The real debate on care funding reform is still to come

Reforms could be affordable if the government took the difficult decisions about which households contribute to a new system, by James Lloyd

The government’s recent progress report on care funding reform left the sector bitterly disappointed. Coming more than a year after the Dilnot Commission and at a time when the social care system is stretched to breaking point, huge expectations – and hope – had built up around the report. The government’s announcement that any decision on reform will be delayed until the next spending review met with a scathing response.

In truth, the progress report was never really likely to contain major policy announcements on care funding. At a time of double-dip recession and the eurozone debt crisis, the treasury wants to keep a tight rein on public spending decisions. In practice, this means restricting all major decisions on who gets what to the spending review process.

Rather than commit to the Dilnot Commission’s “capped cost” model as a way of delivering on this principle, the government instead said it cannot commit to reform while faced with a structural deficit in the public finances. In other words, deficit reduction is more important than reforming how we pay for care.

To underline this position, the Office for Budget Responsibility published its annual review the day after the care funding progress report, and highlighted again that because of population ageing, we face a growing bill just to maintain the current baseline care system.

So rather than sign up to the “capped cost” model, the government now wants to explore whether it’s worth implementing a low-cost less generous version. Or, alternatively, an opt-in voluntary version run through a state-sponsored insurance scheme in which individuals choose to pay a premium in order to obtain greater protection from catastrophic care costs.

However, floating the idea of an opt-in voluntary scheme for individuals to protect themselves against catastrophic care costs is more significant than the government and many in the sector realise. Why? In suggesting a voluntary “capped cost” model – which could become compulsory over time – the government is recognising that households have the wealth to contribute to a better care funding system.

And since this is the case, it means that reform could proceed in a way that is cost-neutral to the treasury, and would not interfere with the government’s deficit reduction strategy. Put bluntly, while trying to argue that care funding reform is unaffordable, the government has admitted that it could be affordable if it were to take the difficult decisions about which households contribute to a new system.

This is why it is so frustrating that the government didn’t use the opportunity afforded by its progress report to kickstart and inform a public debate. It was a chance to discuss where the money could come from to close the current funding gap in the current care system, as well as to implement a new, more generous partnership between individuals and the state in paying for care.

Instead, we are left with recent reports from the Strategic Society Centre, Institute for Fiscal Studies and Nuffield Trust that have all sought to do this.

However, the gap between now and the next spending review provides an opportunity for campaigners to shift public attitudes toward the difficult decisions – especially tax rises or spending cuts elsewhere. These measures could make care funding reforms cost-neutral for the Treasury, and less politically toxic for the government.

Although it may not be what exhausted campaigners or overstretched care providers want to hear, the real debate on care funding reform is still to come.

James Lloyd is director of the Strategic Society Centre.