England looks abroad to fix elderly care crisis

This article is part of POLITICOs Westminster Survival Guide.

LONDON — Its the issue at the top of Britains “too difficult” list.

The U.K. badly needs to resolve how it pays to look after its aging population. Under the current system, this care — whether at home or in institutions — is managed separately from Britains National Health System, and is often patchy and inadequate. A functioning and enduring “social care system” could be as treasured to the public as the NHS.

Unlike with health care, very few qualify for tax-payer funded help with daily tasks like washing and dressing and no insurance is available, meaning tens of thousands of families face huge bills. In other aspects of life you can insure against risk, said Charles Tallack, assistant director for the Health Foundations Health and Social Care Sustainability Research Centre. “But in this area, there is nothing you can do. Literally. There are no private insurers in the market.”

Successive politicians who have taken up the issue have been punished at the ballot box. “Social care is a sort of a third rail of British politics, one that you touch at your peril,” according to Simon Bottery, senior fellow in social care at the Kings Fund think tank.

Former Prime Minister Theresa May, who put forward a social care policy during the 2017 election campaign, backtracked catastrophically after her ideas were branded a “dementia tax.” Before her, in 2010, proposals by Gordon Brown were dubbed a “death tax” and Labour went on to lose the election.

Council funding for social care has fallen significantly in real terms since 2010, because of swingeing government cuts | Matt Cardy/Getty Images

Now, Boris Johnson — with one eye on his legacy — has vowed to resolve the issue and some in government are looking closely at the German model, officials say.

In the next four years, MPs can expect to debate a challenging and costly set of proposals designed to provide people in England with the care. As social care is a devolved matter, the government at Westminster only has power to make changes in England.

Cross-party sideshow

The Conservatives do not yet have a policy. Burned by their experience in 2017, they simply committed in their manifesto to “build a cross-party consensus,” while promising that no one will have to sell their home to pay for their care.

But given the 2019 election result, there is now little incentive for either the Tories or Labour to engage seriously with a cross-party approach.

For Labour, it would mean holding the governments hand and helping secure a historic achievement if a solution is found, or sharing the blame if it all goes wrong. The Conservatives, meanwhile, with their 80-seat majority in the House of Commons, can push through any approach they like without having to get opposition agreement or risking that Labour share in any victory.

In Germany, a fundamental shakeup occurred in 1995, when a mandatory insurance system was introduced.

Its not surprising then that, according to Jeremy Corbyns spokesperson, Labour has not yet been approached for talks. The prime ministers spokesperson, however, insisted Johnson is “committed” to the discussions and will soon present plans to the opposition. He has made it clear that he wants movement on the issue within his first 100 days in office.

That sets the deadline for progress at around the time of the budget on March 11 — which is expected to include the £1 billion for social care per year promised in the Conservative manifesto.

Cross-party talks are likely to go ahead, but will be something of a sideshow. Long-overdue plans to publish a green paper, which would have floated a range of policy options, have been effectively shelved as the government prepares to put forward a more concrete proposal.

Separately, conversations are now going on between No. 10, the Treasury and the Department of Health and Social Care about a viable long-term model.

Lessons from abroad

Social care systems vary greatly by country because of different demographics and cultural expectations about taking care of people in old age.

At the time when Germany was reunified in the early 1990s, its social care model was similar to Englands today. But a fundamental shakeup occurred in 1995, when a mandatory insurance system was introduced.

The system requires people to contribute a proportion of their salary, with their employer matching their contribution — as with National Insurance in the U.K. There is a cap on what an individual can be asked to contribute per month, which was set at €138.40 in 2019. Anybody can then access the services they need, regardless of their ability to pay, though they may have to also contribute on top to access care.

Under Theresa May, Cabinet Office Minister Ben Gummer and then top civil servant Jeremy Heywood had been quietly working on a review of social care policy around the world in a special unit in the Cabinet Office. When the election was called, a social care policy was included in the Tories 2017 manifesto but was dropped when the plan landed badly in that campaign.

Beyond the manifesto proposal, it was assumed some sort of insurance policy — essentially the German or Japanese model — would be put forward later for Cabinet approval, according to a figure familiar with discussions at the time. A proposal to invest the money in a British sovereign wealth infrastructure fund was also being considered.

Developing such a system would require significant government intervention and fundraising through increased taxation — neither of which is traditionally the preserve of a Conservative government.

In a report last year, the Nuffield Trust argued that Germanys response “is an example of fundamental reform, implemented with high levels of public and political support, that has provided the foundations for a system that has been able to adapt and respond to changing circumstances.”

Like Germany, France and the Netherlands also have a form of universal social care insurance or tax. The model is an attractive one because costs are shared between individuals and the government, avoiding saddling anyone with catastrophic bills. All three countries have similar demographic pressures to the U.K, with declining birth rates and aging populations.

But developing such a system would require significant government intervention and fundraising through increased taxation — neither of which is traditionally the preserve of a Conservative government.

A German-inspired, insurance-based policy could also build on the more limited proposals floated last year by Tory backbencher Damian Green in a report for the Centre of Policy Studies, which caught peoples attention in Whitehall. Based on the U.K. state pension system, Green suggested that taxpayers could fund a flat-rate “universal care entitlement,” which patients could supplement with a top-up from their own funds.

In the past, some Tories have favored pressuring private providers to step in and provide insurance. But Bottery from the Kings Fund warns that this “simply doesnt work effectively anywhere in the world.”

Labour, on the other hand, advocates a more radical policy — free personal care.

“If the Tories are serious about reforming social care, they are welcome to take forward our fully formed and costed plan,” said Shadow Social Care Minister Barbara Keeley, who would lead the cross-party talks on Labours side.

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