Scottish independence 'not easy solution' to social care funding dilemma

It also matters for the public finances, and how funding is balanced across the public sector and individuals. 

Scottish Government funding of adult social care amounted to £3.2 billion in 2018.

This is more than the Scottish Government allocated to universities, colleges and the police, combined.

Individuals also contributed some £600 million in fees and charges for the social care services that they received.

Public funding of adult social care in Scotland has increased by 7% in real terms during the past decade, a time of declining budgets for many public services.

But this increase was not enough to match growing demand.

A recent report estimated that around 36,000 people in Scotland would benefit from social care support but do not currently receive it, because of constraints in availability. This is a substantial and growing level of “unmet need”.

The need for social care will increase substantially over the coming years and decades. More of us are living longer. This is a good thing. But many of us will need some element of care as we age. 

Between now and 2040, the total population of Scotland is projected to decline slightly. But over the same period, the population aged over 65 is projected to increase by 30%. 

One inevitable result will be more people requiring care of some sort. How many more, and what type of support, are difficult things to predict.

One recent analysis by the London School of Economics forecasts that the number of people with severe dementia in Scotland could almost double, from 39,000 in 2020 to 74,000 by 2040.

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Public funding will therefore need to increase, not just through the need to provide formal care services, but to support the growing legion of “unpaid carers” too.

Over half of adults in Scotland are expected to have caring responsibilities at some point in our lives.

Before the pandemic, the Scottish Government estimated that social care funding in Scotland would need to grow in real terms (ie on top of inflation) by at least 3.5% per year for the next 20 years.

(David Eiser)

It is not growing by anything like that at the moment. The Government’s manifesto commitment is to increase social care spending by barely 2% per annum this parliament.

The Scottish Government’s response to the challenge of adult social care is framed by Derek Feeley’s independent review of adult social care, published in January 2021. 

The Feeley Review made a number of important recommendations. The one that the Scottish Government is focusing on in the immediate term is the proposal to create a new National Care Service.

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The Government intends that the new national agency will be operational by 2026.

There are grounds to believe that a National Care Service could yield a number of benefits.

A National Care Service might be in a better position to drive service improvements, ensure greater consistency of service across the country, support integration with the health service, provide better opportunities for career progression for those who work in the sector.

It might enhance the accountability of social care services to Scottish ministers.

But a National Care Service also brings risks, particularly around a loss of local control and ability to prioritise services at a local level.

More particularly, proposals for a National Care Service do not explicitly address the underlying funding challenge.

Where will the additional funding come from to support the growth in demand? Will we accept an increase in “unmet need” as an inevitable consequence of demographic change, and if so what will the impacts be on those with care needs and their unpaid carers?

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Or, must we accept a change in existing funding rules, expecting those with more resources to make more of a contribution to their care costs?

These questions and challenges are clearly not unique to Scotland. The UK Government is grappling with similar issues in England. Its recent response has involved two key elements.

First, reforms to the rules around the extent to which the value of people’s assets can be considered when determining the division between public and private costs of social care.

These do not apply in Scotland. 

Second, the introduction of a new Health and Social Care Levy to raise additional public funding. This levy will apply in Scotland, and the Scottish Government will receive a share of the UK-wide revenues generated.

The funding uplift (anticipated to be around £1 billion) will be helpful in addressing funding challenges in both the NHS and social care sector.

But it is not in itself enough to address the funding challenges of the next five years, let alone the next 20.

Given the long-term nature of the social care funding challenge, it is right to think about the implications of constitutional change.

The reality is that the challenges that social care poses to society, let alone the Government’s budget, exist regardless of the constitutional settlement.

Some will say that independence gives the Scottish Government more flexibility to raise additional revenues.

Others will argue that the UK union provides a fiscal dividend that would be lost following independence.

Both statements are true – independence offers more flexibility, but also more funding constraints. It is not in itself a solution.

Inevitable growth in demand for adult social care will pose huge challenges for society and for the Government’s budget over the next couple of decades.

Current Scottish Government reforms are well intentioned and may improve aspects of care delivery.

But there is a risk that the implementation of these reforms will distract from difficult funding choices. Unpopular or not, this is a debate which we cannot ignore.

David Eiser is Senior Knowledge Exchange Fellow at the Fraser of Allander Institute at the University of Strathclyde