Article

Adult social care unit costs are rising - is it sustainable?

Phillip Woolley Phillip Woolley

Adult social care unit costs are on the rise, and there are good reasons for this, but continued increases aren’t sustainable.

In the past, adult social care unit costs have been driven down significantly as a result of austerity. At a national level, 2015/16 marked the fourth successive year of unit cost reductions within adult social care, dropping from £362.39 to £335.76 since 2011/12.

Adult social care unit costs, per year, 2011/12 - 2018/19

adult-social-care-unit-costs-per-year-201112-201819.png

Source: Ministry of Housing, Communities, and Local Government; Office for National Statistics

In some areas, this created commercial instability in the market as it was increasingly difficult for providers to render quality services at such reduced cost. In some cases this has led to poorer outcomes for service users due to increased changeovers of providers and carers and a lack of continuity of care.

However, 2016/17 proved to be a turning point with the introduction of the social care precept, with unit costs increasing in every subsequent year. Nationally, there has been a 9% increase in unit costs for adult social care since 2016 and, in 2018/19, the unit costs surpassed that of 2011/12.

Adult care costs are rising across the country

The three year change in adult social care unit costs before and after 2015/16, by region

the-three-year-change-in-adult-social-care-unit-costs-before-and-after-201516-by-region.png

Source: Ministry of Housing, Communities, and Local Government; Office for National Statistics

The shift from reducing to rising costs has been observed across all regions, particularly in the North West. In the three years before 2015/16, the regional unit cost decreased by 10.5%, in the three years since, there has been increase of 14.6%.

In 2018/19, the South West recorded the highest unit cost for ASC (£423.75), a significantly greater cost than any other region at over 15% above the national average (£367.11). Yorkshire and the Humber recorded the lowest unit cost at £340.96.

Adult social care unit costs, by region, 2018/19

adult-social-care-unit-costs-by-region-201819.png

Source: Ministry of Housing, Communities, and Local Government; Office for National Statistics

Aging populations and increasing complexity of need are frequently cited as drivers of this increase, but they’re not the only factors. While acknowledging that this represents significant financial strain on councils, it’s important to note the positive reasons contributing to this rise, and the market impact:

  • Fairly widespread adoption of the London Living Wage/National Living Wage
  • Providers are able to recruit and retain a more stable workforce, raising the profile and value of individuals working in the sector
  • A better financial outlook for suppliers, leading to increasing market stability
  • Development of longer term partnerships between providers and councils

These things all contribute to higher unit costs but also a better care experience for service users, their families and carers, and should aid in improving outcomes. 

The increase in costs for adult social care needs to plateau

Council budgets are unlikely to receive significant boosts to funding so, regardless of the positive aspects of rising unit costs, the trend will need to slow or plateau. Social care continues to be the most significant factor impacting councils’ finances in England. In 2018/19, 47% of councils overspent on their adult social care (ASC) budget, a 7% increase compared to 2017/181

What can be done to stabilise social care costs?

Officers responsible for maintaining the balance between ensuring best care for individuals and fiduciary responsibility need to look to the future to:

  • identify novel and sustainable cost and demand management strategies
  • explore long term prevention opportunities.

Maintaining this balance and stagnating adult social care costs can work if:

  • councils foster good relationships with providers and share a long term vision and plan to get there
  • providers are incentivised to deliver outcomes-based care and recognised for the service they provide
  • a culture of trust develops, where providers are empowered to create an environment that underpins well-being and increased independence, for example self-managed teams, eg Buurtzorg
  • councils increase their appetite for risk and are willing to pilot new approaches and embed prevention strategies within their core service offering.

These conditions can be achieved if local authorities are sure to implement the following:

  • rigorous demand forecasting to support strategic commissioning and service development, with a view to mitigating need, rather than simply meeting it
  • moving provider relationships from vendor mindset to partner mindset, where outcomes for individual service users are discussed and agreed up front and all parties work towards them
  • promoting community-based provision and creating networks of support, for example social prescribing

If you want to discuss the sustainability of your social care services, please contact Nick Clarke or Phillip Woolley

References

  1. Local authority capital expenditure and receipts in England: 2018 to 2019 provisional outturn and 2019 to 2020 forecast, Gov, 2019
  2. Estimates of the population for the UK, England and Wales, Scotland and Northern Ireland Office for National Statistics, 2019 

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