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13 March 2020

Covid-19 will expose a gaping hole in Rishi Sunak’s budget

Once again the government delayed making one of the most important decisions of all: how to reform social care?

By George Grylls

When Boris Johnson became Prime Minister back in the sunlit uplands of July last year, he made a promise. 

“My job is to protect you or your parents or grandparents from the fear of having to sell your home to pay for the costs of care,” he said, referencing the “dementia tax” fiasco which helped destroy the Conservatives’ hopes of forming a majority government back in 2017.

“So I am announcing now – on the steps of Downing Street – that we will fix the crisis in social care once and for all with a clear plan we have prepared to give every older person the dignity and security they deserve.”

Reading between the lines, and ignoring the obligatory references to Brexit, it seemed clear that Johnson had identified the real issue paralysing the state. Social care was clogging up beds on hospital wards and eating into the budgets of local authorities – nearly 40 per cent of council spending is now absorbed by social care.

The overall figures are alarming. According to Age UK, there are 1.5 million people at present who do not get the care they ought to receive, and the situation will likely only deteriorate in the coming decades. In 50 years’ time, the Office for National Statistics estimates there will be an additional 8.6 million people over 65 – equivalent to the population of London. By 2041, the number of over 85s will have doubled from 1.6 million to 3.2 million.

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While Germany devised a social care solution back in 1995, Johnson has watched successive UK governments fail to address this obvious crisis. In 1999 there was the Royal Commission report, in 2010 there was the government’s white paper, in 2011 there was the Dilnot Commission report, in 2018 there was the Joint Committee report. In 2017, the then Cabinet Office minister Damian Green said that a green paper on care and support for older people would be published “by summer 2018”. It has still not emerged.

This week there was an expectation that the much-delayed budget would reveal Johnson’s “clear plan”. But despite the headline-grabbing infrastructure investment, Rishi Sunak only offered more prevarication on the issue.

The Chancellor’s promise of an additional £1bn for social care was nothing new – it was announced back in September, and was then described by healthcare think-tank the King’s Fund as a “bandage” that “does not lessen the need for the much-promised and regularly-delayed fundamental reform of how adult social care is funded and financed”. 

So what progress has been made? Well, a letter. The Budget announced that Health Secretary Matt Hancock had “written to parliamentarians to begin building cross-party consensus on reform”. Perhaps we should not be surprised by the lack of ambition. One Conservatives MP, who has been campaigning on social care reform, said that when they attended a meeting of special advisers in No 10 a week ago, they were “surprised” to be told that a decision “wasn’t imminent”.

Until now, the social care crisis has not impinged on national consciousness. How, as a media organisation, do you document a process whereby one-by-one, incrementally, unnoticeably, hospital beds fill up with hundreds of thousands of elderly people who have slipped through the austerity-era safety net? “It’s a crisis that nobody has ever demonstrated about,” says one former Tory cabinet minister. “The people who care about it are too frail to kick up a fuss.”

But Covid-19 changes all that. A disease that poses a disproportionate risk to elderly people may well highlight the systemic issues. How will a sector reliant on low-paid, zero-hour contracts fare when self-isolation becomes the norm? How will the NHS increase turnover of beds when it already struggles to do so? How many people will Covid-19 tip over from just about managing to desperately needing care, meaning a sudden raft of unexpected bills?

We already know the problems. At present, local authorities administer means and needs-based tests to deliver social care. Anybody with assets over £14,250 is expected to pay for at least some of their care, and anybody with assets over £23,250 is left to fund the entirety of their care costs themselves. The Dilnot commission recommended increasing that upper limit to £100,000, and putting a cap on total care costs at £35,000, after which point the state would intervene. 

But Dilnot’s solution has fallen from favour, especially in light of the 2017 general election, when Theresa May’s inclusion of property costs in the measurement of assets prompted the “dementia tax” label. “It’s hard to overstate just how badly the Tories got burned by the dementia tax,” says one Labour MP, explaining the current inertia.

Talk to parliamentarians and you realise that, without the need for last week’s letter from Hancock, cross-party consensus has been building organically for some time: social care could be funded through a National Insurance-style “social care premium” of around 1-2 per cent. Employers match workers’ contributions, which would begin around the age of 40 (present demographics mean that earlier generations would be funding themselves, their parents and their grandparents if there were no age limit).

But, politically, this decision is difficult, because the Conservatives’ manifesto rules out any increase in National Insurance (NI) rates. Indeed, the Budget increased the threshold for NI contributions from £8,632 to £9,500 – so the tax has in fact been cut. 

Unless some public relations fudge can be found whereby the “social care premium” is framed differently, or the insurance burden is transferred to the private sector, there seems to be no way for the Conservatives to enact everybody’s preferred solution without being seen to row back on their election promises.

In the meantime, Johnson said yesterday that as many as 10,000 people in the UK will have been already infected with Covid-19. Inevitably, our creaking social care system will shoulder much of the burden. Perversely, this may well be the sort of crisis that social care needs in order to push it up the political agenda and prevent it being ignored in future budgets.

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