My Lords, the purpose of this amendment is to give us a chance to discuss the funding of social care and the Bill’s provisions before we complete Committee, particularly given the continuing concerns that social care is seriously underfunded and is not in a good position to take on the changes—good changes, I should emphasise—in the Bill. Those concerns have been around for a long time and formed a major part of the evidence presented to the Dilnot committee and the Joint Select Committee on the draft Bill. I declare an interest in that I was a member of both those bodies.
On the whole, most people support the basic architecture of the Dilnot report and the Law Commission’s proposals enshrined in the Bill. They simply do not believe that the funding is in place to implement effectively the Bill’s good intentions. They remain unconvinced by the Government’s assurances on funding. This is hardly surprising, because the Government’s social care funding strategy seems almost designed to confuse. Eric Pickles curries favour with the Chancellor by signing up to swingeing cuts to local authority grants, which inevitably reduces social care funding substantially. Health Secretaries—quite sensibly in my view—then start slipping cheques from the NHS to local government to mitigate, to some extent, the Pickles butchery. Welcome as these cheques may be—but probably not to NHS England—they usually have strings attached and do not make good the shrinking base budget of adult social care, which, I have to mention to my noble friends, has been taking place since before the coalition Government.
First, a little history: the problems of funding adult social care predate the coalition, as the Dilnot commission made clear on pages 14 and 15 of its report. It stated:
“We know that the funding of social care for older people has not kept pace with that of the NHS. In the 15 years from 1994-95 to 2009-10, real spending on adult social care increased by around 70% for older people while, over the same period, real spending in the NHS has risen by almost 110%”.
Before the coalition, pay and prices in social care rose more quickly than general inflation. There was—and continues to be—rising demand as the number of older people and younger adults with care needs increases. Social care budgets rose by about 1% a year in real terms in the three years to 2010, compared with 5% to 6% for the NHS. We in the Dilnot commission showed that in the four years to 2010, demand outstripped expenditure by about 9%. We went on to say that in the future this approach to funding would need to change. However—and this is bad news for the Benches opposite—it has not.
The funding shortfall that the coalition inherited, of approaching £1 billion, has got worse. The LGA has estimated that just to keep up with demographic demand adult social care needs real-terms annual increases of about £0.5 billion a year. To put right the deficit and stop it getting worse, adult social care should start the next financial year, 2014-15, with a base budget at least £2.5 billion higher in real terms than in 2010. The reality is somewhat different.
The latest survey that I have seen from the directors of adult social services states that by next April local councils will have stripped £2.7 billion out of their adult social care budgets since 2010. I have heard
Health Ministers say that this is being done by efficiency savings—so that is all right then. In practice, it has been done by denying people services, imposing tougher eligibility criteria and cutting pay and payments to service providers, with their impact on quality. These cuts have been mitigated by transfers the Government are making from the NHS by the start of 2014-15. On the basis of parliamentary Answers given to me, these look to amount to £1.5 billion in total over three years.
To sum up: the Government have not made good from the NHS what they have taken out, and have not protected the base budget against rising demand and inflation—something that the Dilnot commission said was essential if its proposals were to be implemented. My estimate is that adult social care starts 2014-15 with an underfunded base budget of at least £3 billion—some 20% of its budget.
I now turn to whether things get better between April 2014 and 2016, when the main implementation of the Bill’s proposals starts. Before the 2013 spending review, a parliamentary Answer to me suggested that approaching £0.9 billion would be transferred from the NHS to social care in 2014-15. Page 34 of the Government’s Spending Round 2013, suggests that another £200 million would be provided to progress the new pool budget scheme. However local councils still have to make another lot of savings in 2014-15, so it is difficult to see these not wiping out at least half of the transferred NHS largesse.
However, to be fairly generous to the Government, the £3 billion base budget deficit could drop to £2.5 billion by the beginning of 2016, assuming that the Government make the transfers that they promised. It therefore seems to me that, however you cut the figures, there is a pretty big hole in the base budget for adult social care in the year in which the first tranche of the Bill’s reforms begin. I am of course happy for the Government to provide me with chapter and verse in writing on why my figures are wrong.
Let me finish by turning briefly to the cavalry that the Government think is coming over the horizon—their proposal for a £3.8 billion pooled budget for 2015-16 to join up local health and social care services. Everyone in this House will welcome that pooled budget. I particularly welcome it as someone who was involved with the joint finance initiative of Barbara Castle, back in the mid-1970s. In some ways, we have not moved on very far. There is a considerable lack of clarity about this impressive-sounding figure. I therefore have some questions for the Minister.
First, can he say whether the total figure is dependent on the Department of Health making all the efficiency savings cited on page 34 of Spending Round 2013 and is safeguarded from any raiding to meet emergency demands by the NHS? Secondly, does the £2 billion that seems to be being promised to local councils for adult social care include the £335 million promised for the cap in 2015-16, as set out in paragraph 9 of the Government’s very recent document, Caring for Our Future: Consultation on Reforming What and How People Pay for Their Care and Support? Thirdly, will councils be paid the £2 billion at the beginning of the financial year, and how much of that will in practice be offset by the 2.3% reduction in local government
spending in 2015-16, as set out in page 37 of the spending review document? This is typical of what we are seeing from the Government. Page 34 gives you some money and page 37 takes another lot away through another government department. It is a bit like the guys who practise conjuring with peas under egg cups. Finally, can the Minister confirm that £1 billion of the £3.8 billion will be paid only if local authorities can demonstrate outcomes? Therefore, in practice, the money may never reach the local level in 2015-16.
In conclusion, as a battle-hardened Whitehall warrior, I have to say that I suspect that the social care chunk of the £3.8 billion will look a lot smaller when we get to 2015-16. In principle, it is a bold and sensible initiative on which the Government are to be congratulated. However, it will not plug the gap in the base budget to which the Dilnot commission drew attention, and which has worsened since we reported. It is possible that the gap could be partially filled by the pooled budget proposal but a lot of question marks remain over how much of that budget will in practice help social care in 2015-16. I have to say to the Government that because of the funding inadequacies there is a real risk that people will be set up to fail with this new legislation. That is why the Government and, I hope, my own Front Bench should support an impartial review of the funding issues, as proposed in my amendment. I beg to move.