products developing to help individual’s meet their care costs below the cap.

For this to happen both the insurance industry and individuals need to have some certainty about the system.

This will require:

  • Everyone in the system (policy-makers, politicians, those representing older people and younger adults with care needs) to commit to making the system architecture proposal by Dilnot work;
  • A sustainable source of funding to meet the costs of the system: social care costs with or without the Dilnot reforms are rising faster than funding;
  • A parallel focus on improving quality: the system will only be sustainable if individuals and their families are confident that care will be of high quality and treat people with the dignity they have a right to expect.

So whilst this is not the solution to all the problems of the social care system, reforming funding in line with the Dilnot principles is an important and very welcome step in the right direction.

Suggested citation

Charlesworth A (2013) ‘Principles matter: reforming social care funding’. Nuffield Trust comment, 11 February 2013.