Adult Social Care and the Spending Review John Jackson Co-Chair Resources Network 1

Scope of the presentation What is the Spending Review? Financial context What have we achieved since the last Review in 2010? What has happened to local government Demography and unmet need Scope for efficiency savings Funding Reform Risks Timescales 2

What is the Spending Review? 2013 Spending Review focuses only on 2015/16 and not later years Reflects political situation – new Government will be elected in 2015 However, the Spending Review is likely to set the context for later years 3

Financial Context Autumn Statement set out the financial context Starting from the 2010 settlement in which local government’s grant was reduced by 28% (even after extra formula grant for adult social care) compared with overall reduction of 8%. Autumn Statement increased grant reduction to 33% Total spending in 2015/16 and 2016/17 will continue to fall at the same rate as in the current spending review period Spending on health, schools and overseas aid will continue to be protected from further reductions 4

National totals – 2015/16, 2016/ Spending Review 2 more years

What have we achieved since 2010? Budget Survey 2011 Savings of £991m in 2011/12 - 7% of net spending In addition, savings of £169m on Supporting People (further £105m savings in later years) Adult social care savings included £84m from increased charges and £226m service reductions £681m from what Directors described as efficiency savings but it is clear these were not painless 79% Councils froze or reduced fees to providers Cost of demography estimated at £425m 3% of net budget. Only 41% of authorities funded this in full 6

What have we achieved since 2010? Budget Survey 2012 Extra £890m of savings on top of those planned for 2011/12. In other words another 7% savings Further increases in charges of £77m and further service reductions of £113m Efficiency savings £688m but not painless – limited price increases for providers (only 0.9% on average); evidence that personal budgets have been reduced Cost of demography estimated at £403m (3%). 80% funded. NHS money used: £248m offset pressures/avoid cuts; £148m new services; £149m more demand 7

Cumulative impact on adult social care Total annual savings from adult social care of £1.89bn by March 2013 – 14% of net spending More savings to come – 2013 Budget Survey will confirm this Service reductions of £339m; increased charges of £161m “Efficiency savings” of £1.369bn (10% of spending) but significant pain involved: providers squeezed on prices; care packages reviewed; services outsourced; providers changed In addition, savings of £274m on Supporting People and significant reliance on NHS money to avoid further savings and to meet budget pressures 8

Position of local government Impact on adult social care reflects the general pressures on local government Net spending on adult social care £13bn 34% of total local government spending (£39bn) Local government is faced with funding reductions of 33% over 4 years – approximately 8% a year. In contrast, total public spending is being reduced by 8% over 4 years Significant reductions in local government funding will impact on adult social care. There is no choice in that. 9

Demographic Pressures Budget survey has consistently shown that demographic pressures are about 3% a year (and this may be understated) This is not just about an ageing population but also the increased costs of caring for younger adults as their needs become more complex and informal care arrangements breakdown There is also unmet need. 10

Unmet need A summary of national research into unmet need (Southampton University) identified that only 20% of people who report difficulties with dressing and bathing receive support from social services. 50% are supported by their family and friends; 3% pay privately for support and 32% do not receive any support. A substantial proportion of care for people is provided by informal carers. Dilnot suggests that the willingness and ability of family carers to perform a caring role is reducing. The overall demand for care is rising more quickly than the ‘supply’ of carers. Over the next 20 years the supply of care by adult children will grow by 13% (assuming unchanging propensity to care) while demand for care will increase by 55% 11

Scope for savings Scope for some savings as the Use of Resources seminar at 5.15 today will demonstrate But what is a reasonable assumption about what we can deliver without affecting our ability to meet eligible care needs or at risk of not being able to contain spending within budget? In the 2010 spending submission we said: “local authorities will be able to deliver cash savings of 3% per annum. This will be through a combination of genuine efficiencies and mechanisms such as reviewing their charging policies. This figure is higher than the savings identified by the Department of Health (DH). It will mean that some authorities will have to look at reviewing their charging policies and eligibility criteria.” 3% is an absolute maximum this time and will not be painless for service users, carers or providers 12

Why can’t we deliver more than 3% savings? Our response I Treasury will say why can’t we go delivering 5%? Our response is: Savings so far have relied on squeezing providers. This is very unlikely to be continued and may be reversed to become a pressure. Most providers pay their employees at or just above the minimum wage. Social care is not a particularly high value sector of the economy Many of the ideas set out in Use of Resources will have been delivered by April 2015 as we struggle with the huge savings from the 2010 Spending Review. It is unrealistic to assume savings from reablement for example because most authorities will have delivered them before then. 13

Why can’t we deliver more than 3% savings? Our response II Can only make most savings once e.g. outsourcing We do not have the choices that existed last time. Most of us can’t increase charges or increase eligibility thresholds Transformational changes (such as supporting people in the community rather than residential care) takes time and often requires investment. It will also require active engagement by all parties in the NHS in all areas. This is not present at the moment. There is a lack of information nationally about which prevention and early intervention services are really effective There has already been several judicial reviews – some of them successful 14

Savings: our conclusion Although there is scope to achieve genuine efficiency savings, the value is likely to be relatively small – no more than 1% which is relatively painless Achieving 3% will involve significant change which will impact on service users, carers and providers and is likely to lead to challenge in some cases and some Judicial Reviews. It is also dependent on the NHS engaging with this agenda in a much more active and positive way that at the moment. In short, 3% is not straightforward. Planning for any larger figure is unrealistic and will have serious adverse consequences for not only adult social care but also the NHS. We also need the 3% savings to pay for the cost of demography 15

Funding Reform Will have an impact in 2015/16 Demands for assessment will emerge. Dilnot said would cost £200m a year. Potentially more in 2015/16 due to backlog of current self-funders Work on systems and processes, information and advice Need significant one-off resources in that year (and maybe earlier). Best estimate at least £500m. What do Directors think? 16

Risks Unmet need (see earlier) but will this come forward more strongly as a result of funding reform NHS decisions and behaviours  Old fashioned attitudes from parts of the NHS Commissioning Board towards NHS money for adult social care  Implications of the way that they try and deliver QIPP savings (Continuing Health Care?) and the implications if they fail to deliver Welfare reform Stopping the NHS money for adult social care or limiting its use Assumption that integration will necessarily save money without consideration of the financial consequences for both health and social care 17

Timescales Chancellor announces the results of the Spending Review on 26 th June LGA submission including the section on adult social care is likely to be published in May ADASS budget survey is likely to be published at the same time 18

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