The Health and Social Bill 2021, currently going through Parliament, is intended, amongst other things, to:
- sort out the under-funding of social care;
- remove the need for people to sell their houses to pay for their care;
- promote joined-up service delivery;
- replace the competitive model with a collaborative one.
It claims to leave flexibility as to how services are delivered at a local level, although the drafting perpetuates much of the mindset of what has gone before. Flexibility is essential for innovation and development: uniformity breeds stagnation. It is yet to be seen how much delegated discretion there will be.
However, it is doubtful whether what is proposed will achieve the stated objectives and this article takes a ‘whole systems approach’ to see if the money the Government intends putting in might be better spent.
The cap on care home fees
The Government estimates it will cost £5.4bn, in lost income, to put a cap on the amount which can be spent on care home fees at £86,000 and raise the capital disregard from £14,250 to £20,000 and the threshold after which the full cost is paid from £23,250 to £100,000. Between these amounts residents are deemed to have £1 per week income for every £250 capital (including their house). These changes will clearly benefit the better off and rich in that people who do not have sufficient savings will still have to sell their house to pay their care home fees.
Would the £5.4b have been better spent on pensions?
There are currently 12.4m people drawing their state pensions of whom 416,000 are in care homes. There are two million older people living in poverty many of whom, before the abolition of the ‘default retirement age’ in 2012, were forced into retirement and condemned to spending the rest of their lives in poverty. These people are not entitled to the new state pension either as they reached ‘state pension age’ before April 2016.
There is a correlation between income and demand upon the NHS in all age groups. Britain with one of the lowest State Pensions in Europe spends 80% of its health budget on older people. The Netherlands with the highest state pension in Europe spends just 60% of its health budget on older people. So, what would happen if this money were to have been put on pensions instead?
£5.4bn would put £435 per year on the state pension which is not a great deal – but it would be a start. This article builds upon this and aims to raise the basic state pension to 60% of average earnings and follows the consequences of this through the health and social care system.
This whole systems review aims to:
i) enhance the quality of life of older people;
ii) reduce demand upon health and social care;
iii) improve the cost effectiveness of both health and social care;
iv) ease the tax burden on working people, and;
v) enable those older people who need long term care to pay more by handing over their income up to the cost of the care home less their personal allowance, as they do now, without having to take their savings or house into account
Unfortunately, the Government, in its wisdom, has chosen to reduce the income of older people by stopping the free television licence and reneging on the ‘triple lock’, thereby increasing, not reducing, the demand upon health and social care. The pressure on the health service has been further racked up by stopping the £20 per week on income support pushing families deeper into poverty. The additional £36bn the government has pledged for the NHS will soon be absorbed by the additional demand being generated. Perhaps, that also, could have gone on pensions? This could have added an additional £2,903 to the state pension – bringing it up to £10,493 per year.
The state pension is not tax free but counts against one’s personal allowance; therefore, some of this additional pension would be clawed back from people with occupational or private pensions.
There are an estimated 1.5m older people in receipt of pension credit which makes the state pension of £137 per week up to £177.10 per week (or the household income up to £270.30p for a couple) with an estimated take up of just 63% (which illustrates why universal benefits are to be preferred to selective benefits due to the stigma attached which impairs take up).
Given that one of the intentions of this review is to replace ‘selective means tested benefits’ with ‘universal benefits’, with income redistribution done through taxation, the money spent on such benefits can also be added to the State Pension. The saving on pension credit would be £4.9bn, adding a further £394 to the pension, housing benefit and council tax relief £87m, adding a further £6.95, and the winter fuel allowance another £200 bringing the state pension up to £11,093.
Free bus passes have not been included as they are already a universal benefit and encourage both older people to get out, combating social isolation, and the use of public transport. In many ways they are also a subsidy to the less profitable routes and help to combat global warming.
As this article is looking at different ways of spending the same money the 1.25% precept on National Insurance which it is anticipated will raise £36bn over the next three years, presumably £12bn per year, can also be included. Translated into pension income would add another £967 to the State Pension bringing it up to £12,060 per year.
The National Living Wage, for a 37-hour week, is £18,278. I recently saw an advertisement for a bus driver at £10 per hour. Driving a double decker bus is a very skilled and responsible job. Compare these rates to the millions paid each year to the chief executives of the major companies. Pascal Soriot of AstraZeneca was the highest earning CEO in 2020, making £15.45 million, ahead of Brian Cassin of Experian who made £10.3 million. According to a report by the Paris-based World Inequality Lab, 2020 saw the steepest increase in billionaires’ wealth on record. In contrast 100m additional people, worldwide, sank into extreme poverty.
Average earnings in the UK (not to be confused with median household income), at the time of writing were, £30,212 per year. So, the state pension at £7,155 is currently 23.7%% of average earnings. The figure reached above would be 39.9%. The definition of poverty is anything less than 60% of median household income. Given that 3.8m older people live alone, 78% of whom are women, the intention would be to raise the State Pension to 60% of National Average Earnings or £18,127 per year – slightly less than the living wage. This would lift all older people out of poverty but still be some way behind most of Europe. This would cost an additional £42bn.
This could be offset, in part by people who go on working, beyond the age of eligibility for the state pension, continuing to pay National Insurance (raising £4.1bn – which the Government intends doing from next year) and not drawing their state pension until they retire (saving £8.24bn) with phased arrangements – for example one day’s work and 4/5th of the pension etc.
If the estimated lack of take up of pension credit is correct, one can assume that there are 9.6m older people with other income who are not entitled to pension credit. It is highly likely that their additional pension, under these proposals, would be taxed at 20% putting £19bn back in the pot.
Therefore, there is a shortfall of just £10.7bn
So how can this be found and what would be the payback?
Integrated Care Systems and Integrated Care Partnerships
The Health and Social Care Bill makes Integrated Care Systems and Integrated Care Partnerships mandatory and prescribes how they should be constituted. These appear to be a more bureaucratic, cumbersome and costly reincarnation of the old Statutory Health and Social Care Joint Consultative Committees which brought together representatives of the old county councils, district councils, health authorities and voluntary sector and which were abolished some 20 years ago. These were negotiating meetings, with recommendations taken back to the respective authorities for decision, as a group of agencies could not impose their views on another. Regrettably, the proposed Integrated Care Partnerships appear to be more concerned with protecting private providers than they do the provision of integrated care.
Successive governments have tried to get agencies to work more closely together from ‘joint funding’ between health and social services in the 1970s to the pooling of budgets. But no Government has grasped the nettle of the lack of common geographical boundaries, different funding streams and different lines of accountability which have been the real impediments.
Social Services (now Children’s and Adults in England) are county council or unitary authority responsibilities, as is education. Housing is a district council or unitary authority responsibility. Hospital and community health services are provided by NHS Trusts directly funded from income tax and national insurance and not coterminous with local authority boundaries. And the police authorities serve geographical areas which are larger than those of the local authorities.
Therefore, as a first step, the answer might be to bring all services together in either the old county council or, in some cases, police authority boundaries, returning the NHS and the Police to local democratic scrutiny within central government legislation, in-order to achieve common geographical boundaries, common funding streams, common lines of accountability and economies of scale.
There would be huge immediate savings on the cost of democracy, management and support services as a result of fewer local authorities and including health, police and ambulance.
Prior to the establishment of NHS Trusts, my counterpart in Health managed nine hospitals (five of which were regional), community services and the Family Practitioners Committee (GPs) all with a management team smaller than is now found in each NHS Trust.
There are currently 24 county councils, 181 district councils and 58 unitary authorities in England and 22 county councils in Wales. Prior to the last Local Government re-organisation there were 8 Social Services Authorities in Wales and 116 in England – but the latter included Metropolitan Borough Councils which is where the Police Authority Boundaries would be used – e.g. Greater Manchester. There are currently 223 NHS Trusts where previously there were 124 Area Health Authorities. There are 39 Police Authorities in England and 4 in Wales.
Therefore, it is suggested that these 551 organisations be merged into around 120 county council unitary authorities. This would make the Police more local and bring police, fire and ambulance together. This would simply be going back to the size of geographical area previously served by social service departments and making them the new enlarged unitary authorities. Parish councils (community councils in Wales) would be retained with their current powers.
It has proved difficult to get an estimate of the cost of democracy, in terms of elections, meetings, members’ remuneration and expenses or the cost of non-executive directors on NHS trusts. The number of councillors would be substantially reduced, although electoral wards would remain as now, and non-executive directors would disappear altogether as health was returned to local democratic control. A rough guestimate of the cost of remuneration of non-executive directors on NHS trusts would be £50,000 per trust or an immediate saving of £11.2m.
However, an average district council with 60 members seems to spend around £500,000 on members’ allowances and expenses. Therefore, one could assume, a saving here of around £90.5m. There will also be the saving on elections and meeting expenses. An immediate saving would be the £34m on district council elections or £8.5m per year.
So, with the non-executive directors there would be an immediate minimum saving on the cost of democracy of £211.9m – for a system with more democratic control!
There would be 120 chief executives instead of the current 551 at an estimated saving of £86m. The number of other chief officers would also be greatly reduced – for example there would be 120 directors of housing instead of the current 261 saving £17m. So, it would be an underestimate to say that in the excess of £426m would be saved on management costs.
Prima facie evidence would suggest that these changes would improve efficiency and effectiveness and save at least £531m towards the £10.7b deficit on pensions.
The purchaser / provider split.
Since the late 80s, health, and the early nineties, social services, have been required to separate out the management of in-house provision from that of purchasing and commissioning. The intention being that it would encourage a mixed economy of care and force quality up and prices down. Clearly this has not been the case in that it doubled management and administrative costs.
That social workers were employed on the ‘purchasing’, rather than the ‘providing’, side also led to a ‘minding’ rather than a ‘mending’ service with an ever-growing case load of dependent people. It also led to over-prescription with providers unable to respond in situ to changing need or priorities and further fragmentation and lack of continuity as different component parts of a ‘package of care’ could be purchased from different providers.
The proposed ‘Integrated Care Systems’ and ‘Integrated Care Partnerships’ will perpetuate this purchaser / provider split and commissioning, despite the stated change from competition to collaboration, rather than integrating services for people in need. It separates the planning (commissioning), from the providing and evaluation. Those engaged in delivering services should be involved in the planning of them and able to ‘plan, do and evaluate’ their work which completes the learning cycle of constant improvement. It is for the Government to determine the ‘what’ (desired outcome) and for those in the field, the professionals, to determine the ‘how’ based on a thorough understanding of the “why” based upon the empirical evidence.
The proposed structure will encourage further transfer from in-house provision to private providers.
There was a ‘mixed economy of care’ prior to the ‘contract culture’ and ‘internal market’.
The voluntary sector was renowned for innovation and development which local authorities were only too pleased to grant aid and local authorities would get a much better return on their money if the voluntary sector was liberated from the straight jacket of the contract culture.
The costly and ineffective purchaser / provider split should be replaced with a new and genuine partnership between statutory sector, voluntary sector, private sector partnership.
Such a philosophical and organisational change is likely to save millions. A conservative estimate would be around £500m nationwide – bringing the pension deficit down to below £10bn.
So what about other resultant structural changes
There is just as much empirical evidence in respect of organisation, management and leadership as there is for medicine, social policy and social work and yet this is rarely applied in practice. For many years, until the late 1980s, BIOSS at Brunel University received Department of Health funding to apply ‘organisational analysis’ to health and social care. The Tom Peters Group has studied cultural change, customer care and leadership. And applying his unique ‘whole systems methodology’ to a hospital in Holland, Christian Schumacher (the son of the author of Small Is Beautiful) was able to achieve a 30% increase in output with higher morale and lower sickness levels amongst staff.
Social service and health service managers are extremely lucky in that the majority of their staff are working in their chosen vocation, it is what they want to do. It should therefore be possible to arrive at a situation whereby they can say, as many sports people do, ‘aren’t I lucky I am doing what I want to do and being paid for it’. Why then is morale reported to be so low?
It often appears that staff are doing excellent work despite the system, instead of the system helping and supporting them in their work.
People in health and social care are working in some very stressful situations, but which can be very rewarding if they see the outcome of their work and the improvement they have brought about in people’s lives. Unfortunately, many hospitals are still organised on the discredited production line model with, for example, some nurses just taking blood, not knowing why, the results or outcome for the patient. The use of agency staff also distracts from the continuity of care. Agency staff are very expensive, with money going on travel, board and agency fees, and it should not be beyond the wit of managers and trades unions to manage without them until there is no work and they have to apply for permanent positions and the savings shared in higher salaries.
Much of what underpins current management thinking is that people are motivated by, and can be controlled by, money when there is little evidence to substantiate this. People may be attracted to a job by the salary but, once in post, are motivated by job satisfaction and recognition of a job well done. Health and social services need to move away from the traditional management model of getting people to do what needs to be done by reward and sanction (the carrot and the stick) to a leadership model whereby people want to do that which needs to be done and the role of the manager is to train and enable. Staff need to be employed on the work which interests and motivates them. They need the confidence to take decisions up to the extent of their discretion in the knowledge that they will be supported should things go wrong without losing sight of their accountability to elected representatives on central or local government or a board of trustees or directors, or that they work with some of the most vulnerable and least powerful members of society. People often chose to work in health and social work / care as a vocation so are motivated on entry; but managers and organisational constraints can demotivate. Cultural and structural change is required.
Social workers need to be freed from ‘care management’ and the ‘gate keeping’ role of assessing the eligibility for specific services thereby enabling them to practice their skill in using relationship to bring about change in motivation, behaviour, inter-personal relationships and community support by various therapeutic techniques of counselling, thus reverting to a ‘mending’ rather than the current ‘minding’ model. There is a need to:
- take out functional divisions along patient pathways;
- create ‘whole task, right sized, multidisciplinary, inter-agency teams’ aligned behind outcome with access to all the expertise and resources required to complete the task;
- ensure these teams can ‘plan, do and evaluate’ their own work, which completes the learning cycle of constant improvement.
These teams can be quite local as are many ‘community support teams for people with learning difficulties’ and co-ordinated by an employee of the lead agency with a ‘key worker’ appointed to co-ordinate work at an individual level.
This approach was implemented successfully by South Glamorgan County Council across all areas of work in the 1980s and 90s with locally based ‘multidisciplinary. inter-agency, outcome orientated teams’. There were nine teams dealing with child protection and family support (including the registration and inspection of child minders and playgroups, fostering and adoption) based in a network of Family Centres providing a range of services including day care and family therapy suites (these Family Centres were adapted or purpose built in partnership with other voluntary and statutory agencies, the two most recent of which were purpose built integrated family centres and schools – in-order to provide selective help to those in need within a universal framework of support to all to minimise labelling and stigma).
There were five community support teams for people with learning difficulties. Four teams for people with a physical disability based in resource centres (one of which was built by the private sector with flats above, which paid for the capital build, with nomination rights) with two additional specialist resource centres for people with sight and hearing impairment. There were eight teams for older people based in resource centres with a range of facilities including day care (the two most recent of which were in extra care housing developments – built by housing associations), There were four community mental health teams based in community mental health centres provided by the health authority. There were three specialist community teams for older people with Alzheimer’s Disease or Dementia and multidisciplinary / inter-agency community drugs and alcohol teams. There were social workers based in hospitals and primary care. There was also an integrated systems-based youth justice system and youth court bureau, involving the police and courts, pursuing ‘policies of diversion and alternatives to custody’ with considerable success.
Wherever possible, professionals had a room to themselves in order to write their reports, undertake diagnostic thought and receive their clients (I dislike the term ‘user’) in-order to make a differential use of office and homebased contact. There were common staff rooms to enable catharsis after stressful contact and to facilitate team building.
In respect of social services each team had a principal social services officer who managed all the social service employees in the centre and associated residential homes and day centres etc, and where social services were the ‘lead agency’ co-ordinated the work of the other staff in the centre who remained accountable within their employing agencies. The principal social services officers were directly accountable to an assistant director within the departmental management team (a very flat structure – South Glamorgan had fewer tiers of management and a higher proportion of staff in direct client contact than any other social services department) who represented the director on a joint management board, bringing together senior managers from all participating agencies, chaired by the ‘lead agency’. The joint management boards reported via a joint chief officers’ group to the then statutory health and social care joint consultative committee (JCC), which brought together representatives of the county councils, district councils, health authority and voluntary sector.
The JCC was a ‘negotiating body’, as a group of agencies could not impose their will on another agency, with recommendations taken back to the parent bodies for consideration and decision.
Although, until 1995, area health authorities in Wales shared geographical boundaries with the county councils (housing was a district council responsibility and the Police served three counties) South Glamorgan did not have the benefit of common funding streams and lines of accountability – as is proposed here.
It would have made it all so much easier had it all been one authority.
When designing an organisation from the customer interface the number of tiers of management should be kept to a minimum to avoid the party game ‘messages’ whilst ensuring a one stratum gap between manager and subordinate to avoid role conflict (see Stratification of work and organisational design – Ralf Rowbottom and David Billis)). And appropriate levels of delegation can reduce the amount of time spent in meetings.
The health service would also benefit from re-structuring once the internal market and purchaser / provider split are removed and given the example given above of the application of Christian Schumacher’s methodology there would also be considerable savings to be made from this kind of restructuring. However, rather than take these savings into account (as it could only be done gradually over time in each new authority) it would be better that these savings be used to increase the quality and quantity of output and enhance the salaries of those involved.
Reduced demand upon health and social care – assuming a state pension £18,127
Britain’s state pension is 23.7% of national average earnings. The official definition of poverty is anything less than 60% of the median household income. 58% of people over the age of 75 live alone. Given the correlation between income and demand upon the NHS it is hardly surprising that older people account for 4/5th of the expenditure of the NHS. The Netherlands with the highest State Pension in Europe spends 60% of its health budget on older people. Britain with one of the lowest spends 80%. 20% of NHS expenditure would be – the reader might like to look it up!
It would need a further £10bn, in addition to the money already committed to health and social care by the government, to increase the state pension from £7,155 to £18,127 and lift all older people out of poverty. So, what impact might this have on the NHS?
An estimated 1.3m older people suffer from malnutrition costing the NHS £19.6bn per year. There are five main causes of malnutrition: lack of money; lack of motivation; incapacity; lack of support and social isolation. The solution requires both money and professional intervention by social workers and health service personnel. If this increased income, together with the other changes, were to reduce malnutrition by 90% it would save a further £17.85bn.
A reduction of just 10% in demand upon the health service, which would still be higher than The Netherlands, would save a further £14bn (it might be useful to check the data on income and demand upon the NHS to confirm the correlation and test my hypothesis)
Not only would a higher pension improve the quality of life of many it could save up to £31.8bn in respect of what the NHS would spend were it not for this increased pension.
This produces a credit of £21.8bn so far.
Prior to 1980 private residential and nursing homes were only available to those who could afford to pay. Means Tested residential care was provided by local authorities under Part III of the 1948 National Assistance Act and state nursing homes provided by the NHS. In 1980 Margaret Thatcher extended choice by enabling people to have their fees in private and voluntary homes paid for by the then Benefits Agency subject only to the availability of a place and a means test. The cost escalated to billions which Sir Roy Griffiths termed the ‘perverse incentive’ as the money was not available for home care and it was thought there were people in residential care who neither wanted nor needed to be there. The money was transferred to local authority social service departments, by the 1990 National Health Service and Community Care Act, which had to carry out an ‘assessment of need’ and ‘verification of wishes’. For some reason Sir Roy included nursing homes in this, which had always been a health responsibility, so that for the first time they became means tested. And what had been an ‘open-ended entitlement’ became a ‘cash limited allocation’ with social service departments charged with ‘managing the market’. The majority fixed their ‘contract price’ below the cost of their in-house provision (so much for the level playing field) which meant that private and voluntary homes have struggled financially and have had to subsidise local authority placements from the fees of private residents.
Regrettably, many local authorities and health care staff, wave away ‘self-funders’ (a dreadful terminology), saying ‘find a care home for your mum’. Thus, denying the older person a ‘verification of their wishes’ and consideration of options, and their relatives the support needed at a very stressful time. In consequence it is highly likely that there are still many older people in care homes who do not need, or want, to be. (In South Glamorgan, not only did we fix our contract price at the cost of our in-house provision, but we encouraged everyone to arrange their placement through us, even if it meant them paying the full cost, to ensure a ‘verification of wishes’, provide appropriate help and so that as their money was used up the tapering arrangements would automatically kick in giving a sense of security, South Glamorgan had fewer older people in residential care, and supported more older people in their own homes, per head of older population than any other social services department’
The statutory agencies need to work with housing associations to develop ‘extra care sheltered housing’ as an alternative to traditional residential care. It is possible to put just as much nursing and social care into such developments as it is the more traditional residential care. The owner occupier or tenant has their own front door, defended space and retains control over the essentials of daily living. This alleviates many of the harmful effects of traditional residential care and reduces the risk of abuse which is greater when the victim is subservient. These developments can also be used as the base for the multi-disciplinary / inter-agency team (as we did in South Glamorgan) with outreach on a ‘core and cluster’ model. And there is a great deal which social work intervention might do to reduce the demand for continuing state care.
There are currently 416,000 older people in care homes, many of whom will be ‘self-funders’, and it is anticipated that the number might decrease by up to 20%, as a result of this radical reform based upon a ‘whole systems approach’, to 332,000. The average cost of a care home is £35,000 per year. (nursing care is already paid for) People would hand over their income up to the cost of the home, less their personal allowance of £24.90p per week, as now. With an increased pension of £18,127 the minimum residents could contribute would be £16,883 leaving a maximum of £18,117 for the local authority to find. (Currently people are deemed to have £1 per week income for every £250 of capital they have, including their house, between the disregard and full cost thresholds and this would no longer apply). Some people with occupational or private pensions may, with this increased state pension, be able to pay the full cost whilst still retaining their personal allowance. It has not been possible to find out exactly how many people have other income or how much it is. The only reliable figure we have is the number claiming pension credit who would require the full £18,127, which even including those thought to be eligible but not claiming, only amounts to 1.6%. If this is replicated in the ‘care home’ population it would amount to £6,600 - costing £119m. However, given those on lower incomes are likely to be disproportionately represented in the ‘care home’ population this will be increased to £1bn.
The amount of additional funding those with occupational or private pensions might require will vary considerably. However, the best estimate would be a further £2.1bn. (based on retirement income surveys) Therefore, this £3.1bn to disregard capital (including one’s house) could be met out of the £21.8bn
At the end of all this there is a credit of £18.7bn to both improve services, enhance pay, and in the longer term produce tax reductions for working people.
Therefore, by putting the additional money the Government intends putting into Health and Social Care on pensions, and undertake other organisational changes, it would be possible to:
- enhance the lives of all retired people;
- reduce demand upon the NHS and social care;
- benefit rich and poor by disregarding all savings (including one’s house) when charging for social care;
- move from a 'minding' to a 'mending' service;
- improve the efficiency and effectiveness of both health and social care, and;
- in the longer term enable tax reductions for working people
Chris J Perry is a former director of social services at South Glamorgan County Council and a former non-executive director at Winchester and Eastleigh Healthcare NHS Trust