The myth of social care as a working planned economy

Updated: 2 days ago

Our report, Social Care Exposed, will show how social care’s constant crisis is not just about lack of funding, but is rooted in a number of myths and untruths. One of the most damaging is the way that social care supposedly operates as a "planned economy." In reality, it is an economy where supply and demand react on a day to day basis, in a way that is rigged against the interests of the people who rely on it. It ensures that crisis remains the sole driver of supply and removes the possibility of long term or preventative planning.

What people think a "planned" social care economy looks like

People assume that social care is systematically planned to make sure that resources are used fairly and that everyone with a certain level of need gets help. Here’s how it’s supposed to work:

Defining and categorising needs: People’s needs are grouped into categories, allowing the system to calculate the cost of providing care to everyone who meets certain criteria. This should, in theory, create a fair system where similar needs receive similar support.
Setting budgets based on needs: The government then requires councils to set their budgets based on these defined needs so that everyone within the system gets the right care and support. This approach should theoretically help balance the demand for services with available funding.

In England, there are national ‘eligibility’ criteria for social care, which are supposed to make sure that councils provide care to everyone who qualifies. The Statutory Guidance to the Care Act sets this out.

But the reality is very different.

Why this "planned economy" is a myth

The truth is, no system exists that can accurately predict and define needs and costs. Here are the main issues:

Uniqueness and variety in needs: Every individual’s needs are unique, and this variety makes it impossible to predict, categorise and cost them accurately. No system has ever been able to do this effectively. Different people will need different types of social care at different times. Only basic assumptions can be made about ‘likely’ needs based on age and impairment. There will always be a place for academic projections of likely future need to inform long term strategic planning. However, they can never have the accuracy and reliability to determine current spending priorities.
Limited budgets and competing services: Councils can’t set their budgets freely. They must work within a fixed budget that covers multiple services, not just social care. They are restricted in how much local tax they can raise. They rely on government grants to a significant degree. So, overall council funding is always limited, and social care competes with other services for the same pool of money.

The reality: A reactive system that restricts needs to fit budgets

In reality, social care operates as a "reactive" economy, but in the wrong way. Reactive economies can work in the interests of the consumer when supply of goods and services react to consumer demand. But in social care, its the other way round. Decisions about what is ‘need’ are made by council staff. They have to balance two conflicting priorities:

Meeting all needs which are a ‘duty’ under the Care Act: They have a legal obligation to meet all needs they say are ‘eligible’ and therefore a ‘duty’ to meet.
Staying within budget: They cannot overspend their budget.

Since the budget is unchangeable, council staff have no choice but to adjust what they deem ‘eligible’.

In this way, funding limits end up defining "need" instead of needs defining funding requirements.

How the myth is maintained

Claims from Council leaders: Directors of social care departments continue to say that budgets are planned to meet all needs within the National Eligibility Criteria.
The language of ‘eligibility’: Social workers and staff who undertake assessments of need describe their decisions using the language of the eligibility criteria, even when budget restrictions drive those decisions.

The Consequences

Budgets are always met: Every year, the budget is spent almost exactly as planned. The 2024 Association of Directors of Adult Social Services (ADASS) annual budget survey showed £84.9 billion was spent on social care over five years, against budgets of £84.1 billion, a variance of less than 1%. This precision is satisfying for government budgeting but doesn’t reflect real needs.
Unmet needs are officially unseen: Councils claim there’s no unmet need. None is documented. The ADASS survey says the only needs not met are for people awaiting their assessment. The Statutory Guidance to the Care Act assumes all needs are met. It makes no mention of unmet need following the assessment.
Inequality between councils - the postcode lottery: Different councils spend widely different amounts on social care per person. Wealthier councils, with fewer people in need, can raise more in taxes and thus spend more per person, creating large inequalities. The Local Government Association (LGA) found up to a 70% difference in spending per person between the highest and lowest-spending councils. (This is actually an understatement as the LGA excludes councils at either end of the spectrum. If all councils are included, the difference is near 100%).
Hidden unmet needs: Non-governmental organisations know there are many unmet needs in social care, but these remain unmeasured and unaddressed. Think tanks try to estimate the scope of these needs, but since they accept the "planned economy" myth, their projections are based on the assumption that the existing spend is doing what it should. This mistake means their estimates cannot be accurate. They have never impacted political funding decisions

A new approach: Making social care a working planned economy

Our campaign proposes that social care should indeed be planned, but in a way that truly responds to people’s needs. It must be flipped around so that needs determine budgets, not budgets define needs:

Identifying needs first: Instead of fitting needs to a set budget, all needs would be identified and documented, no matter the resources available at the time.
Funding follows need: This approach would allow for the gap between actual needs and available resources to be clearly seen, which could inform future budgets and help ensure resources match real, documented demand.

This would actually make the focus on wellbeing achievable according to the 2014 Care Act. But it has never been delivered. Our dossier will set out how the statutory guidance to the Act is responsible for a system that can never hope to achieve the funding it needs.