Social care is in a state of collapse. Despite an additional £2bn of government funding, cash strapped local authorities have been unable to afford the fees charged by private care providers many of whom are now walking away. There is a serious shortage of care workers who have been worn down by poor wages and stressful working conditions. It is expected that by 2025 there will be a shortfall of more than 600,000; add to that the exodus of EU workers who currently have been relied on to be the backbone of social care support. It is clear that if the situation continues to remain the political hot potato it has been so far the situation can only worsen, leading to more suffering and early death for those who deserve better in their twilight years. Despite the urgency of the situation the Social Care Green Paper promised by government has yet to be published and the issue, along with many others of domestic concern, has been set on the back burner whilst government deals with the political fallout from that other hot potato the exit negotiations with the EU.
Politicians across the political spectrum might agree that a solution must be found but the next question, by default, is always how are we going to pay for it? Predictably, the implication is that the public purse cannot sustain the financial burden of social care provision so other solutions must be found so as not to burden current and future taxpayers. And in this vein, earlier this week, it was revealed that the government is considering a hypothecated tax on the over 40s to fund social care with a proposal that people would be given personal cash budgets to help them pay for their care. Research by a pensions consultancy claims that a German-style system could raise half the money needed to plug the £30bn a year gap in funding that it is claimed the UK will be facing by 2031. Commenting on the research the consultancy said that ‘taxation of current and future generations will be needed’. On the same subject the IFS in a contributory piece for the Local Government Association which formed part of its series ‘Towards a sustainable adult social care and support system’ focused its narrative on how the social care black hole could be filled; whether one should pay for higher social care costs through general taxation the burden of which it claimed would fall on younger people, whether it should be funded by a hypothecated (ring-fenced) tax or even as the government is proposing forcing older generations to pay higher contribution rates.
When funding issues are discussed in the media, by institutions such as the IFS or politicians, the household budget narratives are glaringly in evidence. It is vital that we unpick this mythical narrative which claims that government funds public services through taxation. It is indicative of how deep-rooted the myths are in the public consciousness that when asked if they would be happy to pay extra on their NI contributions to save the NHS, for example, people are ready and willing to do so, such is their attachment to this vital public service.
It is imperative that we debunk this false household budget narrative and show the public how governments really spend and why taxing people more is not the solution to funding public services. So, in short:
- The Government is the currency issuer.
- The UK government doesn’t need tax to spend and does not and cannot collect anyone’s tax to put aside for the future in a savings pot, whether that’s for social care or even state pensions.
- There will be no funding black hole for social care in 2031 or ever. It is a government choice not to fund it today and it will be a government choice, whoever is in power, to fund it or not in 2031. It is never a question of financial affordability.
- The only constraint in provision of social care services that any government will face will be a resource one not a financial one. In other words, did the government invest sufficiently yesterday to ensure that there will be enough trained people and resources to deliver care services today and is it investing enough today to ensure the same for tomorrow?
- Finally, the wisdom of taxing the general population more in a declining economy where wealth inequality is already very high would cause more economic hardship and likely contribute to the already threatening recessionary pressures.
The funding of social care is a public policy decision driven by political ideology rather than financial necessity as the argument goes in political circles.
As Alan Greenspan, former head of the US Federal Reserve, said of funding the US social security system and which applies just the same here in the UK.
‘There is nothing to prevent the […] government from creating as much money as it wants and paying it to somebody. The question is, how do you set up a system which assures that the real assets are created which those benefits are employed to purchase.”
Once the nation grasps the monetary realities it must then decide whether it believes in the value of public services paid for from the public purse and available to all or whether it prefers delivery by the private sector on a for profit basis rather than public and economic well-being.