Bill Morgan is a partner at Incisive Health. He was the Conservative Party’s health adviser 2003-07 and Special Adviser at the Department of Health 2010-12.

Labour’s troubles continue to distract from what would otherwise be a difficult start to 2016 for the Government on the NHS. After Tuesday’s action, the BMA is threatening further strikes. This week, we may learn that the NHS has breached its totemic 18 week waiting time target. GP surgeries are allegedly closing their doors to new patients.

These issues – which would be certain front page stories but for Labour’s difficulties – are nonetheless minor in nature. There is nothing about them that would not be fixed rapidly were 2016 a general election year. 2016 may, however, be the year when something much more serious bursts out into the open. And to safeguard the Government’s fortunes, it is something that ministers should pay heed to soon.

The issue is the funding of social care. That is, funding for those low intensity services – from grab rails in older people’s homes, to alarms to help people call for help if they fall, to the provision of care home beds – which keep people out of hospital, and out of the higher-cost NHS.

In recent years, public funding for social care has been squeezed – as elsewhere in the public sector. But there is evidence that social care may now have been squeezed too much. 2015 witnessed the first fall in care home beds since records began. That means fewer beds into which people can be discharged from hospital. And if the way out of hospital becomes blocked, queues form on the way in. Waiting times for operations increase. A&Es become clogged. And the Conservative Party’s protection of the NHS loses its credibility.

Perversely, it is this protection that is in part to blame for the squeeze on social care. Headlines at the time of the Spending Review rightly cheered the Government’s up-front spending on the NHS, but this masked the fact that the frontloaded investment was bought by back-loading social care spending. The short-term political logic of doing so is impeccable – people vote for the NHS; they do not vote for social care – and even in the years of Tony Blair’s largesse, spending on social care was deprioritised. But even the best political logic cannot negate the practical reality that social care and the NHS are inextricably linked – and, when the social care system falls over, the NHS will follow in short order.

The relative underfunding of social care – and our ageing population, which actually loads more demands onto social care than it does the NHS – are not new, so why might 2016 be so critical? First, because rising world interest rates will clobber those social care providers that are highly leveraged. Second, because the introduction of the living wage will further clobber providers – virtually all of which rely on low-cost labour.

In 2011, Southern Cross went bust. On that occasion, a buyer rescued it. In 2016, and faced with much greater pressures, the doomsday scenario is that another company goes bust and no buyer can be found. That could lead to tens of thousands of vulnerable people left without the care they need. It would leave ministers with the option of either presiding over that disaster, or taking the provider into public ownership.

In truth, there would be no acceptable alternative to a nationalisation that would begin to deprive the social care system of the diversity in provision – and the innovation – that has been its hallmark since the 1980s. Such diversity is sorely needed not only in social care, but throughout the public services – not least because of the capital that the private sector has access to but the public sector does not. Diversity in provision needs to be protected, particularly to help lift the burdens on the NHS in the years ahead.

But doing so requires action now to resource social care adequately. The Government, to its credit, has accepted this by allowing councils to levy a two per cent social care precept on council tax. This is a welcome move – particularly because it removes decisions on funding from politicians at the national level who, faced with a choice, would rather resources flowed to the NHS than social care.

But the precept has flaws. The Treasury’s assumptions on the amount it will raise are heroic. The council tax base varies by locality due to factors (such as the value of homes in 1991) that are not remotely correlated with need. Well-run Conservative councils that have levied historically low levels of council tax will not be capable of raising as much as councils which have no such track record.

A better approach is required: one which raises money from a national base, growing over time in line with our ageing population; and one that allows the money raised to be clearly ring-fenced for the sole purpose of social care, rather than raided for the NHS.

We also need an approach which raises money in short order. That is a requirement which torpedoes policies designed to encourage insurance products to fund people’s social care needs, as the Conservative Party has championed for years. Encouraging insurance-based solutions might deliver resources in five or ten years – too late, when they are needed today.

It is with a grudging realisation – having campaigned against it – that the solution that meets these requirements is to impose an additional levy on inheritance.

Political parties are guided by principles, but on occasion these principles conflict, and the job of parties of government is to balance competing priorities. A “death tax” is manifestly unconservative (as, of course, are higher council taxes) – but neglecting the social care sector, to the point where it is bailed out, part-nationalised, and is no longer capable of supporting the NHS, is a worse outcome still.

Action on social care funding is needed soon to protect our most vulnerable. It is needed, too, to safeguard the Conservative Party’s reputation as a party of the NHS. David Cameron became Prime Minister in 2010 – and won a majority in 2015 – in part because of the trust the electorate placed in the Party on the issue. It would be a shame if the chance of a thumping Conservative victory in 2020 were compromised by nose-diving performance in the NHS, led there by a crisis in social care that could have been averted.

72 comments for: Bill Morgan: Yes, we campaigned against it. None the less, we need a new inheritance tax to fund social care.

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