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Co-published with the Women’s Budget Group.

With contributions from Jerome De Henau, Anna Johnston, Sue Himmelweit, Sara Reis, Mary-Ann Stephenson and Alfie Stirling. Modelling by Jerome De Henau.

NEF and WBG would like to thank Caroline Glendinning and Fran Bennett for their comments and contributions.

A separate appendix for this report is available here.

Executive summary

Successive governments have done little or nothing to tackle worsening conditions in social care, for either recipients of care or care workers. Since the outcry over the failure to stem the spread of Covid-19 in care homes, however, there has been a step-change in the pressure on the government to deliver on their promise to ​‘fix’ social care. In September, the government announced plans for a health and social care levy on national insurance contributions, which included an additional £5.4bn spending on social care over the next three years. On 1 December, the government set out a strategy to ​‘Put People at the Heart of Care’.

The strategy sets out a transformative vision for care to provide ​‘support to those who need it so that as many people as possible can live the life they want to lead’. Such a transformation could be a central plank in building a more caring society post-Covid, where people with additional needs arising from illness, disability, or age have equal chances and increased control over their lives.

The problem is that the government has failed to outline a realistic plan, with a realistic amount of money, to achieve this vision. The government’s attention, and the bulk of the additional money raised, is aimed at ensuring that ​‘no one will have to sell their homes to pay for care’ through a cap on care costs. The remaining £1.7bn over three years is totally inadequate to deal with the raft of other issues facing care: unmet needs due to limited access; unsustainable demands made on family and friends; or poor-quality provision, jobs, and working conditions. Unless these issues are dealt with in the round, the opportunities presented by a transformation of social care will not be released.

Criteria for reforming social care

We argue that the issues facing social care have their roots in a common set of causes:

• Means-testing. Publicly funded social care is means-tested on both income and assets. Those who fail the means test receive no financial help from the state in organising their own care. It has been described as the meanest means test in the welfare state. A freeze on the upper threshold of the means test has meant it has become increasingly more severe over time. While the government’s latest policy will change the level of the means test and introduce a cap on care costs, the cap is high and only calculated on self-funded care.
• Underfunding. Funding cuts have led to local authorities reducing both the number of people they support and the level of support that they provide. One consequence is that publically funded social care is increasingly reserved for those with the highest needs. Another is that self-funders are charged excessive fees to cross-subsidise local authority commissioned services.
• Failing markets. For those using local authority commissioned services, market competition has not achieved its intended aims. Local authorities are pushed towards a short-termist approach of purchasing care packages via competition between providers based on price. To keep costs down, staff-to-client ratios are kept to a minimum, tasks and working practices are standardised, and workforce pay and conditions are suppressed. The quality of care suffers.

Reform of social care, therefore, needs to meet two main criteria. First, it must close the funding gap or the difference between estimated income available to fund services and the cost of meeting all care needs through high-quality social care. This will require a new financial settlement capable of making comprehensive social care free at the point of need, widening the availability of social care, and improving care quality and working conditions.

Investment, however, needs to drive change in social care, not more of the same. So, secondly, reforms must close the implementation gap or the difference between the reality of social care provision and the vision set out in the Care Act’s wellbeing principle. This sets out an admirable ambition for care, with similarities to calls for independent living, where the purpose of care is to ​‘help people to achieve the outcomes that matter to them in their life’.

Proposals for a universal quality social care service

To close the funding and implementation gap, we propose three broad policy solutions:

• A generous new funding settlement. In our core scenario for take up, the additional cost of care under a universal system would be £19.6bn per year. Simultaneously raising the rate of pay to the real living wage would require another £12.3bn. This should be the immediate priority.

  Our proposals are more expensive than many other, more incremental reforms currently mooted in the debate. Unlike other proposals, however, we have combined the costs of all the reforms needed to assess how much it will need to deal with the issues in the round, rather than dealing with each in isolation. And the revenue is raisable.

  Beyond this immediate priority, a transformative care system would extend services to a wider group with moderate care needs while increasing the quality of care through higher levels of training and skills. This in turn would require higher wages, bringing the pay of care workers in the UK more in line with that of Nordic countries at around 75% of nurses’ wages.

• An expanded role for local authorities. We propose that local authorities, working with people needing support and their families, should be required to develop and deliver long-term strategies to transform provision in line with the wellbeing principle in the Care Act. This means putting the principle of co-production at the centre of social care. Getting there will involve (1) shifting the organisational nature of provider organisations receiving public money away from for-profit towards providers, and (2) a step-change in the relationship with and between the local state and provider organisations. Rather than short-termist, cost-driven competitive tendering, local authorities should move towards collaboration and strategic partnership in pursuit of shared goals.
• A new national body to drive improvement. The creation of a new national body would work with local authorities to transform social care provision. It would set and enforce high standards for both care quality and job quality, and share and spread good local practice. A reformed Care Quality Commission (CQC) should sit under it, alongside a new agency with responsibility for the regulation of the workforce.

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