Residential Care: Cost Cap

Lord Turnberg Excerpts

Thursday 10th December 2015 Lords Chamber

[Lord Turnberg (Lab)]

My Lords, I, too, am grateful to my noble friend Lady Wheeler for introducing this debate and pointing out so clearly all the difficulties we face. It is difficult not to be gloomy and I am afraid I shall not lift the gloom. Way back in 2011, we had a harbinger of what might happen to care homes when Southern Cross failed with the loss of a large number of beds. Local authorities, which are mandated to care for their needy citizens, were left to pick up the problems; they cannot refuse to do so. Now we are starting to see more of the same, as other large providers of care homes get into difficulties. The latest is Four Seasons, as we have heard, which finds that offering this type of care is increasingly non-viable financially. As my noble friend Lady Wheeler said, it is already in considerable debt, as has been laid out in stark terms in the Financial Times. We could see the loss of many more beds and Four Seasons is unlikely to be the only one so affected.

It is not difficult to see how we have got into this situation. Government funding for local authorities has been severely squeezed and the impact is clear. Since 2010 there has been a fall of 25% in the number of people receiving social care, and the fees that care homes receive from local authorities are strictly constrained. To add to their problems, they are now faced with having to pay their staff the new living wage. Quite right, so they should—these staff have been disgracefully underpaid for the critically important work that they do—but it will cost the sector some £2.3 billion over the next four years. The net result is that care home providers are hit with the double whammy of increased costs and limited income. It is little wonder that they cannot break even. Private domiciliary care providers such as Allied Health have found themselves having to face up to the extra costs due to an EU directive obliging them to pay for journey times to and from domiciliary visits, when hitherto they have been able to get away with it.

It is not only on the supply side that there are difficulties; the demand side is difficult, too. Since 2009-10, the over-75s have increased by about 500,000, a 9.5% increase. It is not simply the increase in numbers that is problematic; the elderly are living longer with disabilities. It does not help to know that in the UK the time between the onset of disability and death is now seven years. That is seven years of dependency. That compares very unfavourably with Norway, where people suffer only two years in need of support before they die.

Of course, many of the causes of dependency lie outside the remit of the Department of Health, but public health clearly does not. While lip service is paid to prevention in all the health plans that one reads about, it is sad to discover that funding for public health is to be cut—by something like £800,000, I am told. That seems an extraordinary thing to be doing when we are trying to reduce the burden of disease. I well understand that it would be difficult for the Minister to change Treasury plans, but is there anything he can do to suggest that it would mitigate the impact on public health?

All this is leaving local authorities and hospital services to pick up the tab, and neither is in a good position to do so. The fall in government support for local authorities is supposed to be bridged by permission to increase their council tax by an extra 2% a year, over the 2% that they already have the flexibility to raise, for the next four years. However, to raise a total of 4% a year across the country consistently for several years is a difficult ask, and it will be much more difficult in poorer areas of the country.

As we have heard, they will have access to the better care fund, money transferred across from the NHS, but they will not receive much, if any, for the next two years. By 2021 they will get about £1.5 billion, and it is interesting that this transfer just about matches the extra that the NHS is due to get. So there is not much relief for the next two years. Local authorities will inevitably have to raid other budgets—but they will already have been doing so for some time, and there is little slack left in the system.

I did not want to talk about the hospital sector in this debate, but it is hard not to when we know that some 30% of beds are occupied by patients who do not need to be there. Everyone knows that. If nursing homes start closing, more patients will be admitted unnecessarily to a place quite unsuited to their needs, and there they will stay for far too long. It is certainly true that the NHS received a very welcome boost in the recent CSR. We should not look this gift horse in the mouth as it is sorely needed, but I fear that it will be only a temporary relief. As the noble Lord, Lord Lansley, said, we desperately need a more basic change in the way that we provide health and social care. It seems inevitable that we will move much more rapidly to a joined-up health and social care system, the fully integrated service that is talked about so glibly. I am not sure that it will necessarily save money—indeed, it may even cost more to get it off the ground—but that must be the way to go for the patients.

Here and there across the country, efforts are being made by innovative and dedicated managers to do just that, but they are having to operate against the grain of the bureaucracy that we have set up centrally. What progress has been made since David Dalton’s report to smooth the path to integration by government, and can we expect a more rapid uptake locally? It will not solve all the problems we face—I fear that more funding for social care by one means or another will inevitably be required—but it will go some way to improving the care of a large number of our most vulnerable people who are currently being shipped around or, even worse, being neglected completely.