The case for investment in adult social care

By Alex Khaldi | 13 February 2018

Adult Social Care has become synonymous with cuts and desperate pleas for more revenue. But what is less hotly debated is that the sector is now under-invested, and needs capital investment for the longer term as well as cash for now.

The unstoppable force of demand pressure at about £1bn per year (in England) has met the immovable object of the UK’s fiscal outlook. We can expect progress this year with a green(ish) paper and the continued development of integration via sustainability and transformation partnerships, but no one thinks there will be a satisfactory answer for some time. This leaves councils with a dependency; unless they have deep reserves, they need Government to act, either to provide cash or the ability to raise tax.

At one point it was possible to argue that short-term ‘savings’ were on average achievable. But now, savings are getting increasingly hard to deliver, and in many cases are justifications for not meeting need. With revenue constrained, the unexploited opportunity is in investment, via capital expenditure or other mechanisms.  The sector is under-invested. We know this because of increasing provider fragility, a lack of technology adoption, downward pressure on wages and ‘robbing Peter to pay Paul’ cuts to councils operations, often reducing beyond reason our key professionals (as the National Audit Office has pointed out, we are bereft of local workforce strategies). So even if a magical revenue funding answer was created, the structural damage to the sector would require attention.

It might sound implausible in austere times, but as councils await help on revenue, the constructive action they can and should take is to develop cohesive adult social care investment plans, particularly given the borrowing terms town halls can currently achieve. These plans must of course be focused on achieving financial benefit and be affordable, sustainable and prudent. And while they are unlikely to relieve pressure within two years, they can address the three to 10-year outlook.  Because demand pressure isn’t going away; social care economists agree that the year on year pressure is here to stay. For those that are looking beyond next year, three big investment opportunities stand out:

Technology: Councils have always used capital to pay for social care business systems. But the digital world now offers far more potential (and diversity) than can be captured in an electronic filing system. We need technology business cases that encompass much more of the consumer’s digital experience, including peer resilience, assistive tech, self-service, and more. It is painful to see how fast the world is digitally changing and how hamstrung the care sector seems to be in adapting products to improve care and wellbeing.

Accommodation: For some good reasons, councils have historically shied away from investment in the care estate. And I am not necessarily talking about councils going back to running care homes.  But if councils can invest in shopping centres to create income, then investing in social care property to reduce costs and improve outcomes seems closer to core purpose. In some cases, councils can create income streams via self-funders, but the big benefit is to reduce the weekly costs of care by using cheaper capital to pay for the land, buildings and facilities components. In most cases it would make sense for the independent sector to operate these assets.

Market failure: Notwithstanding the Care Act and Market Position Statements, the lack of cash in the system is making things worse for providers, not better. While councils cannot afford blanket price changes, it is possible to jointly invest in modernising the local care estate, help providers reduce their overheads, and delegate more minor commissioning to trusted providers. There is a direct line of evidence in CQC inspections between under-investment and inadequacy, yet we have created a situation where there is a lack of creative dialogue between care providers and commissioners. It is in no one’s interest for local markets to collapse and we should think about how to invest before it becomes too costly, too confrontational, and too late. Care, despite the cuts, is a growth industry, and councils should consider local economic vibrancy alongside the financial and outcomes case.

These are the big areas for action. Social Impact Bonds and other preventive experimentation should of course be a part of the plan, but councils need to be selective where the evidence is thin, and make sure they can draw clear lines of sight between investment and return.

We often talk about social care transformation without really engaging with the meaning of the term. I see councils trying to achieve change with ever-shorter horizons. No wonder savings plans are failing. The scale of change envisaged by adult social care investment plans gives the sector a chance to gather some of the resources needed for real reform. It won’t solve the problems of today but will give the sector a fighting chance of addressing the challenges of tomorrow.  

Alex Khaldi is partner and head of social care insights and advisory at Grant Thornton UK LLP

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