Ministers not councils should make the tough choices on pensioners’ entitlements

Next year ministers will seek views on devolving the main disability benefit for pensioners to English councils. This is a big deal for the architecture of the welfare state, even though the news came in a low-key half paragraph, published as parliament went into recess. It could mean that the benefit concerned, Attendance Allowance, stops being a national, legally enshrined entitlement, funded by a budget that has to rise with demand, and instead becomes a more rationed, variable and discretionary system of support.

Today eligibility for AA is established when someone over 65 has disabilities which give rise to care needs. But the payment is intended to provide for the extra costs of disability in general, not just personal care. The payment of £55 or £82 a week is made to 1.5 million people who become disabled after 65, far more than the 300,000 who receive council social services.

Now the idea is to integrate the design and administration of AA with councils’ responsibilities for adult social care. Local authorities would presumably become responsible for running a combined system of payments and support for all frail and disabled older people in their patch. This would involve merging AA, commissioned care services and the direct payments which authorities already offer to many people with support needs.

Combining AA and social care is not a new idea. The last Labour government consulted on it, as part of its scheme for a ‘national’ care service. And the King’s Fund has proposed it on a number of occasions, to help fund a new settlement for social care. Until now, however, both Cameron governments have ruled out reform. The 2010 Conservative manifesto explicitly promised to protect Attendance Allowance and in 2015 the party said it would ‘maintain all the current pensioner benefits…for the next parliament’ without, this time, mentioning AA by name.

Ministers might argue they are sticking to the letter of their pledge, because this is not a proposal to cut the benefit or merge it on a national basis, but rather to devolve it to councils and pass to them responsibility for future reform. Devolution of social security was once a fringe idea, but the ground had been shifting fast. The Scotland Bill hands responsibility for disability benefits to Holyrood, as part of the Smith Commission package. Wales is catching up and these new proposals would pass responsibility for AA to Cardiff Bay. And in England momentum is gathering for the devolution and integration of health and care services.

On the face of it there is a plausible case for including disability benefits too. It would give responsibility for supporting frail and disabled pensioners to a single commissioner, with powers covering social security, social care and ideally health and housing too. Health and care commissioners could establish a coherent local offer, with a sliding scale of support ranging from modest cash-based help for people with fairly low needs, through to an intensive package of health and care services for the most vulnerable.

That’s the theory. But in today’s financial climate, could it ever become a reality? The fear must be that integrating disability benefits with social care would result in support for people with relatively low needs being cut in order to prop up existing care services. For, even after the new social care precept, the sector continues to face a financial black hole, which will amount to between £2.8 and £3.5 billion by 2020 according to three leading health think tanks.

If councils were handed the £5 billion currently spent on AA, it is almost inevitable that they would allocate some of the money to meeting their existing statutory responsibilities. After 5 years of huge cuts there is little more they can do to restrict eligibility and reduce the number of people offered traditional social care. And there is no way they can pay care providers less per client, as many firms are already near the brink, even without the new minimum wage.

The government says that existing AA recipients will be protected, but any transfer of resources to social care would mean that the system would have to become much less generous for new claimants. We’ve seen something similar happen the last time a benefit was devolved to councils. When responsibility for council tax benefit was handed to English local authorities it resulted in 2.3 million families losing out, by an average of £138 per year, according to the New Policy Institute.

On that occasion the cut was an overt act of policy, as councils were given only 90 per cent of the previous DWP budget. In the case of AA, no such explicit reduction would be needed. With a nod and a wink, ministers could give local authorities the green light to spend some of the money on care services at the expense of cash support, while maintaining that their manifesto promise stood because the AA budget had been passed on intact.

And once the new system was in place there would be no guarantee that real spending would rise in line with the number of frail and disabled older people. The resources available would depend on government grants and local revenue raising.

Some in the health and care sector might see this all as a price worth paying, in order to safeguard services for those with the highest needs. For years commentators have questioned the value and effectiveness of AA, when compared to care services. They worry that many who claim AA do not have significant disabilities, even though the whole point of the benefit is to provide a fairly modest level of support to a wide pool of people: it is a classic example of a preventative public policy.

And it is not even clear whether fears about claimants not having significant needs are correct.

Perhaps a new more robust test of disability would lead to many fewer older people being eligible for payments, but this is by no means certain. A similar assumption lies behind the creation of Personal Independence Payment for disabled people of working age. The DWP and OBR expect that only three quarters of current Disability Living Allowance claimants will be found eligible for PIP. Others are far more sceptical and only time will tell who is right.

It is also said that attendance allowance is poorly targeted in terms of income, because it provides more support to middle income pensioners than to people in poverty. There is some truth in this, since attendance allowance is a universal benefit, while social care is tightly means tested. But sometimes concerns about the targeting of AA have been made on the basis of a measure of income that includes the benefit itself. By definition if you give people more money to meet their higher needs, then they appear to be richer. But if their essential outgoings are greater too their standard of living will be no better.

Attendance allowance is also paid to people irrespective of whether they have a family member who cares for them; indeed it is a gateway benefit that establishes entitlement to Carers Allowance for unpaid carers. By comparison social care assessments take account of whether someone is providing care. Call this inefficient targeting if you like, but it seems eminently sensible for the government to provide modest amounts of cash when disabled people are being cared for by their families rather than the state.

The proponents of integration also question whether cash payments to frail older people are always well spent. On this point they may be onto something. To start with, many people in late old age could have better lives if they spent more of their money rather than saving it. Reform of some sort might help nudge people into using their AA in different ways. Perhaps if the payment was placed in a specific care account, with an explicit mandate to pay for practical support and a better quality of life, then it would bring better results? And if councils had sufficient resources, they could develop advice and guidance to help people spend the money too.

Such a cosmetic, administrative integration of AA and social care could work well. But I’m far more nervous about tasking each cash-strapped local authority to design and then police their own disability payment regimes. Councils have already grown used to applying the national needs assessment process for social care in a way that severely limits access. The same could become true for AA assessments.

And variations in the rules, not just their interpretation, would lead both to post code lotteries in access to support – for disabled people but also their carers – and to unwarranted age discrimination. For under the proposed arrangements someone who became disabled at 64 would remain under the national PIP regime, but a new claimant aged 65 would fall under a locally designed system.

Obviously money is in short supply. But if reform and belt-tightening of attendance allowance is to happen, it would be fairer and more transparent for it to take place in the open, at national level. Two options were explored by the Fabian Society’s 2013 commission on future spending choices.

First, if the new PIP assessment arrangements can be shown to be robust and fair, they could be extended to people aged over 65 (that would eliminate, rather than create, an example of age discrimination). This might save up to £2 billion. Alternatively, the most progressive way to save money from disability benefits would be to treat them as taxable income like the state pension, which HMRC believes could generate £1.4 billion for the exchequer.

Either or both of these options could be progressed, with the savings ring-fenced for spending on adult social care. And local health and care providers could become the local administrators of AA, as part of a wider integration as long as national rules and funding were still in place. The funding of care and support for older people is in crisis, and reform of disability benefits could be a small part of the answer. But devolving responsibility to councils is a dishonest fudge. The answer is national leadership.

Andrew Harrop is general secretary of the Fabian Society