Report calls for ‘a proper market in social care’

[vc_row][vc_column][vc_column_text]22 September, 2020

The social care system in England must be overhauled to function as a genuine and fair market, says the Social Market Foundation (SMF), an independent public policy think-tank.

The SMF says new regulation and rules are needed to help ensure care-users pay the right price for care, and providers supply the levels of care the country needs.

A briefing paper from the SMF, sponsored by Bupa, argues that politicians and officials need to accept that social care in England is provided through a market system, with local councils and self-funded care-users buying care services from providers.

That market needs better regulation, the SMF said, urging ministers to create a new independent body to oversee care, setting rules for the minimum cost of care and identifying areas where an imbalance of demand and supply leads to unfair outcomes.

The SMF paper follows-up on a 2017 market investigation by the Competition and Markets Authority, which recommended the creation of an “independent body” to oversee the care market.

The paper points out that different purchasers of care services pay different prices, partly depending on their bargaining power. On average, wealthier care-users who fund their own care pay much more for care than local authorities who buy care for less wealthy users. Self-funders pay 41% more for their care per week than local authorities, equivalent to £236.

While the SMF acknowledges there can be good reasons for such differences, including the different services offered to self-funders, it says wide differentials can indicate that local authorities are using a dominant position to drive down prices, raising concerns about the future supply of care.

Over the last five years, the social care sector has become more fragmented and overall, the supply of residential care beds has reduced as some providers leave the market, while demand for care has increased.

In its report, the CMA found there was a significant amount of uncertainty among providers about the shape of future policy and the level of local authorities’ fees. This uncertainty, says the SMF, can lead to an absence of investment focused on provision for local authority residents, resulting in a lack of such capacity and, eventually, increased costs for local authorities when procuring care.

The SMF said ministers should act to ensure a better-functioning market for care, by giving the Care Quality Commission new powers to oversee the market, including four new tasks:

National Guidelines: The CQC should create national guidelines for the minimum cost of social care services. These should be designed in a similar way to the NHS national tariff and allow for local variance in cost due to unavoidable differences.

Demand forecasting: The CQC should have a duty to provide government, local authorities and providers of social care with forecasts for future demand by need and place.

Cost of care forecasting: It should provide government and local authorities forecasts on how the cost of care delivery may change. This should account for changes in need, wages and other local costs. This would ensure that decisions on where to allocate social care funding is made based on the best available evidence.

Monitor competition: It should monitor levels of competition and concentration in residential care markets at a regional and local level and carry out regular assessments of the market power of both buyers (local authorities and self-funders) and sellers. This evidence, says the SMF, would help ensure policymakers considering social care are properly informed.

SMF director James Kirkup said that, while there could be good reasons for differences in the rates paid by local councils and self-funders, if local authorities were in a position to drive prices down, they may end up jeopardising supply by forcing providers out of the market for local-authority funded care.

“Like it or not, care in England is provided in a marketplace, where buyers and sellers agree on the price paid in exchange for a service,” said Mr Kirkup.

“Since we have a market for care, policymakers should do more to ensure that this market works fairly and properly, for the benefit of the people in it.

“There is not enough discussion about the care system as a market. Politicians need to do more to develop and implement policies that will make that market work in the long-term interests of users and the country as a whole. That means giving suppliers more certainty about future demand and prices, to help maintain the long-term supply of care.”

Bupa Care Services managing director Joan Elliott said the Covid-19 pandemic had emphasised that the long-term sustainability of the care sector requires a well-funded system.

“However, if it is to be truly successful, it also requires structural changes such as those highlighted in this report,” said Ms Elliott.

“These findings are an important contribution to the ongoing debate about social care reform and, if adopted by the government, will help ensure that the needs of residents, carers, providers and taxpayers are properly met.”

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Date Published: September 22, 2020