The Time Bomb Britain Can’t Afford to Ignore: Therese Raphael

LONDON (Capital Markets in Africa) – A solution to the crisis in social care has eluded both the Conservative and Labour parties. Now, maybe, a consensus is forming.

When a topic is both highly controversial and mind-numbingly complex, there’s a rule of politics that says it’s best avoided before an election if at all possible. A botched offering on social care was one of the things that derailed Theresa May’s 2017 U.K. election bid and cost the Conservatives their parliamentary majority. Her successor Boris Johnson was never going to repeat the error.

It’s no surprise that the Conservative Party manifesto is minimalist on the subject. Even so, if the Tories win outright on Dec. 12, Britain’s care crisis will require more than stop-gap measures and promises. The question of how it can be fixed, and at what price, has been almost as bedeviling as Brexit for the country. The difference is that for the first time, the agreement is starting to emerge.

It couldn’t come soon enough. If a measure of a civilized society is how it treats the elderly and those who cannot care for themselves, then Britain is a backward place. Its social care system is one of the poorest among comparable advanced countries, with some 1.4 million unable to get help with very basic needs, from dressing and bathing to support for dementia and autism.

Social care (called long-term care in the U.S.) is underfunded, fragmented and disconnected from medical care generally. State-funded provision is means-tested with all but the very neediest forced to pay. Even then, services are hugely overstretched, the staff is poorly paid, training is bare-bones and turnover rates for workers are 30%. The quality and availability of care vary dramatically by the local authority.

What about Britain’s vaunted National Health Service? From its founding, it was focused on medical interventions, with large resources dedicated to acute care, while long-term care was left to local councils, whose budgets have been cut by Conservative governments, falling an estimated 49% in real terms between 2010-2011 and 2017-2018.

The system is also unfair. While a well-off person with cancer will be treated on the NHS for free (or taxpayer-funded, more accurately), a poorer person recovering from a stroke or who has dementia would have to fund their own social care until their assets fell below the very low threshold for state help. Those industrious or lucky enough to save for a period of prolonged care will be asked to pay fees that are 41% higher for a care home place than what local government pays for a similar place.

Private savings and the unpaid help of family and friends are propping up the system. While about 21 billion pounds ($27 billion) is spent by the government on social care in England, another 10.9 billion pounds is spent by people self-funding their care. An estimated 5.4 million people are delivering unpaid care (often leaving jobs to do so), work that’s valued at between 58.6 billion pounds and nearly 100 billion pounds by the National Audit Office.

The crisis is going to get worse. More than one-fifth of Britons will be older than 65 in 2030, compared to 15.8% in 1991. One in 10 hospital beds already contains an elderly person who didn’t need to be hospitalized but who didn’t have the care in place to make discharge safe. Delays in discharging patients cost the NHS about 1 billion pounds a year, according to a 2016 NAO report.

Things have been so bad for so long that Johnson pledged in his first speech to “fix the crisis in social care once and for all.” Indeed, his pledge on social care and health-care spending is central to his pitch to working-class Brexit voters, for whom the Tories have always been the party of the rich.

There are different models for social care around; even the U.S. one, which mostly exempts the family home and basic assets from means testing, is more generous than Britain’s. But the most successful systems include a combination of compulsory insurance, subsidies, and cost-sharing. Japan, where more than 28% of the population is over 65, is one such model. Nearly a decade ago, it put in place a system financed through taxes, compulsory insurance, and user co-payments. To answer charges of inter-generational unfairness, only those aged over 40 pay in. Users contribute 10% toward the costs of their care, though low-earners have their costs capped.

The problem in Britain has been in politics. Over the past two decades, there have been a dozen government consultation papers and five independent reviews and commissions on the subject. For a long time, it’s been easier to do nothing than to act.

In 2010, a Labour idea to fund care through an estate levy was denounced as a “death tax.” May’s 2017 plan, though an improvement, was branded a “dementia tax.” She dropped it and promised a consultation paper instead. That was delayed more than six times, which Health Secretary Matt Hancock blamed on “parliamentary logjam and a lack of cross-party consensus.”

Richard Sloggett, a former special adviser to Hancock, saw the challenges first-hand. Getting cross-party support wasn’t the only obstacle. Within the Conservative Party —  a bastion of more limited government — there were strong disagreements over how far care should be covered by the state. The backdrop, however, appears to be changing. “Rather than looking to insurance markets and other mechanisms, there is now a view that there has to be a government-backed solution,” says Sloggett.

He notes that both the Labour and Tory manifestos put the state front and center. “This platform provides cautious optimism for potential cross-party agreement.”

Labour is offering free care for the over 65s, though that doesn’t include residential care. The Tory manifesto promises an extra billion pounds a year to keep the current system afloat and pledges to work across party lines to find long-term solutions. Is that can-kicking? Maybe it’s political realism.

“I don’t hold it against the prime minister that they have not put in some proposal that would be a complex hostage to fortune,” notes Warwick Lightfoot, one of the authors of a Policy Exchange paper that proposes funding social care similarly to the NHS and which was endorsed by Jacob Rees-Mogg, a Conservative in Johnson’s cabinet. Lightfoot and his coauthors calculate the provision would require an additional 0.5% of GDP, or 1.3% of total public spending, sums that “are not trivial but are manageable.”

After years of paralysis, there may now be something like a political agreement on the direction of travel. But what the new system would look like, how much it will cost and how to get agreement on the details — in other words, the hard work — lies ahead. A little like Brexit, only with more lives at stake.

Therese Raphael writes editorials on European politics and economics for Bloomberg Opinion. She was editorial page editor of the Wall Street Journal Europe.

Source: Bloomberg Business News