THE GOVERNMENT is digging a hole. Yes, another one. The rising cost of care of the elderly is not a new issue. It has been building gradually for years, for the obvious reason we are generally living longer, thus more people need care and need it for longer, at a time when care costs are rising materially – largely down to the Government’s own rules and regulations. This Government is in a rush promising to ‘solve’ the problem by Christmas. If only.
What the Government will really deliver remains a mystery, more on that later. What it really wants becomes clearer by the day – more money – by raising National Insurance 1.25% – a 10% hike – to raise around £14bn. Levied on employers and employees, to eventually pay for the care scheme, but first erode its self-induced NHS waiting list of 12 million, or perhaps neither, as taxes in the UK are not hypothecated.
Perhaps it is simply a clever excuse to raise more money after the last substantial hike in corporation tax and freezing of allowances just as inflation burgeons.
The chart below shows just how much this Government already taxes the population. Prior to this latest tax raising idea taxes were already at their highest level since the early 1980’s. This latest proposal will take us back to the dark days of the 1970’s. Despite this the public finances are running persistent deficits at unprecedented peacetime levels.
Quite honestly, this Government has a cheek. Vast sums are squandered on track and trace, poor and inefficient procurement, lamentable and declining public sector productivity, HS2, paying people to do nothing in lockdown (cunningly called by the innocuously sounding name of furlough) and numerous other wasteful schemes.
Indeed the combined expenditure on just three of those items – track and trace, HS2 and furlough is well over two hundred billion. To put £200bn in context the entire UK population of 66 million spends just £95bn on food a year, so this largesse could have fed the entire nation twice over in one year! What exactly have we got to show for that £200bn?
So extravagant is the Government that it now spends well over 50% of the national treasure each and every year squeezing the wealth producing private sector. The Government claims this is simply a lockdown-induced spike. The Cabinet deludes itself if it believes that, given their raft of further spending pledges.
Now the state is embedded as the overwhelming agent of the economy in a situation that is stiflingly unhealthy. Is it really beyond the competence of our ministers to find just a little bit of efficiency savings rather than demand yet more?
We must also await with interest what its National Care Plan might be. The intention is to use the expected increased revenues to fund care at 15% more and the NHS 85% more with that ratio moving more in favour of social care after three years. Already some Conservative MPs are doubting this will be achieved, raising fears that the ever-hungry NHS will simply devour the funding without any tangible benefit to social care.
The best plan would be no plan at all. Organic beats central planning every day of the week. Of course care for the elderly is exceptionally expensive and a massive worry for families up and down the land. But you can be sure any nationalised plan will be no better than average, rationed and lacking any choice.
A good plan would be to make it easier for those requiring care to access it at the level of intensity they wish. Unfortunately Government regulation and deliberate policy decisions make care extraordinarily expensive and out of reach without yet more state intervention.
Care costs for the last decade have increased at over twice the rate of inflation as a direct result of Government interference with mind-boggling and often counter-productive, regulatory burdens placed on the sector while legislation forces wage costs materially higher.
So, what to do? First, let’s increase choice. Currently many are forced into a home not out of choice but simply because they don’t have the resources to pay for care at their home thus they have to sell up with the capital from their home used to pay for a home. The monthly average cost in the UK of residential care is £2816 and with nursing is £3552.
Many elderly people, however, would prefer to stay in their home. Often they are forced out not because they don’t have the assets to pay for care but because if they have care at their home they have to pay not just the carer’s salary but also the employers’ National Insurance, pension contribution and holiday pay as well as likely the agent’s fees.
An apparent £10 an hour salary for the carer routinely costs the family requiring the care easily £15-20 an hour, possibly more, out of taxed income. Thus, why does the government not encourage the at home sector by making salaried care costs tax deductible, avoiding effective double taxation and helping keep many at home for longer as the service becomes that bit more affordable? At a stroke this would cut at home costs by a third, possibly more. It would also stimulate the sector providing employment, choice and a better quality of life.
Second, for those who need full time residential care, or choose such care, there must be equality between the public and private sectors. Currently private patients in a home routinely pay 50% or more for the identical product compared with the council-funded resident in the same home. That is clear discrimination and it should be made illegal to issue a dual price for the same product. It is sharp practice in the extreme to subsidise council care from hard pressed private patients – pushed upon care home management because of the unrealistic cap Government puts on local authority payments.
Third, regulation needs to be appropriate and consistent. It must allow providers to offer a wide range of care levels and price points to meet the differing aspirations of the patients. This is increasingly difficult with the regulatory straitjacket resulting in a one-size-fits-all approach.
The constant regulation ratchet is destroying the business model and despite rising demand resulting in spiralling costs and forcing capacity reductions. The sector is in turmoil with an estimated 37,500 reduction in bed capacity over the next four years. That is significant on a capacity of just under half a million places and a deep irony that a return cannot be made when fees are so high. (link here
Care is a massive challenge and an increasing one. That is undeniable but the solution is not a centralised national care plan and tax hikes. It is quite the opposite. It is measured tax breaks to help keep more people in the familiarity of their home, it should be organic choice led and requires far more sensible and less bureaucratic regulation which often misses the point.
Regulation does not make a care home good. Great leadership and caring staff do. Ironically regulation makes it more demanding for staff, not less; often undermining their confidence, wasting time with box ticking and resulting in care minimalism. So please drop the soundbite of a National Care Plan and free up the nation’s best resource – allowing its people and families to make the right choices, affordably for them.
Photo by Viacheslav Lakobchuk from Adobe Stock