Social care for the elderly will be the first to go in the council cuts

What could replace it? "Adopt-a-granny" schemes, or a National Care Service, maybe.

Recent weeks have seen social security cuts ignite passions and viscerally polarise politics. Benefits reform lit the touch paper for disputes on the future affordability of the welfare state. But pensioner benefits, over half of the total welfare spend, are curiously off the table for discussion.

Yet if anything it is elderly care, rather than jobseekers payments, which will bankrupt the public finances. Constructive debate on the future of adult social services is more urgent than political wrangling on strivers vs. scroungers. Without it we risk sleep walking into a care crisis. 

The looming crisis hasn’t gone unnoticed by government over the past decade, yet no minister has yet arrived at a conclusive response. The latest attempt to grasp the nettle was made in Budget 2013, when the Chancellor agreed to fast track reform to social care funding. The government’s proposals are designed to make the system fairer, by protecting housing assets, but don’t tackle current spending pressure. 

Simply put, through capping individual payments at £72,000 from 2016, the government is addressing the balance of payments between the state and individuals. But the totality of funding will not change.

In response, a prominent Lords Select Committee has declared that the country is still “woefully underprepared for ageing.” Radical changes to the way that health and social care is delivered are needed to provide appropriate care and to address future demand.

Over the next two decades, England will see a 51 per cent rise in those aged 65+ and a doubling of those aged 85+. Many elderly people will be increasingly dependent on the care system. The Local Government Association estimates that this will see an increase in the care bill of £7bn - or about 15 per cent - over the decade. Worryingly, this is a "modest" estimate.

At the same time, until the social care system is reformed, money will continually be sucked out of other local services, such as roads, street cleaning and education support. This reality became apparent during research for NLGN’s latest report Gaming the Cuts, which is launched today. 

To inform the research we conducted a "budget war game" with senior council officers thinking through the implications of the cuts on an imaginary council called AnyBorough. Both teams quickly latched onto integrating health and social care, thinking that substantial savings could be made.

Back in the real world, many local authorities are already looking to bring clinical and public health commissioning together. Essex County Council is pioneering a new joint approach to tackle the £1bn elderly budget it shares with the NHS.

It is estimated that Essex’s new approach could save the public purse £348m by 2017/18. A study commissioned by the Local Government Association suggests that if such approaches were scaled up there could be a 5-year net benefit to the public sector of £5.8-£12bn. 

However, the budget war game made clear that savings from new models would likely flow to the acute sector. As a result, councils may look to the community to provide more social support. 

In England and Wales the informal care economy already accounts for approximately 3.4m working days every week, this is a substantial increase from 10 years ago. During our research it was therefore mooted that the public may have to be paid to deliver social services.

Currently, advocates for increased community involvement in adult social care point to the success of time dollar banking approaches first developed in Japan. Elderly people are befriended in order to combat loneliness and people account for the time spent in such schemes as a currency. They can then trade time to ensure that their own elderly relatives, who often live too far away to visit regularly, are supported.

But what if such Adopt-a-Granny schemes were based on a monetary transaction? Could support for elderly independent living be based on a similar financial footing to the fostering of children, with allowances paid to accredited carers?

Although seemingly radical the principle behind such an approach makes sense. For many people social relations are as important to physical and mental health as social services.

Yet, considerable risk would be transferred onto the community and more money saved would only be a drop in the ocean of the health and adult social care bill. But most importantly, monetisation could have unforeseen consequences on the sense of community and mutual relations that is at the heart of caring. 

With health integration and community care likely to be insufficient we are left with a seemingly intractable situation. Councils are even beginning to raise the possibility of social care spend being taken away from them, through a National Care Service for example, so that they can focus on making investments for local prosperity and growth. Just two years ago this would have been unthinkable, but such is the pressure now facing councils that such heresies are increasingly to be heard whispered around local government.

Photograph: Getty Images

Joe is a senior researcher at the New Local Government Network

Photo: Getty Images
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A simple U-Turn may not be enough to get the Conservatives out of their tax credit mess

The Tories are in a mess over cuts to tax credits. But a mere U-Turn may not be enough to fix the problem. 

A spectre is haunting the Conservative party - the spectre of tax credit cuts. £4.4bn worth of cuts to the in-work benefits - which act as a top-up for lower-paid workers - will come into force in April 2016, the start of the next tax year - meaning around three million families will be £1,000 worse off. For most dual-earner families affected, that will be the equivalent of a one partner going without pay for an entire month.

The politics are obviously fairly toxic: as one Conservative MP remarked to me before the election, "show me 1,000 people in my constituency who would happily take a £1,000 pay cut, then we'll cut welfare". Small wonder that Boris Johnson is already making loud noises about the coming cuts, making his opposition to them a central plank of his 

Tory nerves were already jittery enough when the cuts were passed through the Commons - George Osborne had to personally reassure Conservative MPs that the cuts wouldn't result in the nightmarish picture being painted by Labour and the trades unions. Now that Johnson - and the Sun - have joined in the chorus of complaints.

There are a variety of ways the government could reverse or soften the cuts. The first is a straightforward U-Turn: but that would be politically embarrassing for Osborne, so it's highly unlikely. They could push back the implementation date - as one Conservative remarked - "whole industries have arranged their operations around tax credits now - we should give the care and hospitality sectors more time to prepare". Or they could adjust the taper rates - the point in your income  at which you start losing tax credits, taking away less from families. But the real problem for the Conservatives is that a mere U-Turn won't be enough to get them out of the mire. 

Why? Well, to offset the loss, Osborne announced the creation of a "national living wage", to be introduced at the same time as the cuts - of £7.20 an hour, up 70p from the current minimum wage.  In doing so, he effectively disbanded the Low Pay Commission -  the independent body that has been responsible for setting the national minimum wage since it was introduced by Tony Blair's government in 1998.  The LPC's board is made up of academics, trade unionists and employers - and their remit is to set a minimum wage that provides both a reasonable floor for workers without costing too many jobs.

Osborne's "living wage" fails at both counts. It is some way short of a genuine living wage - it is 70p short of where the living wage is today, and will likely be further off the pace by April 2016. But, as both business-owners and trade unionists increasingly fear, it is too high to operate as a legal minimum. (Remember that the campaign for a real Living Wage itself doesn't believe that the living wage should be the legal wage.) Trade union organisers from Usdaw - the shopworkers' union - and the GMB - which has a sizable presence in the hospitality sector -  both fear that the consequence of the wage hike will be reductions in jobs and hours as employers struggle to meet the new cost. Large shops and hotel chains will simply take the hit to their profit margins or raise prices a little. But smaller hotels and shops will cut back on hours and jobs. That will hit particularly hard in places like Cornwall, Devon, and Britain's coastal areas - all of which are, at the moment, overwhelmingly represented by Conservative MPs. 

The problem for the Conservatives is this: it's easy to work out a way of reversing the cuts to tax credits It's easy to see how Osborne could find a non-embarrassing way out of his erzatz living wage, which fails both as a market-friendly minimum and as a genuine living wage. A mere U-Turn may not be enough. 


Stephen Bush is editor of the Staggers, the New Statesman’s political blog.