Free personal care - at what price?

The Labour Government has committed to introducing free personal care at home for those in highest need. Announced in Gordon Brown's party conference speech, it is at the centre of Labour's plans to create a new National Care Service. However, critics have slammed the government's approach and questions have been asked about its cost.   The Association of Directors of Adult Social Services (ADASS) has warned that the true cost of providing free personal care in England and Wales may be almost twice what the government estimate. Andrew Cozens, from the Local Government Association described the government estimates as "a stab in the dark".   Andy Burnham, Secretary of State for Health, says the changes in the bill will cost £670 million per year. £130 million of the total will be to support extra re-ablement programmes with £540 million allocated to paying for new services. £420 million will be provided from the health budget, with local authorities contributing £250 million through efficiency savings.

There are two issues that affect cost estimates. The number of people that will qualify for free personal care and the cost per person of that care. 

Numbers

Because these decisions are taken locally, no precise national figures exist about who will qualify under the new legislation. The government considers those in highest need to be those who fall into the 'critical' category of their eligibility guidance and are in need of help with more than four activities of daily living.

The Impact Assessment published alongside the Personal Care at Home Bill considers that 170,000 older people fall under this category of highest need. It uses the English Longitudinal Study of Ageing (ELSA) to arrive at this figure. 

It is worth noting that the Public Social Services Research Unit (PSSRU), which conducted a comprehensive analysis of the cost/benefit analysis of social care funding, suggests that the number of older people who fall under the government category of highest need is much higher at 480,000. Although this includes those already in residential care, there is a far larger number of people eligible for this service than the impact assessment suggests.

For younger adults the government uses the referrals, assessments and packages of care data from councils for 2007-08. It estimates that the majority of these will qualify for free care - 100,000. It is also estimated that an additional 10,000 younger adults who currently self-fund are likely to claim free care. In answer to a Parliamentary Question Baroness Thornton explained that "little is known about the number of younger adults who currently fund their own care at home" and stressed that the Government figure "should be treated as an estimate". 

Cost

On the actual cost of providing free personal care at home, the Government estimate a total of £103 per week. ADASS however, based on surveys of local authorities providing free care, believe the actual cost to be significantly more. The Impact Assessment uses the method of the PSSRU study to estimate that the average amount of free personal care at home will be 6.54 hours per week. It takes an estimate of £15.75 per hour of care to reach its £103 per week estimate. A Department of Health official explained to Full Fact that although it has used the PSSRU method, the specific calculations were not in the original report and are not publicly available.

ADASS surveyed 61 local authorities and asked them to estimate the time and cost per hour of personal care for those in highest need. It found the average hourly cost estimate to correspond closely with DH figures (£14.55). However, councils estimated that those in need required around double the number of hours of care that the Government suggested - between 11 and 14 hours per week. The ADASS research therefore gives a higher estimate of the cost at £160.05 per week for older people and £203.70 per week for younger adults.   ADASS calculate the total cost of services to new services users at £660 million. In addition, with loss of council income and re-ablement costs, ADASS believe the total bill for free personal care at home could exceed £1 billion. At a time of tight public finances, it warns that local authorities will face new duties but will not receive the money from central government to meet them. 

Additional concerns

The impact assessment report explains that "due to the inherent uncertainty in estimating the costs of offering free personal care" it only projects costs over two and a half years. It assumes only a 1.5% increase in take up per annum over this period. However, there is no explanation of how this figure is reached. The Scottish example, where the over 65s have received free personal care since 2002, suggests that the increase in take up and costs will be greater than the Government currently estimates.

The United Kingdom Home Care Association (UKHCA) has raised concerns about the perverse incentives that the new measures will create. The body fears that the additional pressure on local councils will result in increased charges for other forms of non-personal care or that councils will push more people with highest needs into residential care.    Lord Lipsey, who was part of the Royal Commission on Long Term Care which reported to the government in 1999, has been scathing about the legislation. He described it as "one of the most disorderly pieces of government I have ever seen in 40 years of political life".      The Government's figures cannot be described as robust. The Government does not know exactly how many people are eligible for free care, precisely what the cost per person will be or what impact the changes will have on take-up. There are several assumptions included in costing these proposals, some of which are unclear. The impact assessment acknowledges the limitations in drawing up accurate figures and it must be concluded that these are very rough calculations with large margins for error.   The House of Commons Library has published a summary of the Bill and the political context around the proposals. The Bill has its second reading in the House of Lords today.