Free care for our old: Will new policy turn into costly mistake?

Published on 12/10/2004 00:55

FREE personal care for the elderly has been hailed by the Executive as one of the success stories of devolution but the controversy surrounding its long-term cost is growing like Jack’s beanstalk.

More than 48,000 Scots now receive free personal care. This year has seen a 74 per cent increase in those receiving care in their own homes. Last month, Robert Black, Scotland’s auditor general, said almost the entire 126m annual budget for free personal care had been spent in the first nine months of this year. The Executive has pledged to honour the policy, introduced by Henry McLeish in 2001, but experts increasingly believe it will not prove financially viable in the long term.

Professor David Bell, head of economics at Stirling University and an adviser to the Executive on the cost of free personal care, believes people will have to start paying for some element of personal care now provided free.

"I suspect government will be unwilling to continue to pay for such a high share of these costs because it [would] have to cut back on education, health care for the middle-aged or transport," he says. "There will be increasing pressure for private solutions. People are going to have to pay much more."

Prof Bell’s projections show the cost of implementation rising to 290m a year within 15 years, a 16 per cent increase on projections from 2001.

"There is no doubt in my mind; subsidised personal care for the elderly cannot be afforded," says Prof Robert Wright, a colleague of Prof Bell. "We can’t afford it now and we certainly won’t be able to in the future. I was giving a talk to one local authority in Scotland recently and they are very worried. They can’t pay the costs now, let alone in ten years.

"There is a huge expectation among the public for free care. When the politicians realise this, they are going to have to withdraw it. It will cost somebody’s political career. Using simple arithmetic, assuming the most optimistic scenario on the health of the ageing population, we still can’t afford it. Everywhere else in Europe is watering down these policies."

The debate was fuelled by Stephen Ladyman, junior health minister at Westminster, who said: "The Scots have gone for free personal care. I bet they change their minds in a few years because I just don’t believe it is going to be sustainable in the long term. It doesn’t make sense to spread a finite pot of money evenly - nobody gets enough care and everybody loses." Lord Lipsey, the Labour peer who was on the Sutherland commission on long-term care for the elderly but wrote a minority report disagreeing with its conclusions, went further. He said: "The Executive introduced free care for the elderly...a 100 million bribe to the electorate coming out of money that would have been used for health. It has not improved services one bit."

However, Jess Barrow, head of policy and public affairs at Age Concern Scotland, argues: "We’re a rich country - of course we can afford it. These are people who have earned the right to be taken care of. They have paid their taxes. We are a society which takes care of people who cannot take care of themselves. Older people in our society should be a priority and they aren’t just now."

There are three elements to care: nursing care, which is free in Scotland, England and Wales; personal care, free only in Scotland; and hotel and accommodation charges for people in residential care which have to be paid for by anyone whose assets amount to more than 18,000.

"This idea that it is all free in Scotland is wrong," says Prof Bell. "Another myth is that the state is the main provider of care for the elderly. It is not. The main providers of care are relatives and friends. But, in future, because the elderly will have had fewer children and more people see care as the state’s responsibility, we might see much less informal care. That’s one of the biggest potential black holes in this equation."

The Range and Capacity Review report for the Executive predicts total expenditure on elderly care - state and private - will rise to 2.54 billion in the next 15 years, an 81 per cent increase. Almost 2 billion of that is expected to fall on the state. "It is a concern," says Prof Bell, who sits on the review team. "We have to find people happy to supply these services. They are not paid particularly well now. The only way to get them is by bringing them from other countries or hiking up the wages and that puts costs up even further."

The number of staff needed to deliver the care is forecast to rise between 26 and 38 per cent; care work is the fastest-growing job sector. Ms Barrow argues an 81 per cent expenditure rise over 15 years is an increase of only a few percentage points a year. "It is very manageable," she says. "Demographic change happens slowly. We can plan."

Ministers want to move away from residential care towards providing more care for elderly people in their own homes. "Figures from Audit Scotland suggest 65 per cent of people in residential care homes probably don’t need to be there," says Ms Barrow. "They could manage in adapted houses with support. But facilities aren’t available."

Demographic changes may, in part, bring their own solutions. The number of men over 85 is expected to rise by 110 per cent within 15 years, which could have a profound impact on society. Double-income households tend to be better off than single-income households and older couples are good at caring for each other. "Older single men and women are more willing to reform partnerships than they were in the past," says Prof Bell. "The other big difference between now and 2026 is a move from a modest number of the frail elderly [being] home owners to a large number owning property."

In England, the market for financial products to cover care costs is growing. For a one-off premium of about 30,000, you buy long-term care for the rest of your life; the market in Scotland is less well-developed. "It’s difficult enough to get people to save for retirement when they won’t be earning," says Prof Bell, "but doubly difficult to get them to save for the idea they might need care."