Chris Skidmore MP: Direct payments for social care could save £1bn a year

Chris Skidmore is the Member of Parliament for Kingswood.  Follow Chris on Twitter.

Today sees the publication of the latest Free Enterprise Group report, The Social Care Market: Fixing a Broken System.  We know that long-term care for the elderly will present one of the greatest challenges for the future: the number of over-85s will double by 2030, yet it is estimated that 75% of people over 65 will eventually require some form of care. Recognising the demographic challenge, the government will be publishing a White Paper on Social Care shortly, in light of the recent proposals by the Dilnot Commission to look at how to fund social care for the future.

Yet as the report demonstrates, we need to also consider how to make the existing social care market more flexible and simpler for those who need care and their families. Above all, we should focus on allowing individuals and their carers the opportunity to decide upon what care they should have by liberalising social care budgets currently in the grip of local authorities- and give those in need of care the opportunity to access their individual budgets as cash payments.

In doing so, we would be following the example of Germany and the Netherlands. In Germany, individuals who have been assessed as needing care at one of three levels of severity are offered a choice between a cash payment, services in kind (including residential care), or a tailored combination of the two. Importantly, the cash payment is significantly lower than the value of the services. 49% of people eligible to receive care opted for a straight cash payment, rather than the alternatives, because they value the freedom that this gives them. 

Local authorities spent £3.4 billion on residential care for the elderly in 2009-10. If, as in Germany, half of these people opted instead for a direct cash payment and stayed at home, this would save £1.14 billion a year- with that group receiving around £566 million instead of £1.7 billion. Not only does this save a considerable amount of money, but all the evidence from Germany and the Netherlands, where such a system already exists, suggests that those receiving the payments feel significantly better cared for as a result. As well as increasing the amount of informal care provision, offering these payments will also create more competition amongst other care providers, driving down costs and increasing quality.

Encouraging informal care is one key aim of the report. But where this is not practical, it is also important that people better understand what is available and how to pay for it. At present the social care system is poorly understood, and not simply on account of its complexity. Effective markets need informed consumers. If we are to expect more people to make decisions over where, how and when they want their care, then it is vital that the information is available to make proper comparisons.The Director of Strategic Commissioning for Kent County Council, Mark Lobban, suggests an online Amazon-style marketplace where people can rate the performance of providers. People looking for care services, whether for themselves or for a family member, should be able to access a wide array of information- as much so as if they were purchasing a house, or choosing a university. Removing as much uncertainty as possible from the process is essential.

Ultimately, we cannot fix the broken social care system with a one size fits all solution. But only when people are in control of their own care, and in control of who provides it, that we will see a system that works for vulnerable people rather than against them. Elderly people have given so much to our society; the least we can do is ensure that it supports them properly in their old age.

The full report can be found here.