My Lords, in some ways this is a reprise of an earlier debate we had in Committee, but none the less it has been valuable. I am grateful to all noble Lords who have contributed. I begin by saying to the noble Lord, Lord Warner, that I am in total agreement that care and support funding is vital. It is essential for the success of the reforms we
have been discussing that these services are fully funded. I start by assuring the noble Lord on one key point, which is that the costs of these reforms have been clearly set out in the Bill’s impact assessment, as was our duty.
I listened with care to the case put by the noble Lord that the Office for Budget Responsibility should conduct a review of care and support funding. I do not believe that such a review would be necessary or desirable. As noble Lords will be aware, the Government recently announced the conclusion of the spending round for 2015-16. It is only right that decisions on care and support funding are taken by the Government at the same time as spending plans are set for all areas of government. It is the job of the Government to decide on priorities and what is affordable. Any further review by the OBR would clearly cut across that process.
There is also an issue about the OBR’s autonomy. The OBR performs its duties independently with complete discretion to determine the content of its publications and its programme of research and analysis. It would not be in keeping with the OBR’s duties or its independence to have the Secretary of State commission a report in the way the noble Lord, Lord Warner, suggests. The main duty of the Office for Budget Responsibility is to examine and report on the sustainability of public finances, including a statutory obligation to publish an annual fiscal sustainability report. The most recent of these was published this month and already includes long-term projections of care and support spending, taking account of the cap on care costs and the extension of the means test. A further report, such as the one proposed by this amendment, would risk duplication and repetition.
It will perhaps be helpful if I confirm that the projections set out in this OBR report are broadly in line with the department’s own, and it is on the basis of this analysis that I am in a position to say that the spending round settlement delivers the funding required for the care and support system. We have identified the financial burdens facing care and support, including those arising from this Bill and demographic pressure, and we are putting enough money in to maintain service levels. This will ensure that care and support can be protected and will allow us to deliver on the reforms set out here.
However, we need to do more than simply put more money into care and support. We also need to improve the way that health and care is delivered, and in particular how these services work together. That is why the settlement includes a £3.8 billion pooled health and care budget—the noble Lord, Lord Warner, referred to this—which will be given only on the basis that services are commissioned jointly and seamlessly between the local NHS and local councils.
This is, in many ways, a historic moment. What we intend to do represents a genuinely new departure. It will help to ensure everyone gets a properly joined-up service, with people getting the care they need from whoever is best placed to deliver it—whether that is the NHS or the local authority. Chris Ham from the King’s Fund has welcomed this, calling it,
“a much more ambitious approach to delivering integrated care and a real opportunity to improve the co-ordination of services for patients and service-users”.
We will ask local areas to work collaboratively together in drawing up plans for the use of this money, ensuring that the priorities of both the NHS and care and support are addressed. All plans will include a commitment to protect care and support, ensuring that this money goes where it is needed.
The settlement also provides the funding for the commitments and duties set out in this Bill, and factors in the growth in demand from an ageing population and a growing number of disabled people. With additional pressure on the system, we must ensure that the NHS and care and support services are working together to offer the best possible services for patients, while also addressing the growing demand on the system, which noble Lords have rightly referred to.
The creation of pooled budgets will help to achieve the more efficient use of resources in the system as a whole, driving down costs by tackling expensive pressure points in the system, like A&E, by improving preventive services, reducing unplanned hospital admissions and by allowing people to stay in their homes and live independently for longer. It is intended that £1 billion of the pooled fund will be linked to outcomes achieved, ensuring that local areas are incentivised and rewarded for achieving better outcomes, including those that could reduce financial pressure on the system.
Noble Lords have rightly referred to the pressure on local authority budgets. Of course, we recognise that the last spending round provided local government with a challenging settlement. That is why we took the decision to provide extra funding to help local authorities maintain access to services; that includes £1.1 billion in 2014-15. In fact, spending has been roughly flat over the period since 2010-11. The latest survey shows that councils are expecting a small increase in expenditure next year. The survey also shows that the vast majority of the savings that have been made have been efficiencies. Councils have largely been able to protect services. They should now, however, be looking at how they can transform care by innovating and exploring new ways of working. Many local authorities are achieving much greater integration between health and care services and thereby improving the care for those they look after.
The latest ADASS budget survey shows that only 5% of directors of adult social services believe that quality has suffered as a result of the savings they have made. Five per cent is regrettable but it is a lot less than some of the figures that we see printed in the media.
In 2012-13, bed days lost because of delays attributable to social care were nearly 50,000 fewer than in the previous year. One of the other criticisms one hears is that quality is getting worse in social care and that that is having an impact on the NHS. But if we are going to continue to make these sorts of improvements, we need radically to rethink how we deliver health and social care and move to a more integrated system.
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To answer one or two of the questions posed by the noble Lord, Lord Warner, on the £3.8 billion pooled budget, half of this fund is made up of funding that is currently spent across the health and social care system on areas relevant to both services, while the other half, nearly £2 billion, is additional NHS money. To access this funding, all areas will need to produce local plans, signed off by the NHS and local authorities, for how the money will be used across health and social care. These plans must demonstrate that social care services will be protected. Furthermore, £1 billion of the funding will be linked to outcomes achieved, as I have outlined, based on a combination of locally and nationally set outcome measures. Half of that funding will be paid at the beginning of the year, based on performance in the previous year, and the remainder will be paid in arrears against the performance in year. The noble Lord, Lord Warner, asked me about that. To flesh it out a little more, we are working with our partners in the sector, including NHS England and the Local Government Association, on the detail of the pooled budgets, but the principle is that only £1 billion will be subject to payment by performance. All the pooled budget will be subject to local areas, protecting social care—that is a key point—helping to ensure that the money does not just compensate for cuts to social care services.
The noble Lord asked whether the pooled budget includes £335 million that we have announced for funding reform. The DCLG will pay a £285 million grant to local authorities to meet the revenue costs of these reforms. There is also £50 million in the pooled budget to help local authorities improve their IT systems to help to prepare for the reforms as well to integrate systems between health and care.
The noble Lords, Lord Lipsey and Lord Hunt, spoke about self-funders and the disparity that we sometimes see between the rate that self-funders have to pay and that which other people have to pay. Local authorities and individuals can pay different prices for care. This can be because individuals have chosen premium facilities or because the local authority has negotiated a lower price in exchange for buying care for a large number of people. The Government are clear that local authorities should have regard to the cost of care when setting their prices. The noble Baroness, Lady Wilkins, asked whether I could give an assurance that funding has been calculated for independent living fund transition. I can assure the noble Baroness that we have taken account of that issue.