‘How we treat our old people is a crucial test of our national quality. A nation that lacks gratitude to those who have honestly worked for her in the past while they had the strength to do so, does not deserve a future, for she has lost her sense of justice and her instinct of mercy.’
So said a former Prime Minister David Lloyd George around a century ago. Before 1948 social care meant that either your family looked after you or you died. The setting up of the NHS and the welfare state changed all that.
And yet, today social care for the elderly is on the brink of collapse. Only last week, following a 13-month enquiry into the challenges that older people face accessing social services, Human Rights Watch reported that people believed that they had been ‘denied crucial services or had services significantly reduced causing their health and well-being to decline’. The report signalled that vulnerable older people in England were at risk of being denied human rights because of failures in the way the government allocated care resources since cuts of almost 50% in central government funding for councils. This report followed hard on the heels of the United Nation’s Rapporteur Philip Alston’s investigation into extreme poverty in the UK in which he laid blame on the UK government for inflicting ‘great misery’ on its people with ‘punitive, mean-spirited and often callous’ austerity policies’.
While Human Rights Watch talks about the misery caused to people because of cuts to public spending the government brushes aside the human scale of that failure for a discussion on finances and how elder care can best be paid for or reformed so as not to burden future generations of taxpayers. Indeed, last week’s MMT Lens focused on how thinks tanks, politicians and journalists frame their arguments, not in terms of dealing with how we tackle the very real human dimensions of ageing or ill-health, but how are we going to pay for it. Instead of a discussion about how we address the challenges we face through fiscal policy action we are invited to imagine household budgets and limited pots of money. For decades successive governments have chosen to skirt around or put off a proper discussion about how to pay for social care, in particular for older people, because they know that the false framing that tax might have to increase would be unpalatable to voters. It is presented as if there were no other options at all.
The seeds of the collapse in social care were sown decades ago by Mrs Thatcher and successive leaders. Where prior to the 1980s almost two thirds of residential care was provided at local authority level, responsibility gradually passed over to the private and charitable sectors (the Independent Sector) and, over time, greater emphasis was laid on provision of care in the community. As has become clear the social care system has increasingly come under huge pressure as a result of the deliberate strategy to reduce the number of hospital beds coupled with insufficient funding to meet community care needs. This had its roots in NHS reforms begun by Labour and continued by the current government whereby between 1997 and 2017 around 45,000 hospital beds closed which as a result has put huge pressures on hospitals to discharge elderly patients into a financially pressed and failing social care service.
To give some context in 2016 figures published by the Observer showed that cuts to council budgets had been responsible for closures of residential and nursing care providers in 77 of the 152 local authorities it surveyed. Forty-eight councils had had to deal with the fall out caused by companies providing care for the elderly ceasing trading. Fifty-nine councils had had to find new care arrangements after contracts were handed back by private care providers who could no longer deliver services due to central government funding cuts and the drive to find savings at local level and the introduction of the living wage which was they said increasing their costs (and naturally decreasing their profits.)
However, whilst focusing on the impact of austerity and cuts to public spending on the provision of social care services to the elderly something else just as concerning is playing out in the residential care sector. As already mentioned forty years ago almost two thirds of care homes were run by local authorities but today over 95% have been outsourced to the independent sector both private and non-profit of which large private care home chains account for almost 25% of care home provision. This has been referred to as the ‘financialisation’ of care whereby private equity investors eying up the profit to be made by exploiting a growing population of older people have swooped into the market. As the Centre for Research on Socio-Cultural Change (CRESC) noted in a report in 2016
The techniques of debt based financial engineering (as developed by private equity) suit high risk and high return activities (e.g. cyclical businesses like commodities, tech start-ups and turnaround of failing businesses) but are here being applied completely inappropriately to an activity like adult care which is low risk and should be low return (e.g. utilities and most kinds of infrastructure). The chains bring a return on capital targets of up to 12%; cash extraction tied to the opportunistic loading of subsidiaries with debt; and tax avoidance through complex multi-level corporate structures which undermine any kind of accountability for public funding. The chains are effectively asking for a bail out when they are squeezed between austerity fees and rising wage costs. Through threats of home closure, they are now trying politically to spook the state into paying a higher price for residential care which will protect them from the losses that are an ordinary risk of capitalist businesses. Their own financial engineering is a major contributor to chain fragility and care quality problems so that private gain comes at the expense of costs for residents, staff and the state.
This is the reality of today’s adult care sector, but it has come at a price as CRESC notes. The collapse of Southern Cross in 2011 should have been a wake-up call to the risks posed by outsourcing and private provision. Indeed, over the last few years fears have grown about the financial stability of many of these companies. The accountancy firm Moore Stevens estimated in 2016 that one in six UK care homes is at risk of failure due to unsustainable levels of debt. Already it is being made clear that local authorities crushed under the weight of cuts to central funding will, in the event of further failures, no longer be able pick up the pieces when companies go under. Meanwhile, the companies themselves put the blame on government, complaining of rising costs due to having to pay a ‘living wage’ and stagnant income due to government austerity. And at the same time the sector itself is haemorrhaging staff as low pay and poor working conditions drive people away. No wonder they are talking about crisis!
So, on the one hand, we have a social care system in freefall, on the brink of collapse caused by ideologically driven cuts to public spending which are blamed on the fiscal imprudence of the previous government. And on the other, we have a financialised business model for a sector which now functions ostensibly to deliver profits when social care would be better publicly managed and funded for the well-being of the nation’s citizens.
These two strands of the story represent a deliberate strategy that has been played out by successive governments. Firstly, politicians who, over decades, have embraced the idea that delivering public services is better achieved through outsourcing/privatisation funded from the public purse. And secondly, that governments must demonstrate that they are fiscally accountable to their electorate i.e. they spend taxpayers’ money responsibly and keep a tight rein on borrowing. It is sad to note that elections are won or lost on a government’s ability to show itself financially prudent and not on their economic record that is how their policy decisions have affected the economy and the nation’s citizens as a whole.
Founded on the big lie that there is no money the public has been hoodwinked into accepting a false narrative about how governments spend. However, the wheels are now coming off the globally organised neoliberal wagon of free markets and fiscal discipline, as they are increasingly being shown up for what they are a fraudulent ploy designed to enrich the few at the expense of the well-being of the many.
While think tanks, political parties and even charities still discuss increasing taxes or raiding the Cayman Islands to address poverty and inequality, fund public services, healthcare, welfare and pensions, the reality of how governments really spend has continued to be brushed under the carpet as if there were no alternatives.
However, it is an upbeat sign that the lid is now being lifted on this cruel deception which claims that balanced budgets are more important than people’s lives or indeed the future of the planet. It is translating into a public understanding that the UK government by dint of being the issuer, the creator of currency is not short of money. And, now, when the orthodox economic pundits mention money printing, Zimbabwe and hyperinflation all in the same breath, people are slowly beginning to understand that the only caveat to government spending are the limitations imposed by the nation’s own resources.
To use the economist Professor Stephanie Kelton’s analogy ‘we can all have a pony provided there are enough ponies.’ And that is the crux of this argument. That firstly it is not the role of government to balance the accounts it is the role of a good government to serve the public purpose by balancing the economy. Essentially this means two things; that a government’s spending should not exceed the productive capacity of the nation whether that’s labour or physical resources to avoid the threat of inflation; that it has a strategic plan to ensure that those available resources are used efficiently and effectively to meet the needs of citizens today and tomorrow. In the case of social care that means a government spending sufficiently to ensure there are enough trained, decently paid care workers, social workers and other professionals as well as social care infrastructure to guarantee that the needs of elder citizens are being met adequately.
And, of course, finally and not least the knock-on effect of people with more money in pockets and having more secure employment is that as money circulates around the economy people feel more confident and less anxious about the future leading to a happier society all round.
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