Social care funding needs to rise 3.9% a year to meet growing demands

Published on 28th May 2018

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Social care funding needs to rise 3.9% a year to meet growing demands

IFS study warns of pressures on health and social care system

Published on 28th May 2018

Social care funding will need to increase by 3.9% a year to meet the needs of an ageing population and an increasing number of younger adults living with disabilities, a report by the Institute for Fiscal Studies has warned.

Pressures on social care spending are increasing and, if we continue with something like the current funding arrangements, adult social care spending is likely to have to rise by 3.9% a year over the next 15 years taking an extra 0.4% of national income, relative to today, the report added.

“If the widely acknowledged problems with England’s social care system – of limited eligibility, low quality and the perceived unfairness of the current, uncapped, means test – did result in reform, spending on social care would need to increase at a faster rate,” said the IFS.

Furthermore, just to keep the NHS providing the level of service it does today would require an increase in spending by an average 3.3% a year for the next 15 years – with slightly bigger increases in the short run to address immediate funding problems.

This would mean health spending rising faster than national income and would take health spending from 7.3% of national income today to 8.9% of national income by 2033–34.

“To secure some modest improvements in NHS services, funding increases of nearer 4% a year would be required over the medium term, with 5% annual increases in the short run. This would allow some immediate catch-up, enable waiting time targets to be met, and tackle some of the underfunding in mental health services,” said the report.

Putting these figures together and health and social care spending is likely to have to rise by 2–3% of national income over the next 15 years, added the report which has based the figures on a ‘bottom-up’ modelling of supply and demand factors in the health and social care sectors.

Researchers from the Health Foundation and the Institute for Fiscal Studies use a different approach from the more usual ‘top-down’ methods for forecasting spending. It builds up spending needs from detailed models of demographic change, population health and cost data.

Paul Johnson, director of IFS and an author of the report, said: “We are finally coming face to face with one of the biggest choices in a generation. If we are to have a health and social care system which meets our needs and aspirations, we will have to pay a lot more for it over the next 15 years. This time we won’t be able to rely on cutting spending elsewhere – we will have to pay more in tax. But it is a choice: higher taxes and a health and social care system which meets our expectations and improves over time, or taxes at current levels and a more constrained health service delivering less than we have become accustomed to”.

Cllr Izzi Seccombe, Chairman of the Local Government Association’s Community Wellbeing Board, said: “This report lays bare the scale of the additional funding that is required to sustain care and health services over the next decade.

“If the NHS is to celebrate its 100th birthday, then it’s imperative that adult social care is not only given parity with the health service, but seen as a vital service in its own right and fully funded to future-proof it for the rising numbers of people who need care.

“The way councils are successfully using extra social care funding from the Government to meet care and support needs, support the provider market and reduce delayed transfers of care – reducing delayed days by 30 per cent since July 2017 – should incentivise government to fully fund our social care system and play its part in raising the profile of this vital service.

“Adult social care is facing a sinkhole in funding which is putting at risk provision of care for a growing number of people of all ages with care needs. Without an immediate injection of cash, even more providers will either pull out of contracts or go bust, leading to a lack of available care and a decrease in social care’s ability to help mitigate demand pressures on the NHS.

“Government needs to give urgent funding to councils to invest in prevention to reduce the need for people to be admitted to hospital in the first place, which will help to reduce costs to the public purse.

“But we cannot afford to wait for the adult social care Green Paper reforms to deliver; we need action now. As a down-payment on funding reforms, government needs to fully plug the funding gap facing adult social care, which is set to be more than £2 billion by 2020, including £1.3 billion that is needed now to stabilise the provider market,” she added.

Securing the future: funding health and social care to the 2030s




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