Keep calm, but note the warning

Whilst social care reform proposals remain bedevilled by an inability to find a funding solution, the Office for Budget Responsibility (OBR) has published its annual Fiscal Sustainability Report.  As last year, this warns of the age-related risks to public finances in the longer term – which, to the OBR, is 50 years.

Its big picture forecast is of rising costs on health and pensions, offset by falls on public sector pensions, and of shrinking revenues from parts of the existing tax base especially oil and gas and (because of globalisation) corporation taxes and VAT. It expressly does not call for more fiscal tightening in the medium term – the period in the Treasury’s sights to 2017 – but it concludes that “governments would be likely to need some replacement sources of revenue just to keep the tax burden constant, let alone to meet the costs of an ageing population”.

Comparing 2016/17 with 2061/62, the OBR sees:

  • health spending rising smoothly as the population ages from 6.8% of Gross Domestic Product to 9.1%;
  • state pension costs increasing from 5.6% to 8.3%;
  • social care costs growing from 1.1% to 2%;
  • gross public service pension payments falling from 2.2% to 1.3% – or in net terms (including contributions) from 1.7% to 0.9%.

The shortfall in tax revenues are even less easy to project, but could amount to 2% of GDP or more.

These percentages translate into big money – in today’s terms, 1% of GDP is about £15bn. But it is striking how modestly social care features in these estimates. And of course, all the calculations are based on what we are doing today and cannot reflect any significant change in public habits and behaviour, or indeed scientific breakthroughs, such as finding a cure for dementia.

Meanwhile, what do we know about the public’s attitude to paying higher taxes for better public services? The picture is often contradictory. Polling by MORI shows that in 2010, 58% of the public supported cutting public services to pay off the national debt, but by June this year, that had fallen to 46%. The British Social Attitudes Survey, covering the years 1998 to 2009, showed a falling appetite for spending more on welfare benefits for the poor if it led to higher taxes: different age cohorts hold different views (with older generations being more supportive), but nearly half the baby-boomers, for example, supported this proposition at the beginning of the period, but only a third by the end. There has been a slow but steady shift from supporting a society which emphasises social and collective provision of welfare towards encouraging individuals to look after themselves – the balance is now 51:49.

The row about social care reform, of course, is that people probably would do more to look after themselves if the reforms gave them a credible platform to do so. That was the whole point of Andrew Dilnot’s proposed caps, which we now learn the Government agrees with in principle. If we look at the OBR’s rather gloomy forecasts we cannot have these proposals too soon, both for social care per se and for getting more efficiencies into the health service. Kicking these decisions into the long grass is not going to make the OBR any less gloomy next year.

Read Age UK’s briefing about the Governments proposals for social care reform

Find out more about our Care in Crisis campaign

Agenda for Later Life report – last year’s priorities

In the second post previewing Agenda for Later Life 2011 we look back a year to the priorities we highlighted in the 2010 edition of the report. Published just weeks before the general election, we knew in March 2010 that a lot would change over the coming year, but no one predicted how much. The political landscape has of course transformed, but there have been huge ruptures in public policy on later life as well. The 2011 report charts the changes impacting us as we all live through or look forward to our later years.

There are many positives to report. It was a year of considerable progress on issues that Age UK and our predecessors have campaigned on for many years. In early 2010 we published our pre-election manifesto, Our Power Is Our Number, setting out 30 challenges to the political parties. We were delighted when key proposals appeared in the manifestos of all three main parties, and then in the subsequent coalition agreement.

In the list below we evaluate progress on each of our election priorities with a traffic-light score. Some (labelled red) have been ignored by the new administration; notably our proposals for specialist support packages for unemployed over-50s, the future-proofing of new housing and prioritising older people within international development and disaster relief. In health there are radical proposals for reform, but it is far from clear how these will affect the priority issues that we highlighted last year, with respect to dignity and mental health. Continue reading “Agenda for Later Life report – last year’s priorities”

Whatever you do, don’t cut care

All across the country, local authorities are holding talks on how they can reduce their spending. This is a result of, on average, 26% cuts to their central government grants budgets over the next 4 years. Tough choices are inevitable.

But as they work out where they can make savings by cutting red-tape, reducing services, or increasing user charges, councils must remain aware that the demand for many services, in particular social care, is actually rising due to our ageing populationContinue reading “Whatever you do, don’t cut care”

No less Atlases

Along with thousands of people, I picked up a copy of the Evening Standard on the train the other day (9 November). But unlike those thousands, as I read it I recalled a lecturer of mine who used to say, mantra-like, that half-baked evidence is no evidence at all.

What prompted the memories from my cherished years as a university student was an article by Russell Lynch on the so-called ‘Atlas generation’ – i.e. people in their 20s and 30s. Lynch claimed they would be ‘sagging’ under the burden of the concessions for older people announced in the Comprehensive Spending Review (eye tests, concessionary fares, TV licences, and winter fuel payments spared from the cull plus the linkage of pensions to average earnings, and so on).  Continue reading “No less Atlases”

Real terms growth in older people’s needs

Following the intense interest in the Comprehensive Spending Review, we can be forgiven for thinking that the only figures that matter are the ones with pound signs in front of them. However, the Hospital Episode Statistics (HES) released last week come as a timely reminder of how important the NHS is for many older people.

The headline figures showed that average hospital stays for people over 75 years have grown by 66% since 1999. For people between 60 and 74 years, this number has grown by 48%. By comparison, people between 15 and 59 years saw growth in hospital says of 28% in the same period.

Further detail reveals how much longer older people need to stay in hospital compared with other groups. Observing average length of stay, we can see that people over 75 years are in hospital for almost three times as long as people between 15 and 59. However, people over 75 years have also seen the biggest drop in average length of stay since 1999, a decrease of almost four and a half days.

So apart from reflecting the growing numbers of our older population, what do these figures tell us? The growth in NHS funding since 1999 could explain the extra numbers of people being treated – we are spending around three times as much today then we were in 1999. People are also living longer and therefore could return to hospital on more occasions later on in their lives.

What of the decrease in the days spent in hospital? Reducing bed days has been a significant focus of the NHS for the past ten years and this clearly shows it has paid off. Certainly, getting people home, in appropriate circumstances and with the right level of support, should always be a priority. Advances in medical practice and the opportunity to treat more people as day cases have also paid dividends.

However, the numbers presented in the statistics relate to episodes of care, not individuals. We also know that emergency readmissions have gone up significantly since 1999. It could be that as the number of bed days go down, people have become more likely to return to hospital, thus generating a new episode of care. The Nuffield Trust recently made an assessment of rises in emergency admissions and highlighted the need for better care outside of hospital and prevention services. Whatever the figures show, it is important to remember that achieving more episodes of care is only one part of the picture.

The figures need further analysis to draw any firm conclusions, though it is immediately welcome that more older people are receiving care (though obviously less welcome that they need it in the first place). As we concentrate on the figures in the CSR going down, we must not forget those critical figures that continue to go up.

Cuts to Local Authority funding – opportunity for a fresh approach?

The 26% cuts over 4 years to the grants from central to local government announced in last week’s CSR will burn a significant hole in the local public purse, and challenge even the most innovative and well-prepared local authorities to look again at how they can provide consistently ‘more for less’ between now and 2015.

The removal of ringfencing, the development of community budgets and the reduction of targets will be welcomed by many councils, as this will offer the freedom and flexibility they need to bring agendas together internally and externally to produce improved outcomes while reducing spend.

But will they take advantage of these new opportunities?

Age UK has recently been calling for a new cross-council approach to ageing, building the needs of older people into all departmental plans and factoring demographic change into all council budgets.

Too often ageing as an issue gets passed to the adult social care department. However, an Audit Commission report revealed that 85% of people over 65 don’t use council care services, but they do use – and often rely on – the majority of general council services and many use other services such as transport, leisure, and housing.

With growing numbers of older people in all but four of the local authorities in England, surely now is the right time to take a fresh look at ageing as a cross-cutting priority and bring together strategic thinking and budgetary planning at the highest levels to ensure reform of any or all public services has our ageing population in mind.

The fiscal clouds and the long-term vision

Pound coins - Photo: Flickr user hitthatswitchOver the last few days and weeks economists and analysts have speculated about the comprehensive spending review. In the build-up, endless rumours and ‘leaks’ and even snapshots of confidential papers inundated the media and kept almost everyone busy – and worried.

After the announcements, some breathed a deep sigh of relief, many felt disappointed while others felt outraged. However important it may be, the CSR only presents a set of fiscal measures to tackle the short term – until 2014 at the most – or, as the Chancellor put it in his speech, measures that ensure “that what we buy, we can afford; that the bills we incur, we have the income to meet; and that we do not saddle our children with the interest on the interest on the interest of the debts we were not ourselves prepared to pay.”

The Chancellor also announced that “a stronger Britain starts here”. Perhaps, but it will take a lot more than fiscal restraint for this attempt not to become a false start.

Fortunately, economics has developed the life-cycle approach, but unfortunately it is taught solely as a way to study consumption and saving decisions. There’s more to it than this.

Let’s consider the Marmot Review on health inequalities, for example. It lists a number of key policies over the life course. When it comes to ‘adults of retirement age’, one of the policy objectives was to increase access to apprenticeships. Certainly most apprentices are young adults – so, how come this is an appropriate objective for people past state pension age? It is, if we look far at the horizon where these young people get to retirement age.

Around 21 per cent of all economically active adults in England have qualifications below Level 2. Students who leave our schools with no or very low qualifications are twice as likely to claim job-related benefits before they are 25 as those with better qualifications. And it is also much more likely that it will be them who may have to struggle most to keep warm in winter and who may have to get by on very low incomes when they get to retirement age, and it is them who are more likely to endure worse health earlier in life and even more likely not to make it to retirement age.

A life-cycle or life-course approach helps dispel the short-term fiscal clouds and focus our effort on the long term vision more clearly. In our submission to the Comprehensive Spending Review, we highlighted 12 key long-term challenges we face as an ageing society. That is, even though we discussed and proposed measures related to public spending over the next four years, we refused to be locked in the short-term fog and never lost our vision.

The best thing about the CSR announcements – if there is such a thing as a ‘best thing’ about it – is that now the focus of the economic discourse may concentrate on the bigger, more meaningful and crucial picture, that of raising productivity and employability, and reducing inequalities, on behalf of everyone – including the people currently in older age and the future older people. This is the real challenge facing us in the longer term and Age UK will be seeking to ensure that it is not forgotten.