Thursday, 18 May 2017

Why is Theresa May taking such a gamble on Social Care Funding?

I never had Theresa May down as a gambler, but the inexplicable line she appears to be taking on Social Care Funding appears to be a gamble, and an unnecessary one at that.

Social Care funding first really became a personal issue for me in 2001, when like many families we became aware that my father’s carefully saved but modest reserves were likely to be swallowed up by my mother’s care needs.

 I began looking at the history of this complex problem.  The reliance the Major government had placed on the Insurance industry had been a mistake, most of the insurance packages had been withdrawn and the misspelling scandals were well underway.  

The need for people to sell houses to buy care had become an issue in the 1997 election, and had triggered a royal commission. This was the first of many studies and reports with a coherent set of recommendations on how to protect people from the un-insurable risk of care costs.

Things moved slowly. The treasury is always alarmed by the cost of care, and conscious that it is wrong to put the burden of caring for the rapidly growing older population on the shoulders of working age tax payers. I think they are right about this. That meant that the then Labour government carried out a temporary fix on social care provision, and delayed taking the necessary steps to create a fairer care funding solution until the 2010 white paper. This was far too late!  For a while attracted the necessary cross party co-operation, until this was broken by Andrew Lansley, and trashed by the Daily Mail with its headlines on the “Death Tax”.

The Conservatives entered the 2010 election with the promise to find  a solution. They commissioned the Dilnot report, with recommendations on raising the threshold above which people have to pay their full care costs, from £23,000 to £100,000, and capping the expenditure for an individual in care to £30,000. This would have created the conditions where the private sector insurance system could have offered packages to cover this limited risk of £30,000 care costs, at an affordable price.  This also would have created the certainty to allow families to plan for care costs.

The Conservatives  entered the 2015 election with a watered down version of Dilnot, raising the individual liability to £72,000.  This was far from ideal, but it at least offered voters the notion that there would be some kind of limit on the risk of care costs.  

It was necessary to offer this, because more and more families are experiencing the huge costs of care, and a care system that is far from perfect. We are also seeing the Care industry under increasing pressure with many of the providers, mainly private, going out of business, because they can no longer make a profit.  More and more people are also aware that families that are paying the full cost of care are actually subsidising families that have no savings.
because funding by the local authority does not cover the cost of care. 

Imperfect though it was it was a blow to many that the 2015 election promise was never met.  The treasury deferred  it until 2020.

Sir Andrew Dilnot was understandably distressed by this.  

Sir Andrew had not been consulted or warned that the Conservatives intended in their manifesto for 2017 to go back on the promises of 2015, and to totally change the approach to the social care funding issue.  We are back as Sir Andrew made clear into the realm of an un-insurable risk for many of the voters who are perhaps Mrs May’s core supporters.

 Sir Andrew  is perhaps the mildest mannered and most courteous man in public life, so when you listen to his interview on BBC Radio 4 Today 18/05/17 it is probably worth considering that this is what he sounds like when incandescent with anger!

So what is Theresa May doing?  Before the calling of the snap election we had the perfectly sensible plan for a green paper on social care, in the Autumn, and careful cross party negotiations were underway to create a sustainable solution.  Today’s manifesto announcement seems to have thrown all of this up in the air.  I find it hard to understand why.

There are behind all of this some sensible assumptions.  Mrs May is wanting people to pay far more for care in their own homes, than many currently do.  This probably links to the proposal to give workers a year of unpaid “carers” leave which may work for some. This probably does make sense as the problems of the Care home industry coupled with the demography means that there will not be enough care home beds to go around.   It is also sensible to point out the need for inter-generational fairness. It is simply wrong that baby boomers who have opted for a low tax economy throughout their working lives should expect the younger generation, many of whom will never be able to afford to buy a house, to pay for their care.  It is also right to say that the wealth locked up in people’s houses has to be part of the solution to the problem.

What I think Mrs May has failed to understand is just how worried many people are about the threat of care costs, of being a burden to the younger generation, and of being deprived of the option of passing on savings to their children and grandchildren.  Her core voters are being left with an un-insurable risk, and understandably many of them will not like this.

The answer to all of this is to spread the risk of care costs as widely as possible There are ways to do this which would have given the electorate as a whole a real sense that the care funding question was under control.  I find it hard to understand why these options are not being considered.

I can only imagine that Mrs May is so completely confident of winning the election that she can risk ignoring the interests of her core voters, whilst throwing a bone to the people who bought their council houses, with the hope of passing on a very small inheritance.  

The proposals that Mrs May is putting forward cannot I think happen without legislation, so  if her gamble pays off and she remains in power, there will be a lot of battles ahead.

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