From Ros Altmann:economist and pensions,
    investment and retirement policy expert

  • pensionsandsavings.com

    Care crisis is getting worse – Government needs to take more action now

    Care crisis is getting worse – Government needs to take more action now

    • House of Lords warns of Government policies that will make the care crisis worse and opposes National Insurance rise for health and care levy. 
    • Raising National Insurance places more burdens on employers and low-earners, while the money will go to NHS rather than being earmarked for social care.
    • Mandatory vaccination rules from November could see over 40,000 careworkers sacked and there are already 150,000 vacancies. 
    • New immigration visas do not cover careworkers, who earn too little to be allowed in so care providers can’t replace lost staff. 
    • Care ISAs and Care Pensions should be incentivised to help people have money to pay for better or earlier care than will count for the cap. 

    The Health and Social Care levy Bill was debated in the Lords yesterday for many hours.  Peer after Peer explained why they believe the measures are not only wrong, but also why they will not address the worsening crisis in social care. There were complaints from all sides of the House that this is not a sensible way forward.

    Here is a Hansard link to yesterday’s debate https://hansard.parliament.uk/Lords/2021-10-11/debates/D8582F1D-578F-4996-A1C7-EF2E891C30B1/HealthAndSocialCareLevyBill#contribution-59226FA7-1687-450D-9549-5AC0C2441F2B

    This is a link to my own speech https://bit.ly/3oOSKKs  and below is an explanation of why I believe these proposals are so wrong.

    The care sector is marching ever closer to disaster. The measures in the Health and Social Care levy Bill are nowhere near what is needed to fulfil the 2019 commitment to sort out the social care crisis and they break a Manifesto commitment. No help is guaranteed for care at all, near-term, even though the sector is in crisis with many homes on the brink of bankruptcy after pandemic cost increases. Of course, as we emerge from Covid-19 disruptions, additional funding for both NHS and social care is needed, but the care crisis predates this period. It was supposed to be fixed by plans ready to roll out in 2019, yet we are still waiting. And it is not clear why businesses should pay for care reforms.

    Social care failings have already cost thousands of lives, the system is broken and needs fixing. The claims that these reforms demonstrate the courage to tackle the difficult issues that other Governments have ducked simply do not stand up to scrutiny. I wish they did, but sadly this is nothing like the bold initiatives needed to get to grips with a situation. Social care is a national and social failure which has already, and will continue to, cost the lives of many vulnerable British citizens.

    A 1.25% rise in National Insurance does not share the burden fairly across society. It.is an added cost on all employers and puts more burdens on the lowest paid, while wealthy pensioners or buy-to-let landlords pay nothing extra to help the care and health sectors. The dividend tax will raise very little and working pensioners who will pay 1.25% National Insurance for the first time, are a small minority.  Yes, the proposed increase in the means-test threshold is welcome, but the £85,000 cap the on costs is misleading. It will not count many of the costs people pay for their care.

    This Bill fails to address the many challenges of social care. It has been rushed through Parliament before any detail on how the sector will be reformed are released and a White Paper is promised soon.  The measures repeat the Dilnot-style cap (but at a higher level) that was legislated for many years ago in the Care Act 2014.  This cap still won’t cover actual costs paid by families, as it excludes board and lodging fees, will only pay the council-approved rates and will not allow for choice of care home.  So the amount spent on care before reaching the cap is likely to be well over £150,000 before any public funding begins.  Councils are not being given enough to meet the current needs of their disabled and elderly citizens, and with an aging population, they will keep having to ration, reduce or deny care for those in need.

    The funding raised by the National Insurance hike is not even ring-fenced for care. It will first prop up the NHS, which already receives the lion’s share of taxpayer money and has itself worsened pressures on social care through the pandemic. We have seen the appalling effects of social care’s second-class treatment—for example, by discharging Covid-positive patients to care homes, refusing to admit elderly people to hospital and cutting the previous regular visits by GPs to care homes.

    Disabled and elderly people will still be forced to subsidise local authorities: The measures do not address the artificial distinction between free-at-the-point-of-need NHS care for cancer, and the ruinously expensive social care for dementia patients. They will still leave ordinary families facing massive costs to subsidise local authorities, which underpay for council-funded residents. By not paying enough to cover the true costs paid by care homes to look after each resident, councils force those who use their savings to pay extra to subsidise the local authority underpayments. The whole burden therefore falls on those who actually need care, while the rest of the population pay little or nothing.

    The measures will not address crippling staff shortages which risk people’s lives. There are already 150,000 vacancies in social care and the new levy will not give any more money to social care for the near future.  Without staff, how can homes look after people needing care? Many care homes are financially fragile and can’t afford to pay much higher wages, but without careworkers they will close. That would see frail residents forced to move elsewhere and this could cost people’s lives.

    Government must rethink its policies that are worsening the staffing crisis and putting lives at risk. Shortages of careworkers, a workforce with notoriously high turnover and low wages, have already been compounded by post-Brexit migration rules, as carers from overseas do not reach the new higher income threshold to be eligible to work in the UK. The Government is also approving plans to force all careworkers to need to be vaccinated against Covid by November 11th. Its own estimates are that at least 40,000 CQC-registered care home staff will refuse the vaccine and therefore risk being forced out next month if mandatory vaccination is introduced. This could see a further exodus of dedicated care staff, who may just move to the NHS or domiciliary care which do not demand vaccination. These staff shortages are running risks with people’s lives. People have a right to refuse the vaccine. After all, even when vaccinated, they can catch and transmit Covid.

    This is not a meaningful commitment to fix social care.  Raising tax to give money to the NHS to tackle its backlog, while of course important, will not reduce unmet needs or the financial fragility of care home operators. It will not end the current rationing of care, nor the ongoing reduction of preventive measures as councils keep cutting services. The national economic model of social care relies on councils’ public funding paying below costs of delivery and such social care underfunding can be just as serious to people’s lives as inadequate healthcare.

    People will still have to sell their homes to pay for care, although that is not the main problem.  Most people will need to spend well over £150,000 on care before they receive public health under these proposals.  So, if they do not qualify for NHS help, they will have to use up most of their savings or assets and have to sell their homes to pay for care.

    This is not a political issue and I hope Government will offer cross-party talks to tackle the care crisis properly. It is a social policy issue of the utmost importance, which has been neglected by successive Governments for decades. Worthy words, reviews, royal commissions and more have made recommendations for urgent change, but action on the ground was ducked. Even legislation has lain unimplemented, despite rising need and the financial collapse of major operators has not brought radical change.  Time and again, funding the NHS is still being prioritised over funding social care.

    Savings incentives to help pay for care are urgently needed – Care ISAs, Care Pensions and life insurance with early payout clauses. There are some life insurance policies that will pay out before death to help fund social care. But the Chancellor should urgently introduce incentives for families use their savings for future care needs too. More than 8 million over-60s in 2018 held a total £300 billion, an average of £35,000 to £40,000 each, in ISAs. These ISAs are usually not earmarked for any purpose. Encouraging the money to be set aside as Care ISAs – perhaps £85,000 a person in a Care ISA which can be passed on free of inheritance tax if set aside for care but not needed.  Perhaps tax-free pension that encourage people to keep pension money for later life, in case they need care. Before all this money is spent on cars, cruises or other goods, introducing incentives not to spend it yet, could benefit both families and the financial services industry. As the care cap only starts accruing when needs are substantial, people may need to spend money when they have moderate needs, and will need funds for preventive measures to keep them safe in their homes even before the cap starts counting. If pensions or ISAs are emptied while relatively young, future taxpayer costs will be higher, because people will have exhausted their savings before they need care. They will then be unable to afford higher standards or earlier care than they will want.

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