From the TUC

Six years on, Dilnot is still an improvement and still not enough

07 Apr 2017, by in Public services

Yesterday I attended a lecture by the economist Andrew Dilnot, hosted by the Resolution Foundation. The lecture was called “A lasting solution to the social care crisis”; it was effectively a relaunch of the proposals of the Dilnot Review.

The Dilnot Review published its proposals in June of 2011, and they formed the basis of the Care Act. Despite receiving royal assent in 2014 and featuring in the 2015 Conservative manifesto, implementation of the Act was delayed until 2020 and appears to have disappeared into the long grass. But then, as now, Dilnot was prescient in identifying the factors driving the need for reform.

Why reform is needed

1. Demographic change

The chart below provides ONS estimates for the changes in population by age group (i.e. what percentage of the total population each age group represented in 2014 and will account for in 2039):

Age groups as share of population, 2014 v 2039

Source: ONS

But because it is based on raw numbers, the chart above underplays the dramatic increase in the percentage of people right at the top of the age range – and the implications for the vastly increased demand for social care services. The chart below shows this:

% change in population by age, 2014-2039

Source: ONS

2. Social care means testing and market failure

The second factor is the abrupt and punitive nature of social care means testing. Once your income rises above £23k, the council cannot help: all social care provision becomes your responsibility. But because no individual knows how long they will live, or what their care needs will be, it is impossible to prepare for the risks involved. People often under-invest, meaning they have run down their assets and eventually fall below the required threshold. Others often under-consume, thereby saving money to pay for care services they do not live long enough to require.

It is not just individuals who face this problem. It is very difficult for the private insurance market to devise a product to cater for long term care needs because they do not know what will happen to life expectancy and morbidity in the future. This leaves them open to huge aggregate shocks, when whole populations live much longer with consequent increases in morbidity (dementia being the most obvious example).

Despite the passing of the Care Act, social care represents a market failure. People don’t know how much it will eventually cost them, so the demand curve for care is effectively flat. Most consumers are reluctant to risk paying for more than the most basic provision if they don’t know how long they will be paying for it. Because the demand curve is flat, there is little to no incentive for the industry to invest in better service provision.

Statistics from the Skills for Change Social Care National Minimum Database, and the Communities and Local Government Select Committee found 60% of care workers have less than two years’ experience, and the annual turnover rate for care workers is 47.8%. This is hardly a surprise considering care workers’ average wage is £7.40 or £8.50 per hour – and many are effectively paid below the minimum wage due to employers failing to pay for travel time or sleep during 24 hour shifts.

Dilnot’s recommendations

The Dilnot Review argued that this is a classic example of a time when the community should pool their risks, via a cap on social care spending. Individuals pay for the care up to a set level, then the community – in the form of the state – steps in and covers the rest. In the event that life expectancy becomes dramatically longer (or heaven forbid shorter) or when other forces come into play that affect the communities’ ability to pay, the cap can be moved up or down. The democratically elected government has the licence and legitimacy to do that, in a way that a private corporation having signed a contact, simply could not.

Once people know how much they will have to pay, they can plan. They can decide if they want to invest in more than the basic provision. This would address the market failure and drive further investment from providers, leading to better terms and conditions for workers. At least in theory.

Why we need integrated health and social care

Should we welcome the return of Dilnot? For all his answers he leaves a range of questions unanswered. Many people on low incomes are already struggling with very high debts long before retirement (see my colleague Geoff Tily on this last week). They may therefore struggle to cover their future care costs well below the level of the cap – especially as in 2013 Secretary of State Jeremy Hunt indicated that the cap would be set at some £70,000, more than double the level recommended by the Dilnot review. And it subsequently became clear that the real figure could still be higher than that.

The reliance on private sector provision also leaves the system at the risk of the kinds of problems that have plagued vital services provided by for-profit organisations. We only have to look to the collapse of Southern Cross in 2011 for a reminder of the stakes involved.

Unions have been calling for an integrated Health and Social care system, paid for out of general taxation for several years. While Dilnot has rejected it, this would address all of the problems above. The community would pool all their risk to provide for long term care needs. They would not need to fear being left without through under investment. At the same time, money currently being saved to provide for care needs that may not appear, could go into productive circulation in the economy.

People would not be left at the mercy of a failed market with no incentive to go beyond the most basic provision. And health care workers would receive the provisions and protections of public sector employees, rather than the being left to the vicissitudes of zero hours contracts in the private sector.

In addition, a universal system affirms a more basic, and important principle: that society should provide for their members when in need. This should apply regardless of income, savings or care needs.

Six years after his report was first published, Andrew Dilnot’s solutions represent a significant improvement, but they are still not the answer.

4 Responses to Six years on, Dilnot is still an improvement and still not enough

  1. Joe Bailey
    Apr 9th 2017, 11:35 pm

    This is not new —— would it be possible to have an

    International Care Workers Day ??. (If not officially sponsored unofficially organised.)
    On the longest Day of the year to highlight urgent issues such as a career structure – pay etc?

  2. Kam Gill

    Kamaljeet Gill
    Apr 10th 2017, 9:36 am

    Hi Joe,

    That’s an excellent idea.

    Kam

  3. Joe Bailey
    Apr 11th 2017, 10:19 am

    If there is a government Green Paper on the care sector, will there be an appeal for a trade union and labour movement submission? (As there was for a recent Green paper on disability. As far as I am aware the government appealed for organisational submissions last November.)
    Can this input from individual trade unions and trade union organisations be benchmarked against the scope and efficacy of the trade union labour movement consultation on the Disability Green Paper?
    Did individual members of trade unions sense that their views were processed correctly? Could the feedback mechanism be improved? (Value for money- pay off.) Were the charities (third sector) submissions on the green Paper on advisability congruent with TUC policy?
    The concept of equality of public sector employment provision — statistically per constituency — per population has been proposed in the past for public sector jobs — in the same style as that of analyses of government infrastructure spending.
    Would the implementation of this policy improve the delivery of services in the care sector?

  4. Three approaches to social care: what are the parties’ plans?
    May 18th 2017, 5:27 pm

    […] wrote a blog discussing the limitations of the Dilnot proposals here, and at the time my former colleague Richard Exell wrote an excellent summary, […]

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