Getting REAL on future health and social care funding Looking to the long term

Over the next week, the Chancellor will deliver both the Budget and the Spending Review. The funding announced will have a critical impact on how the NHS and social care recover from the pandemic, catch up on the backlog of planned care, and deliver on the NHS Long Term Plan.

We already know that additional future health and social care spending will be funded by the new Health and Social Care Levy. We also know that – a decade after it was proposed by the Dilnot Commission – a lifetime cap (of £86,000) will be introduced on the amount that individuals must pay for care before they are eligible for state-funded care. This, combined with changes to the means-test thresholds, will benefit the whole of society, not just those in expensive homes in the South East.

The additional funding is welcome, and the cap on care costs is long overdue. However, as Anita Charlesworth wrote in Prospect magazine, the scale of the pressures on the system means there is a sizeable risk that the funding will not be sufficient to deliver health and care services that meet public expectations. Meanwhile, the new cap on care costs will solve some of the challenges for the social care system, but others remain.

Our first long-term projections for health and social care

The core mission of the REAL Centre is to provide independent analysis and research to help inform better long-term decision making in the NHS and social care. The upcoming long-term spending review – the first since the REAL Centre launched – gives us an opportunity to help inform decisions on government funding. REAL Centre colleagues contributed to the Health Foundation’s submission to the Autumn Budget and Spending Review 2021. We focused on future capital and workforce requirements and the need for additional funding for social care, while the Health Foundation also highlighted the need to prioritise investment in the public health grant.

Following this submission, we recently published the REAL Centre’s first set of funding projections. These projections set out the long-term funding requirements for health and social care in England in 2030/31, and what this means for the size of the workforce.

Last month we also looked at how much the UK spends on health care compared with other countries experiencing similar pressures, such as an ageing population and an increase in chronic disease. Overall, the UK spends more (8%) than the OECD average (6.4%) on health as a share of GDP, but less than the G7 average (9.9%). Where the UK looks quite different is in fixed capital spending, which includes assets like buildings and MRI scanners, where spending is significantly lower than other advanced economies. This is important as higher levels of capital will tend to increase the productivity of the workforce and the quality of care they can provide for patients.

Back to the backlog

Many of the pressures that are driving up funding requirements for the NHS and social care pre-date COVID-19 and will persist beyond the pandemic. However, the past 18 months have made delivering health and social care harder and more costly. There are widespread reports of staff burn-out, and a mounting backlog of patient care. Last month our evidence on the scale of disruption to primary care services through different waves of the pandemic was presented to SAGE.

We outlined the consequences of the backlog for patient health and quality of life in our recent analysis of the implications of delayed care for patients requiring hip replacements and care for diabetes. The analysis also showed that the backlogs and the consequences of delayed care are not distributed equally across the country. Prioritising patients and maximising efficiency in a way that does not exacerbate inequalities is not straightforward – and is a challenge that will be repeated across care for years to come.

What now for social care?

The cap on social care costs announced last month was a long time in the making. The reform addresses perhaps the greatest hole in the current social care system: that it does not protect people from the risk that they will face extremely high care costs in later life. This is not good for individuals, but also contributes to inefficiencies within the care system and the wider economy. The cap is therefore very welcome.

There are however a range of other issues affecting social care, which means that the introduction of the cap does not mean ‘job done’. Many of these issues were discussed at Health Foundation events at which Anita Charlesworth spoke during the recent party conferences. The cap will not tackle unmet need, fix the fractured provider market or address challenges in the social care labour market. And without funding for improved access to care, the cap will disappoint those it aims to help.  Finally, the cap is typically not relevant to younger adults who currently account for half of all publicly funded social care spending and have suffered disproportionately from the COVID-19 pandemic.

What’s next from the REAL Centre?

Next month, we will publish a report looking at nurses’ pay over the long term. And on 2 November, Hilary Cottam will present the second REAL Challenge annual lecture, ‘A radical new vision for social care’, which will move beyond funding reform and take a fresh look at how we think about care. We hope you can join us.

Elaine Kelly (@ElaineKTHF) is Head of Economics Research for the REAL Centre.