Dilnot survives the Russian front. . . for now

Social care is a minefield for politicians - and the Dilnot report offers no easy option for the gov

"One of the three Russian fronts of Whitehall". That's how a very senior Whitehall mandarin described social care to me over a decade ago. Alongside housing benefit and local government finance, social care has long been seen as one of Westminster's most difficult policy challenges. This particular Whitehall official had "lost many of my best people on that treacherous terrain". The warnings were well-deserved, even if the language was a little hyperbolic. After countless reviews, consultations and reports, little lasting change was secured on social care in the Labour years.

So it's to Andrew Dilnot's credit that he's come up with a package that provides the best opportunity for a generation to create a new and lasting settlement on elderly care. The basic shape of his proposals has been heavily trailed - a cap of £35k on personal liability for the costs of care with encouragement of private insurance to meet these costs; a less punitive means test for state support (lifted from £23k to £100k); and the creation of national standards for assessing care needs to remove worst aspects of the post-code lottery. These proposals fall short of what some campaigners have called for, but they are broadly sensible.

They do, however, pose some major questions. Most obviously: how will the cost of the Dilnot package be funded? That's not a question today's report seeks to answer. We also need to ask if it's realistic to expect a private insurance market to develop (there is scant international evidence of this happening). Then there's the hope that the current generation of working adults - so many of whom are already failing to save anything for their pensions - will be encouraged to put aside some extra cash in their pension pots to cover future care liabilities below the level of the cap. Really?

The "death tax" assault

Doubts on these issues were exactly the reasons that the previous Labour government wanted some sort of compulsion in the system, forcing people to save or contribute from their assets. But following the Conservative's "death tax" assault in the last election, that plan became politically impossible -so it's hardly surprising that it hasn't been proposed.

Given this context, how are the politics likely to play out over the coming months? There are high stakes both between the parties and within Whitehall. As my former mandarin colleague would have said: never underestimate the forces of inertia when it comes to funding social care. The treasury will be pivotal. Even though the total cost of Dilnot is tiny compared to overall public expenditure, George Osborne will dig in hard against absorbing any new costs. The treasury will insist on any new sources of revenue to be agreed upfront.

Harder still is the fact that the £2bn price tag associated with the Dilnot report understates the problem. For instance, the report does not include the cost of preventing the existing system from collapsing prior to the new proposals coming into effect - the King's Fund estimate that the shortfall will be well over £1bn by 2014. It is hard to see how the government can commit to fixing the system without filling this gap. Doubts on funding mean there will be a very real temptation to try and find a way to play Dilnot long, by kicking the tough questions on funding into a second term when (so the argument goes) revenue will be flowing more freely into the Treasury.

Number 10, meanwhile, will be anxious on many fronts. It will be highly concerned about a popular backlash against some of the likely ways of raising the necessary resources to pay for Dilnot (such as means-testing of disability benefits or increasing National Insurance contributions of the over 60s). And, following the recent NHS debacle, it will be intensely worried about rushing down a reforming path with great fanfare only to carry out a humiliating U-turn. It is also nervous about tying itself to proposals which offer significant benefit to middle and high income groups whilst doing comparatively less for the poorest, leaving the coalition potentially exposed to a Labour ambush. Overall, the mood-music coming out of government is worrying: the fact that even Lib-Dem ministers are using dread phrases like an "important milestone" to describe Dilnot speaks volumes.

Inertia or inaction?

Weighed against the forces of inertia are the escalating political costs of inaction. If the coalition ducks this opportunity then any claims to be willing to make the long-term reforms the country needs will be seen as risible. This is as clear a test of the coalition's reforming resolve as it is going to get. And the notion that it will be politically more tenable to deal with this issue in a second term should be dismissed out of hand - it won't be, and the leading lights of No 10 will know this. Those Conservatives still hoping that Tories can be the true radicals on welfare and public services understand that Dilnot presents them with a way of demonstrating the coalition's vitality. It is a policy area where Labour failed to lead and so is wide-open for the coalition to make its own. What's more, it provides a beguiling opportunity to protect the property interests of the Conservative's core electoral group (middle income baby boomers) in the name of securing a new pillar of the 21st century welfare state. That is surely a heady mix.

We can also be confident that there will be a rash of stories between now and the next election about shocking conditions in care homes. This will happen whether or not the government embraces Dilnot. The key difference is that acting on Dilnot will help insulate ministers from the fallout of these scandals and provide them with a clear argument to make whenever they arise. If the public judge the coalition to be foot-dragging, ministers will be in the firing line every time Panorama does an exposé. And let's not forget that the mainstream media is now sensitised to the politics of ageing in a way that simply wasn't the case 10 years ago, so these stories will run and run.

Labour's problem

And what about Labour? First and foremost it must appear relevant to the debate - as the party sometimes struggled to recently on the NHS. For that reason, Ed Miliband, who has always been keenly interested in this issue, was rightly quick out of the blocks yesterday seeking to insert Labour in the middle of the story on possible cross-party talks. The Labour leadership's strategy is to be seen to be statesman like and to occupy the high-ground. The hope is that this creates a 'win-win' scenario. If the talks deliver a consensus Labour can claim to have played a key role in securing reform for the good of the country. If the Conservative's crash the discussions (and let's not forget what happened just over a year ago during the last talks on this issue) Labour will be in a position to condemn them for being partisan and untrustworthy on this vital issue, at the same time as they seek common cause with the Lib Dems, who should surely want to be seen to be taking a lead.

That said, the risks for Labour are very real. The leadership will not want to get tied to unpopular ways of funding the proposals; and there are many within the Labour movement who are still smarting from the "death-tax" campaign who would like nothing more than the opportunity to use Dilnot to inflict political pain on the coalition come the next election. There is scope for division.

All sides have a lot to lose. Make no mistake: there is a long way to go before we see the new system of care this country so badly needs. Dilnot has done well to bring care in from the cold - and to have survived the Russian front. Whether his proposals will do so by 2015 remains to be seen.

Gavin Kelly is chief executive of the Resolution Foundation 

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Chuka Umunna calls for "solidarity" among Labour MPs, whoever is voted leader

The full text of shadow business secretary Chuka Umunna's speech to Policy Network on election-winning ideas for Labour's future, and the weaknesses of the New Labour project.

There has never been an easy time to be a social democrat (or “democratic socialist” as we sometimes call ourselves in Britain). Whereas the right can demonise the poor and extol the virtues of the market, and the hard left can demonise the market and extol the role of the state, our position of constraining the domination of markets and reforming the state is, by definition, more complex.

It is nonetheless the case that social democracy has a historic responsibility, in every generation, to renew democracy and preserve a civic culture. This is achieved not through soundbites and slogans, but through the hard-headed development of a progressive politics that reconciles liberty and democracy, new comers and locals to our communities, business and workers, in a common life that preserves security, prosperity and peace.  This historic mission is all the more urgent now and my determination that we succeed has grown not weakened since our election defeat last May.

But, in order to be heard, it is necessary to make balanced and reasonable argument that both animates and inspires our movement, and which is popular and plausible with the people.  The first is pre-requisite to the second; and there is no choice to be made between your party’s fundamental principles and electability. They are mutually dependent - you cannot do one without the other.

We are in the midst of choosing a new leader and it is clear to anyone who has watched the UK Labour Party leadership election this summer that amongst a significant number there is a profound rage against Third Way politics – as pursued by the likes of Bill Clinton, Tony Blair, Gerhard Schröder and others - as a rejection of our fundamental values.

In the UK there is a view that New Labour accepted an uncritical accommodation with global capital that widened inequality, weakened organised labour and we were too close to the US Republicans and too far from the European left.

I do not believe this is fair, not least because we rescued many of our public services from the scrap heap when we came to office in 1997 and there were very significant achievements  we should celebrate.  New Labour renewed our National Health Service in a fundamental way; we built new schools and improved existing ones; we set up new children’s centres all over the country; we brought in a National Minimum Wage; we worked with others to bring peace to Northern Ireland; we introduced civil partnerships.  Just some of our achievements.

However, though we may take issue with the critique, I do not think we can simply dismiss out of hand those who hold critical views of New Labour. Like any government, the New Labour administration made mistakes - it could and should have achieved more, and done more to challenge the Right’s assumptions about the world. In the end, it is not unreasonable to be ambitious for what your party in government can achieve in building greater equality, liberty, democracy and sustainability. It is far better we acknowledge, not reject, this ambition for a better world, as we seek to forge a new politics of the common good fit for the future.

Realising our values in office has been disrupted by globalisation and the surge of technological forces that are displacing and reshaping industry after industry.

Some argue that globalisation as an ideological construct of the right. But we must recognise that we live in an increasingly integrated world in which markets have led to an unprecedented participation of excluded people in prosperity, a rise in living standards for hundreds of millions  of people and a literacy unprecedented in human history – this is particularly so in emerging economies like my father’s native Nigeria. And the internet has led to a level of accountability that has disturbed elites.

Yet, this has been combined with a concentration of ownership that needs to be challenged, of a subordination of politics that requires creative rather than reactive thinking, and these global forces have exacerbated inequalities as well as helped reduce poverty.

So it is important that we understand the sheer scale and impact of new technologies. At the moment we are engaged in a debate about Uber and its threat to one of the last vestiges of vocational labour markets left in London, those of the black taxi cabs and their attainment of 'The Knowledge'. But the reality is that within the next decade there will be the emergence of driverless cars so we have to intensify our exploration of how to support people in a knowledge economy and the realities of lifelong learning, as well as lifelong teaching. As people live longer we will have to think about how to engage them constructively in work and teaching in new ways.

Once again, I'm addressing all of this, Social Democracy requires a balanced view that domesticates the destructive energy of capital while recognising its creative energy, that recognises the need for new skills rather than simply the protection of old ones. A Social Democracy that recognises that internationalism requires co-operation between states and not a zero sum game that protectionism would encourage.

Above all, Social Democratic politics must recognise the importance of place, of the resources to be found in the local through which the pressures of globalisation can be mediated and shaped. Our job is to shape the future and neither to accept it as a passive fate nor to indulge the fantasy that we can dominate it but to work with the grain of change in order to renew our tradition, recognising the creativity of the workforce, the benefits of democracy and the importance of building a common life.  Sources of value are to be found in local traditions and institutions.

This also requires a recognition that though demonstration and protest are important,; but relationships and conversations are a far more effective way of building a movement for political change.

One of the huge weaknesses of New Labour was in its reliance on mobilisation from the centre rather than organising. It therefore allowed itself to be characterised as an elite project with wide popular support but it did not build a base for its support within the party across the country, and it did not develop leaders from the communities it represented. It was strong on policy but weak on strengthening democratic politics, particularly Labour politics.

Over half a million people are now members, supporters or affiliated supporters of our party, with hundreds of thousands joining in the last few weeks. Some have joined in order to thwart the pursuit of Labour values but many more have joined to further the pursuit of those values, including lots of young people. At a time when so many are walking away from centre left parties across the Western world and many young people do not vote let alone join a party, this is surely something to celebrate.

So it is vital that we now embrace our new joiners and harness the energy they can bring to renewing Labour’s connection with the people. First, we must help as many them as possible to become doorstep activists for our politics. Second, I have long argued UK Labour should campaign and organise not only to win elections but to affect tangible change through local community campaigns. We brought Arnie Graf, the Chicago community organiser who mentored President Obama in his early years, over from the U.S. to help teach us how to community organise more effectively. We should bring Arnie back over to finish the job and help empower our new joiners to be the change they want to see in every community – we need to build on the links they have with local groups and organisations.

I mentioned at the beginning that in every generation Social Democracy is besieged from left and right but the achievements of each generation are defined by the strength of a complex political tradition that strengthens solidarity through protecting democracy and liberty, a role for the state and the market and seeks to shape the future through an inclusive politics. Solidarity is key which is why we must accept the result of our contest when it comes and support our new leader in developing an agenda that can return Labour to office.

Yes, these are troubled times for social democrats. All over Europe there is a sense among our traditional voters that we are remote and do not share their concerns or represent their interests or values.  There is surge of support for populist right wing parties from Denmark to France, of more left wing parties in Greece and Spain and in Britain too. There is renewal of imperial politics in Russia, the murderous and abhorrent regime of ISIL in the Middle East, volatility in the Chinese economy and in Europe a flow of immigration that causes fear and anxiety.

But, the task of Social Democracy in our time is to fashion a politics of hope that can bring together divided populations around justice, peace and prosperity so that we can govern ourselves democratically. We have seen worse than this and weathered the storm. I am looking forward, with great optimism to be being part of a generation that renews our relevance and popularity in the years to come.

Chuka Umunna is the shadow business secretary and the Labour MP for Streatham.