Free care for the elderly

Cuthbert, Jim and Cuthbert, Margaret (2005) Free care for the elderly. Quarterly Economic Commentary, 29 (4). pp. 32-40. ISSN 0306-7866

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The policy of free personal care for the elderly in Scotland was implemented in July 2002. Work on the costings of the exercise had been undertaken by the Care Development Group (CDG), a group established by the Minister for Health and Community Care, and chaired by Malcolm Chisholm. Research to assist in the costings was specially commissioned and the research papers were published by the Scottish Executive Central Research Unit: (CRU, 2001). The CDG's main conclusion with regard to costs was that the initial cost of the policy would be £125 million, rising to £142 million by year 3. (CDG, 2001) Even before the policy was implemented in Scotland, the question of cost had caused considerable debate. Doubts, for example, were expressed by David Lipsey and Joel Joffe, two of the members of the Royal Commission on Long Term Care, who had produced a Note of Dissent (1999). In Lord Lipsey's view, "If it was affordable and if it was going to people who most needed it, yes great, free care would be a splendid policy. Unfortunately it is not affordable." One contribution to the debate on the cost of the policy in Scotland was a paper by Cuthbert and Cuthbert (2002), in which it was argued that the costs had been substantially underestimated. Recently, some members of the CDG have been quoted as saying that implementation of the policy could be too expensive: (Scotsman 12th October 2004). Nevertheless, the current state of the debate on costings is still unsatisfactory. The discrepancy between the cost estimates which have been produced by the CDG and ourselves is so large that it needs to be resolved. Moreover, the need for this resolution is heightened by two additional factors. First, the latest population projections by the Government Actuary’s Department indicate that there will be more old people in Scotland than was previously projected, which means that the effects of any underestimation of costs will be multiplied. Second, the Liberal Democrats have adopted free personal care for the elderly for the whole of the UK as a major part of their pre-manifesto3. The LibDem costings of £1.4billion for this policy for the UK appear to be broadly in line with the CDG costings for Scotland. So if the CDG has indeed underestimated its costings for Scotland there could be profound implications for the LibDem strategy. The main new information in this paper is derived from examining, in greater detail than in our previous paper, that part of the CDG’s work concerning the estimated costs of delivering free personal care in the community, as opposed to in residential and nursing homes. In the course of this critique we establish that there were flaws in the basic research commissioned by CDG, which meant that the numbers of elderly disabled people in private households in Scotland were seriously underestimated by the CDG, by a factor of more than 2. This mistake appears to account for a major part of the discrepancy between the CDG and Cuthbert and Cuthbert costings. In addition, in other parts of our critique we point to other areas where the methodology is suspect.