The government’s social care reform plans don’t add up

The government’s social care reform plans are all wrong

4 September 2021

9:00 AM

4 September 2021

9:00 AM

As Covid-19 swept through care homes in the spring of last year, the public watched on with horror and helplessness. About a third of all Covid deaths in England took place among residents of these homes. It was worse overseas. In Spain, care home residents accounted for 40 per cent of Covid deaths last year. In the Netherlands and Sweden, it was around 50 per cent. In Canada, almost 60 per cent. But this doesn’t provide much comfort. Britain may belong to a large club of countries that got their pandemic policy wrong — but the results, regardless, were deadly.

The huge holes in Britain’s social care system have been exposed. They had been expanding for decades but comprehensive reform was avoided time and time again. In the past year, though, what would normally be deemed politically impossible has been reconsidered. ‘Covid made everything possible,’ one government insider tells me. ‘That includes manifesto overhauls. The Prime Minister sees an opportunity.’

Boris Johnson is convinced he can now do what his Tory predecessors promised but failed to deliver: comprehensively reform social care. An announcement is expected in the coming weeks. It will tear up the Tory manifesto pledge to protect the public from tax rises. The reforms, which have been trailed for months, are expected to be funded by a 1p tax on National Insurance contributions to make up the costs. It’s a big U-turn. Tories who renege on their promise not to raise taxes usually struggle to be re-elected.

Even a 1p tax might not be enough. The tax haul would raise £6 billion to tackle growing NHS waiting lists and to provide social care support, but health chiefs are reported to be pushing for even more funding. Behind closed doors, the debate carries on. ‘The whole way of selling this,’ says a source close to government, ‘is to frame the tax rise in terms of the NHS — what it needs to recover post-Covid, and then set up long-term, sustainable funding for social care.’ It’s a plan to get the NHS more funding, we’ll be told, rather than a tax hike.

If this great Tory U-turn solved the care-home problem, it might be worth the cost. But Johnson remains wedded to the Dilnot proposals from 2011, which won’t add a single bed to the care-home system. Instead the proposals aim to protect the sick and elderly from the threat of having to sell their home to cover their care — but in many cases, that translates into a subsidy for the rich. The proposals transfer the cost of social care to the taxpayer. ‘Ultimately it’s a regressive policy,’ says one government source — taxpayers will protect the assets of many people who can afford their own care. ‘We’re changing who pays, but not much else.’

Taxes are going up but without any guarantee that the money will translate into a better care system. Taxpayers will expect faster GP access, shorter NHS waiting times, and, crucially, better care for their elderly relatives. They may not necessarily get that. Nor is there much evidence that the new proposals will improve the system that led to so many avoidable care-home deaths.

Already this hypothecated tax — that is, a specific tax to fund a specific purpose — is being fudged. The money raised from the NI hike seems designated for the NHS before the social care system. History shows this often happens. In 2002, Gordon Brown put 1p on employer and employee NI, with the stated purpose of funding the NHS. In practice, healthcare spending continued on an upwards trajectory, and wasn’t linked to how much money was raised through the NI increase. Brown increased the tax burden and bloated the state without giving patients much in the way of return. Nothing about Johnson’s proposals, so far, suggest the outcome will be any different.

The Tory party is about to become even more unpopular with younger voters. It plans to tax the working-age population more to support the old. But this funding stream is becoming increasingly unsustainable. In 1971, there were 4.6 working-age people for every person over the age of 65. Last year, it was down to 3.3. And the ratio is set to decline further. The Office for National Statistics predicts that by 2050 it will fall to 2.3. The government isn’t just running out of other people’s money; it’s running out of workers, too.

There is little discussion about whether the 2011 proposals are even fit for purpose, particularly after the pandemic. Are we really so sure that care homes, as they currently operate, are the right choice for our growing elderly population? Many families seem to think not. Our society is ageing but the proportion of over-85s in residential care homes has fallen from 25 per cent in the mid-1990s to under 15 per cent today.

Lockdown was not a good advert for care homes. The pandemic led to families being cut off from their loved ones for many months. The rigid system isn’t designed for the individual. With the possibility of another wave of Covid, or even another virus, would relatives be willing to take the same risk again? Might people find other ways of looking after their relatives?

‘We’re very nervous,’ says one Tory MP when asked about the social care plan. ‘We don’t know the full details about what these tax hikes get us.’ There is no obvious answer. Young people are not going to be able to foot this bill forever, but the prospect of making people sell off their homes to pay for their care remains politically impossible. But the alternative option of a social care insurance scheme, which would enable people to protect their assets and contribute to their care, remains completely off the cards. Never mind that countries with universal healthcare, such as Germany and France, use statutory insurance to help fund their systems. Any discussion of how the market could be used to improve UK healthcare is thought to be politically toxic.

What’s the answer? More tax? That is politically dangerous too, particularly for a prime minister who promised he wouldn’t raise key taxes. But if taxes do rise, voters will expect something in return. It’s not clear that the Tories can deliver this.

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