The social care reforms proposed by the Dilnot Commission would require a rise in spending equivalent to just 0.2% of national income within 10 years, according to an influential thinktank.
A report by the Institute for Fiscal Studies, said that if the Dilnot Commission’s proposals were implemented in full, social care spending would require average real-terms spending increases on social care of 5.4% per year.
It says leaving the current means-tested system in place would require spending rises of 3.3% per year between 2014-15 and 2021-22.
“Because spending on social care is relatively small as a share of national income, the difference between these scenarios is about 0.2% of national income by 2021−22,” the report says. It says the difference represents about £3bn in today’s terms.
The report also issues a strong warning that without increases in NHS productivity, rising demand would cause access to care and the quality of care to deteriorate.
It says: “Serious consideration should then be given to the options for the NHS, which include reviewing the range of services available free at the point of use and reconsidering the level of taxation needed to finance the NHS in future.”
It also warns about long-term cuts to welfare spending. “Even if the Government were to implement welfare cuts of £8.5 billion (in today’s terms) in 2016−17, as mooted by the Chancellor in his March 2012 Budget speech, spending on public services would still need to be cut in real terms by an average of 1.7% a year over 2015–16 and 2016–17 to keep to the current spending plans,” it says.
“If total public spending is held constant as a share of national income thereafter then, in absence of further welfare cuts, spending on public services could only be expected to grow by an average of 1.1% a year in real terms over the seven year period from 2015–16 to 2021–22.”