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by Jamie Cater 13th November, 2015

Paying to Care

The last few weeks have seen a growing urgency in the debate over the future funding of social care as the Spending Review approaches. Submissions to government from providers, pressure groups and think tanks have all expressed fear at the financial state of social care, especially with the introduction of the National Living Wage from April 2016 in a sector dominated by workers at the lower end of the income distribution.

Yesterday the Resolution Foundation joined the clamour of voices demanding that the Chancellor guarantee more public funding for social care. Despite having been cited by the Chancellor as the inspiration behind his National Living Wage when he announced it in July’s Budget, the think tank has been increasingly cautious about supporting the policy, warning that the impact it will have on sectors such as social care should not be underestimated. It finds in its new report that the government will need to find an extra £1.4 billion just to meet the cost of the National Living Wage in the care sector. It estimates that up to a million workers will benefit, but that the sector as a whole may be left further out of pocket by their pay rise.

The Resolution Foundation argued that the only viable option is a drastic increase in public funding as cost pressures and demand for services continue to grow. An increase in productivity would be difficult to achieve in a short timeframe, and sits awkwardly with the pressure on homecare providers to commit to longer visits. There is little that providers can do to trim their costs (or profits, where they exist) any further, and greater restrictions on eligibility would be undesirable. It also notes a risk of further compression of payscales and non-compliance with the National Minimum Wage in a sector in which both have been identified as problems.

Will the government heed the anguished cries of think tanks such as the Resolution Foundation and ResPublica – who warned on Wednesday that 10% of residential care beds could disappear before 2020 – as well as local authorities and providers, and include a substantial uplift in funding in the Spending Review in less than two weeks’ time? Although the Department for Communities and Local Government has pledged that no cuts will be made to frontline services as part of its agreed spending reductions, it seems unlikely that a major boost is on the cards. The best the sector may be able to hope for is being allowed to keep all of the money the government will save from the delay in bringing in the cap on individual contributions to the cost of social care, thought to be in the region of £6 billion.

It is symbolic of the funding troubles facing the sector, and what a vexed political issue they have become, that the only money likely to be ploughed by the government into ensuring services continue to be run is that which has been saved by further avoiding its only solution so far for a more sustainable settlement for service users. The money will provide some relief to the sector but would fall short of the comprehensive, long-term that many are calling for.

While the National Living Wage has been welcomed by many, including in the care sector itself, it has raised concerns that the government has not fully thought through what the effects will be on an industry that has already been at the forefront of austerity. While George Osborne may give a nod to social care in his statement on 25th November, there could be further hardship ahead.

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