A fair settlement for high quality disability provision: voluntary organisations disability group’s representation to hm treasury on the comprehensive spending review
- People are using care services at a time of unprecedented demographic change and financial austerity. Fewer and fewer disabled people are eligible for services and unmet need is on the rise. High quality care must be funded to enable disabled people to have their needs met.Key messages
- The continued squeeze on fees has led to social care markets, worth over £20 billion per year, being fragmented and unstable. Without adequate funding voluntary organisations will exit the market causing further market instability.
- Government needs to be alert to the fact that the social care market could collapse. Markets require good management, and as part of this the costs of procurement and regulation need to be controlled and kept low. Central to this are the fees that are paid to providers, which must be set at a level that will enable people using services to have their needs met through the provision of high quality services.
- Should social care markets fail, the lives of millions of people who use services will be negatively affected. There will also be a direct impact on the NHS as demand increases for emergency and hospital services.
- We urge government to ensure that social care funding is protected including making provision for the gap in social care funding by 2020, alongside the £8 billion gap in health service funding over the same period.
- The recommendations of the Barker Commission provide long-lasting solutions to the challenges in integrating health and social care budgets. These recommendations should be implemented.
- A sustainable funding settlement for the sector will enable disability organisations to invest in their people – to further build careers in the sector, to recruit and retain the right staff and to pay the workforce at a rate that recognises the value of the work they do in society. The national minimum wage and national living wage must be properly funded.
The Voluntary Organisations Disability Group (VODG) represents over 80 leading voluntary and charity social care disability provider organisations. Our members work with around a million disabled people, employ more than 75,000 staff and have a combined annual turnover in excess of £2.5 billion. Though diverse in terms of their size, history and individual strategies, our member organisations share common values. These are clearly discernible through work that promotes the rights of disabled people, approaches to citizenship, user choice and control and in successfully delivering person-centred services. We are members of Think Local, Act Personal and the Department of Health, NHS England and Public Health England Voluntary Sector Strategic Partner Programme. In addition, VODG leads the sector in terms of its investment in the workforce and through the development of new and innovative service models.
VODG welcomes the opportunity to submit this representation to HM Treasury on the spending review. We also recognise and endorse the submissions being made by our member organisations and our other key stakeholders including the Care and Support Alliance. VODG is also a co-signatory to the joint sector statement. We use this paper to draw out those issues most relevant to disability, care and support providers and the people they support.
MEETING NEED FOR THE GROWING NUMBERS OF DISABLED PEOPLE USING CARE AND SUPPORT SERVICES
Today there are 9.9 million disabled people living in England who represents 19 per cent of the overall population. This includes a significant number of working age adults who require support with their mental health, or who have learning and social or behavioural impairments. Demographic changes are seeing the numbers of older people rise, which includes a far greater proportion of the population aged 85 and over.
The Centre for Disability Studies estimate the growth in the numbers of adults with physical and learning disabilities:
- Support will be required for an additional 6,000 to 46,000 young adults with physical disabilities over ten years. This equates to a ten-year growth rate of between 32% and 239%.
- Between 37,000 and 52,000 adults with learning disabilities will require support over the next ten-year period, resulting in a growth rate of 26% to 37%.
Alongside these working age trends, the number of older people is rising. The latest Census data demonstrate 9.2 million older people aged 65 years and over, with 52 per cent of people living with a long-term health problem or disability. Of the older people living in communal establishments, such as care homes, 84% reported poor general health. The proportions of older people are not uniform and there are over half a million people aged over 90 years with increasing levels of dependency.
Within the context of unremitting demographic change, funding to support disabled and older people has been significantly reduced. Over the last five years funding reductions have totaled £4.6 billion (a 31% reduction in real term net budgets). In 2015/16 directors of adult social services plan on making significant additional savings:
- Physically disabled and people with learning disabilities using residential and home care – £53 million.
- Older people supported through home care or in residential care – £67 million.
- People using mental health services – £14 million.
The Local Government Association and Association of Directors of Adult Social Services estimate a £4.3 billion funding gap in adult social care by the end of the decade.
A hallmark of high quality third sector provision is fully meeting people’s needs and enabling disabled people to have full choice and control over their lives, and to be included in society. In the long term this can reduce inequality, injustice and save public money. Yet today only two-thirds of disabled people believe they frequently have choice and control over their lives. The sustained downward investment in the sector is leading to fewer and fewer disabled people using services. The number of people aged between 65 and 89 years who have unmet needs is estimated to be 900,000. The stark reality is that unmet need is on the rise, and this will be further exacerbated by welfare reform changes .
People are using care services at a time of unprecedented demographic change and financial austerity. Fewer and fewer disabled people are eligible for services and unmet need is on the rise. High quality care must be funded to enable disabled people to have their needs met.
A FAIR CONTRACT – SUSTAINABLE FUNDING, MANAGED MARKETS AND EFFECTIVE REGULATION
True personalisation and choice requires a healthy supply of innovative, high quality providers. A good market requires the engagement of people who can exercise choice and control over their services, alongside competition to ensure high quality services meet need. The characteristics of a stable care market are understood, and CQC have already pointed to fragility in the adult social care markets.
- Demand and supply should be roughly in equilibrium. Delayed transfer of care is an indicator of a weakening of community services – a trend that has remained critically unresolved, and rising, over recent years. The proportion of delays attributable to social care increased over the last year to 31.4% in June 2015, compared to 24.7% in June 2014. The main reasons for the delay was people waiting for community provision in order to leave hospital – those very community services which have been cut due to reductions in local authority funding.
- Price would be at a level to deliver the quality purchasers demand and to secure future investment. But 56% of directors of adult social services report that providers are facing financial difficulties, and sector leaders have warned of an exit of providers.
- Consumers would have good access to information, and providers would be readily able to respond to consumer demand. People who use services do not always have the right information, at the right time to make informed decisions. One quarter of people who use social care services report not having access to the right information and advice about their services. For people who use care services one quarter feel they do not have control over their daily lives.
- Regulatory or legislative change would be planned well in advance with ample warning to the supply side of the market. Whilst the CQC has made some improvements in its operating model, the National Audit Office find the regulator still has a long way to go to demonstrate its cost effectiveness. This financial year, for example, the CQC raised its fees to providers by 9% from 1 April despite widespread opposition to the proposals (80% of sector respondents). The regulator needs to be made fit for purpose with a lean operating model focused on clear outcomes.
- Market entry and exit would occur but it would take place in an orderly fashion without consumers being disadvantaged. Whilst the Care Act should enable providers to deliver transformational care and support, concerns remain over commissioning practices. For example commissioning that lacks strategic vision and is unilaterally driven by price, and not quality.
The continued squeeze on fees for these services, whether determined centrally or locally, is leading to an ever widening gulf between the real costs of delivering services and that which commissioners are prepared, or able, to pay for. Insufficient funding is seeing fragmented social care markets, and councils struggling to manage the market. For example, only 70% of councils have a published market position statement (used to summarise commissioning intentions to local providers). Some third sector providers are choosing to exit the market because of the ever-widening gulf between costs of provision and fees from commissioners. It is also important to recognise that the national picture can disguise marked regional differences in the ways in which funding cuts have fallen. These differences include local authorities’ readiness to implement the Care Act and local outcomes for disabled people which all vary considerably across England. The risk is that, not only is the market becoming increasingly unstable and is at risk of collapse, but that inequality is increasing.
The continued squeeze on fees has led to social care markets, worth over £20 billion per year, being fragmented and unstable. Without adequate funding voluntary organisations will exit the market causing further market instability.
Government needs to be alert to the fact that the social care market could collapse. Markets require good management, and as part of this the costs of procurement and regulation need to be controlled and kept low. Central to this are the fees that are paid to providers, which must be set at a level that will enable people using services to have their needs met through the provision of high quality services.
Should social care markets fail, the lives of millions of people who use services will be negatively affected. There will also be a direct impact on the NHS as demand increases for emergency and hospital services.
INTEGRATED CARE – THIRD SECTOR DISABILITY ORGANISATIONS ARE AN INTEGRAL PART OF THE SOLUTION
The NHS faces a number of financial pressures, which are increasing the costs of healthcare – growing numbers of people with long-term conditions, the costs of technology and treatments and a significant pay bill. Health funding has increased from £97.5 billion in 2001-11 to £116.4 billion in 2015-16, an increase of 19.3%. Over the same period, social care funding has decreased from £14.9 billion to £13.3 billion, a reduction of 10.7% and more in real terms when demography is taken into account.
The NHS Forward View offers a real opportunity to seize the benefits of integrated care. We welcome pioneering new approaches to blending health and social care funding for disabled people, including NHS England’s ambition to design easier ways for voluntary organisations to work alongside the NHS. Third sector disability organisations have a track record of innovation and enterprise and are an integral part of the solution to joining up local services to improve outcomes for people. Providers help to make connections between local services and build community capacity, such as volunteers, and are at the heart of making local communities caring and economically prosperous.
The role of third sector disability organisations is significant. The aggregate cost of social care services provided by third sector organisations for example is estimated to be at least £7.2 billion per year. Of all public service areas, social care is thought to have the greatest involvement from the third sector. However, across the third sector the combined effect of current forecasts is a £4.6 billion annual shortfall in overall sector income by 2018/19, simply for the sector to maintain its 2012/13 spending power. These shortfalls will impact on third sector activities across health and social care.
The recommendations of the Barker Commission provide long-lasting solutions to the challenges of integrating health and social care budgets:
- England needs to move to a single, ring-fenced budget for health and social care, with a single commissioner.
- There should be more equal support for equal need. Over time the ambition should be:
- First, those whose needs are currently defined as ‘critical’ should receive free social care, ending the current distinction between free NHS Continuing Healthcare and means-tested social care at the highest level of need.
- Second, that as the economy improves, free social care should be extended to those with ‘substantial’ needs.
- Third, that some support should be extended to people with moderate needs by 2025, with the expectation that they would be expected to contribute to those costs subject to a means test,
- The government should plan on the assumption that public spending on health and social care will reach between 11 per cent and 12 per cent of GDP by 2025.
“We urge government to ensure that social care funding is protected including making provision for the gap in social care funding by 2020, alongside the £8 billion gap in health service funding over the same period” (Spending review statement from the social care sector).
We urge government to ensure that social care funding is protected including making provision for the gap in social care funding by 2020, alongside the £8 billion gap in health service funding over the same period.
The recommendations of the Barker Commission provide long-lasting solutions to the challenges in integrating health and social care budgets. These recommendations should be implemented.
RIGHT PEOPLE, RIGHT VALUES – INVESTING IN THE WORKFORCE
A sustainable funding settlement for the sector will enable disability organisations to invest in their people – to further build careers in the sector, to recruit and retain the right staff and to pay the workforce at a rate that recognises the value of the work they do in society.
The national living wage (NLW) announced by the Chancellor in the Summer Budget will increase the current national minimum wage from £6.50 to £7.20, and rising to £9 per hour by 2020. Social care is a labour intensive sector. For providers the principle of paying the frontline workforce a living wage, staged over a period of time, has been warmly welcomed. The NLW ambition represents an important step towards securing a sustainable workforce. An increase in frontline pay will, for example, help with the recruitment and retention challenges faced when delivering high quality care. This welcome ambition must, however, be properly funded and the implementation must ensure that monies secured to pay for the NLW is cascaded straight to the frontline workforce. Social care markets are local, and the introduction of the NLW is going to see different geographical consequences of implementing the NLW.
A VODG rapid review, from a sample of 20 disability organisations, demonstrates the significance of securing a sustainable settlement to introduce the NLW:
- In 2016/17 20 organisations will be required to spend an additional £6.2 million on the pay bill. By 2020/21 the figure rises to £58.3 million.
- The percentage increases in hourly rate required to manage the impact varies considerably. The average percentage increase expected in 2016/17 was 2.5%. This rises to 14.4% by 2020/21.
- Pay differential within the sector will be negatively affected. 11 organisations will not be able to maintain their current pay differential. 7 organisations reported that they will seek to uplift pay grades above the NLW.
- There are significant ‘knock on’ effects on overall business costs when outsourced services (e.g. cleaning) are taken into account. 14 organisations reported the knock on effects of the NLW to be highly significant or significant.
- Should predicted fee increases identified to implement the NLW not materialize the following issues were reported:
- Debt covenants could become a problem for some providers. 6 organisations reported debt covenant problems were likely given the current proposals on the NLW.
- 14 organisations reported that reductions in service development would be very likely or likely.
- 15 organisations reported that reductions in workforce development would be very likely or likely.
- A reasonable threat to the viability of the organisation was reported as very likely or likely by 12 organisations.
A separate technical report, forming appendix 1, details VODG workforce intelligence on the NLW. It is clear that the NLW must be properly funded – without such investment local care markets are very likely to fail.
Appendix 2 details further examples of service commissioning being out of step with workforce costs on the national minimum wage and sleep in shifts:
- The national minimum wage working time directive represents a significant human resource issue for disability care providers. 89% of staff in our sample of 36 VODG organisations take part in sleep in arrangements, typically lasting nine hours long.
- Arrangements in paying for sleep in shifts are very mixed and there is a lack of clarity amongst providers. We estimate that the cost for all VODG members implementing NMW during sleep in shifts would be £27.3m.
- A need for a fair contract between commissioners and providers. Only four providers received fees from commissioners that cover the costs of paying the NMW for every hour of a sleep in shift. 88% of providers do not receive sufficient fees and the average shortfall is £3.25 per hour. Overall providers report the attitudes of commissioners to be largely unsupportive (84%). Only one provider reports all commissioners being supportive on paying fees sufficient to cover the costs of sleep in arrangements.
On domiciliary care whilst few commissioners pay for travel time, many voluntary organisations still seek to pay staff for travel time. In our sample 28 organisations provide domiciliary care and of these only eight (9%) were paid for travel time as well as contact time by commissioners. In these cases all organisations paid staff for travel time. However, when commissioners do not pay for travel time, 12 organisations still pay staff for travel time.
Across the care home and home care sector leaders have warned about the costs of delivery. VODG adds to this body of evidence and warns of the exit of third sector disability organisations from the health, care and education sectors should funding not follow workforce commissioning.
There are, therefore, a number of strategic workforce and leadership issues that need to be addressed in the sector. This includes developing approaches to current workforce shortages, including the need to build a sustainable pipeline of nurses, registered managers and allied health professions within the sector. The role of dedicated social care delivery and improvement organisations, which receive grant funding from the Department of Health, needs to be maintained as an essential part of the sector’s infrastructure during this period of unprecedented challenges for social care.
A sustainable funding settlement for the sector will enable disability organisations to invest in their people – to further build careers in the sector, to recruit and retain the right staff and to pay the workforce at a rate that recognises the value of the work they do in society. The national minimum wage and national living wage must be properly funded.
VODG represents leading not for profit disability organisations with a combined annual turnover in excess of £2.5 billion. We recommend Government:
- Protects social care funding, including making provision for the gap in social care funding by 2020 alongside the £8 billion gap in health service funding over the same period.
- Stabilizes the market through a funding mechanism that enables the fees paid to providers to reflect the costs of delivering high quality care.
- Implements the Barker Commission
- Enables disability organisations to invest in their workforce by properly funding the national minimum wage and national living wage.
Voluntary Organisations Disability Group (VODG)