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Author: Age UK
Published on 04 September 2014 12:01 AM

The way that health and social care are currently organised and funded creates confusion, perverse incentives and much distress for individuals and families.


An independent commission established by The King’s Fund has concluded that a new settlement is needed for health and social care to provide a simpler pathway through the current maze of entitlements.

Redesigning care

The commission, chaired by Dame Kate Barker, proposes a new approach that redesigns care around individual needs regardless of diagnosis, with a graduated increase in support as needs rise, particularly towards the end of life.

The final report of the commission recommends:

  • moving to a single, ring-fenced budget for the NHS and social care, with a single commissioner for local services
  • social care for those whose needs are currently defined as ‘critical’ should become free at the point of use
  • as the economy improves, free social care should be extended to those whose needs are currently defined as ‘substantial’
  • by 2025, some support should be provided to those whose needs are currently defined as ‘moderate’ but this should continue to be on a means-tested basis.

It also recommends integrating Attendance Allowance, the benefit paid to older people with care and support needs (which would be renamed Care and Support Allowance) within the single budget for health and social care.

Mounting funding pressures

Although mounting funding pressures are being faced in both the NHS and social care, the commission’s report challenges politicians to look beyond the deficit and engage the public in a debate about future care and how it will be funded. The commission calls on the government to plan on the assumption that public spending on health and social care combined will rise to between 11 and 12 per cent of GDP by 2025. These levels will be broadly comparable to current expenditure on health alone in many other countries.

A partnership model, in which the costs of social care will be shared between individual and the state, would be phased in over time to provide fairer, more consistent entitlements to social care.

The move to make all care free for those with critical needs would end the confusing distinction between social care provided in residential care homes and NHS Continuing Healthcare, which is provided free of charge in nursing homes – a huge source of frustration under the current system.

After careful consideration, the commission rejected extending charges for NHS services, with the exception of prescription charges.

Instead, to pay for these changes, the report argues that the bulk of the additional funding should come from the public purse, with wealthier people and older generations – the main beneficiaries of the changes – contributing more. To fund the initial roll-out of the new settlement, the report recommends:

  • radical changes to prescription payments, reducing charges to as low as £2.50 but significantly reducing the number of prescriptions exempt from charges
  • limiting free TV licences and the winter fuel payment for older people to those on pension credit
  • requiring people working past state pension age to pay National Insurance at a rate of 6%.

The report also recommends that new recipients of NHS Continuing Healthcare should pay the costs of their accommodation, as those receiving residential social care do now.

As the more generous elements of the new settlement are phased in, the report recommends further measures to raise revenue:

  • a 1% increase in National Insurance contributions paid by those over the age of 40
  • an increase of 1% in National Insurance paid by those earning more than £42,000 a year.

The report also recommends that a review of wealth and property taxation should be undertaken to raise additional funds.

The commission recognised that the Care Act and Dilnot reforms represent an important step forward but considered that they will not be sufficient to address the funding and service challenges that lie ahead.

‘Our system is not fit to provide the kind of care we need’

Kate Barker, chair of the commission said:
‘Our challenge was to look at the big and difficult questions about the kind of care system, and indeed what kind of society we wish for ourselves and our families. The prize, if this kind of change can be achieved, is huge – a more integrated service, a simpler path through it, more equal treatment for equal need, a better experience for people who need care and their families.

‘We have concluded, as others have before us, that our system is not fit to provide the kind of care we need and want. We propose radical change, greater than any since 1948, that would bring immense benefit to people who fall between the cracks between means-tested social care and a free NHS. This includes people at the end of life and those with dementia or other conditions where too often there is a conflict about who pays at the expense of what people need.

‘Our proposals would continue a system where costs are shared between the private individual and the state but with the taxpayer carrying a heavier load of that cost than at present. The cost of a more generous settlement, though large, can be afforded if phased in over time.’

Professor Chris Ham, chief executive of The King’s Fund said:
‘We asked Kate and the commission to tackle some of the most difficult issues in public policy. They have delivered a robust and convincing report, which remakes the case for change powerfully and makes recommendations that could provide a better and more generous care system based on genuinely long-term thinking.

‘The proposals as set out by the commission may not appeal to politicians, fearful of commitments of greater public expenditure, but these issues cannot simply be ignored. The commission is clear – there is no “do nothing” option. As the costs of what we now classify as social care grow, these will increasingly fall to individuals and families, creating fear, uncertainty and inequity on a scale that the public would find completely unacceptable if applied to health care. The recommendations are therefore radical – tinkering around the edge of our systems of care is not enough to deal with the challenges we face.

‘The issue is not whether health and social care are affordable in future –they have to be paid for one way or another. The issue is how far they are publicly or privately funded and at what level of quality and decency. This report lays down a challenge to politicians of all parties to acknowledge the unsustainability of current funding for health and social care and to set out, ahead of the election, some of the difficult choices that need to be made.’

Support for an integrated, properly funded system

Caroline Abrahams, Charity Director at Age UK, said:

'Age UK fully supports the Commission's ambition for an integrated, properly funded health and care system and we applaud Kate Barker and her fellow Commissioners for the rigor and tenacity with which they have approached their task. For too long policymakers have failed to grasp this nettle and the result is the fragmented, underfunded health and care services we see today, which are increasingly unfit for the purpose of caring for our ageing population, despite the best efforts of the many good people who work hard to deliver them.

'The really tough question is how to pay for the transformational changes that are needed. Here we feel bound to point out that taken together, the Commission's proposals would constitute quite a big hit on the incomes of many older people. We worry especially about the potential impact on older people with modest means, who sit just above the poverty line. In addition, we think many older people will question how good a deal it is to be asked to exchange the certainty of more money today for the possibility of better care tomorrow.

'For this reason we agree with the Commission that a lot more work needs to be done on detail of what a transformed, properly integrated system would look like, and how we can get there in a way that the majority of older people will want to support.'

For more information: Call Age UK Advice: 0800 169 2081