My Lords, we now come to the beginning of the Bill and the very important Part 1, sensibly postponed until after the Chancellor’s Statement last week on the spending review.
I declare my interest as president of the Local Government Association. The LGA has drafted this amendment and, as with many other Bills, has provided invaluable analysis and briefing for parliamentarians, alongside its direct negotiations with central government on behalf of local councils. Indeed, I commend the LGA’s new publication, Rewiring Public Services, which was launched yesterday and sets out a radical agenda for local services, including social care services.
The provisions in Part 1 have been widely welcomed. They will update and reform the adult social care system. They will support greater integration of health and social care and, on the issue of paying for care, the Bill’s provisions will redefine the relationship between the state and the citizen. Some of these changes will lead to future savings in the cost to the public purse of providing adult social care.
However, achieving later savings means spending more today, and some elements of the Bill mean a shift in the cost of care from the individual to the state. Therefore, before your Lordships’ Committee embarks upon its consideration of the important changes contained in Part 1, it seems important to consider the financial position from which we are starting out.
There is compelling evidence that rising costs of care are leading inexorably towards a crisis in funding for the local authorities which are trying to meet the needs of an ageing population. Before we can assess the practicalities of extra activity and extra spending for social care, it is necessary to be clear how existing care commitments can be paid for, as well as how extra costs arising from the Bill will be funded. Decisions on funding need to be taken before, or at least at the same time as, the policy decisions. Therefore, Amendment 77B—and I am very grateful to the noble Lord, Lord Tope, who had added his name to it—seeks to postpone implementation of Part 1 until the Secretary of State has addressed the crucial issue of how the costs of social care and support will be met in the years ahead.
What we now know from the Chancellor’s Statement last week is that the spending review includes genuinely helpful steps to fund key measures contained in the Bill. Following productive dialogue between central government and the LGA, the plans set out in the spending review make it clear that significant extra funds will be available from the NHS to assist with the costs of local care services. As well as needing reassurance that all extra costs for local authorities resulting from
the Bill really will be covered, there remains the greater underlying concern that the financial foundation on which the new position is to be built is not secure. Over the past three years, adult social care budgets have reduced by 20%. In a number of areas, to cope with the funding cuts it has already been necessary for councils to raise the bar before regarding older people as eligible for help from the council. Accordingly, despite growing numbers of older people, fewer people are now being helped because their needs are assessed as moderate, not substantial, even though earlier support can prevent the need for higher costs later.
The Association of Directors of Adult Social Services notes that the bulk of this reduction has been made up by efficiency gains. Many adult services directors believe that they can go a bit further; for example, through better procurement, shifting activity to cheaper settings, subcontracting provision to the private sector, and so on. But the scope for further efficiencies clearly now is much reduced. Demographic pressures, with a 3% growth every year in numbers of older people, mean that savings are predicted to be immediately cancelled out by the cost of meeting increasing demand. The cost of just standing still is estimated at another £400 million a year. Efficiency savings alone cannot keep pace with these budget pressures.
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Local government funding from central government has taken a huge hit with a 33% reduction over the period 2011 to 2015, prior to the additional 2% cut made in the Autumn Statement for 2014-15 and now the further 10% reduction in funding for 2015-16 announced in the spending review. Many of your Lordships will be aware of the frightening prediction that, unless the funding arrangements can be sorted out, local authorities face the so-called Barnet graph of doom. This shows how social care costs could absorb almost all local authority resources by 2019-20, leading to massive reductions in a whole range of existing local authority services. Already increasing costs, alongside a growing ageing population, are stretching adult social services to the limit. The funding issue really needs to be addressed before we consider a reform system for social care. Analysis by London Councils suggests that the combined effect of inflation and demographics means that there will be a potential £421 million additional cost pressure on adult social care in London by 2015-16. That is before any reforms are implemented.
The new spending review includes some really helpful measures for adult social care and health. The £3.8 billion pooled budget for health and social care services, with a continuation of the existing transfer from the NHS to social care that emerged from the 2010 spending review, is enormously important. Some of that transfer includes additional funds for the measures in this Bill. The new costs to be covered include resources to accelerate the transformation of services, provision of support for carers, capital funding for projects to improve integration locally and help for councils to organise themselves to implement this legislation. Costs are also coming down the line to support the scheme of local authority assistance for equity release by home owners who defer repayments. The extra funding in the spending review is greatly welcomed. I believe that
the Government have listened to the concerns expressed by the LGA and others, and recognise the importance of providing sustainable funding for adult social care.
However, it is not clear that the sums add up. London Councils has helpfully spelt out that very significant costs arise from the legislation covering paying the care costs for people who have spent up to the cap of £72,000 and/or have become eligible for support because the means-tested threshold is being raised to £118,000; assessing the increasing number of self-funders coming forward as a result of the reforms; monitoring each individual’s care accounts and progress towards spending up to the cap; assessing carers’ needs for support and making extra carers grants; setting up new safeguarding boards for adult services like those for children safeguarding boards; and promoting integration with health services, fulfilling a new duty to provide information and advice on care.
In its new analysis released this week, London Councils has found potential total additional cost pressure of £1.3 billion for London local authorities by 2019 as a result of introducing the new measures. Approximately £877 million of this will be as a direct result of implementing the capped cost model for care and raising the eligibility threshold over the first four years. If these figures are right, the Government’s estimates of providing £1 billion per year to fund the cost of the reforms for the whole country will clearly be inadequate. London Councils’ analysis has found that the reforms nationally over the four years will be in the region of £6 billion, on average £1.5 billion per year, with cost pressures heavily weighted in the first and fourth years of implementation. It seems very likely, therefore, that the additional burdens on local government will not be matched fully by extra central government support.
I think we all appreciate the hazards of going boldly forward without real clarity on whether councils can afford to meet both their existing and their new commitments for social care. This amendment provides the opportunity for greater clarity as we set out to consider the details of Part 1. I conclude by asking the Minister the following questions. Have the Government fully assessed the likely costs of the nation’s adult social care for the years ahead? If so, do they accept that there is an alarming growing gap between resources and demands? Do the Government consider that their new funding plans are adequate both to cover the extra costs of implementing the Care Bill’s measures and to fill the funding gap already looming so dangerously, and, indeed, that funding allocations will reflect different costs and population pressures in different parts of the country? In relation to the existing funding gap and to any inadequacies discovered in the financing of the extra spending in this Bill, what contingency plans are in place if actual costs prove more than expected to prevent the already hazardous position becoming quite untenable? Until these questions are answered satisfactorily, it seems wise to hold back on implementation of Part 1 of the Bill. Accordingly, I beg to move Amendment 77B.