| Posted: 10 Dec 2021 12:00 AM PST Recent healthcare reforms in England, combined with financial austerity, have accelerated both the corporatization and commercialization of the NHS. This combination has encouraged greater public sector entrepreneurialism, argue Damian E. Hodgson, Simon Bailey, Mark Exworthy, Mike Bresnen, John Hassard, and Paula Hyde. They examine the meaning and experience of corporatization in the sector, illustrating their argument with qualitative data from a specialist hospital. The passage of the Health and Care Bill through Parliament has revived debates about privatisation and the NHS. However, much less attention has been devoted to the closely related process of commercialism in the NHS, as an illustration of entrepreneurialism across public services more generally. Here, we trace the origins of the growing commercialism in the NHS in England and draw attention to some of the hidden costs of entrepreneurialism in the public sector. Commercialism in the English NHS, although encouraged implicitly since the formation of Foundation Trusts in the early 2000s, was promoted by the Health and Social Care Act of 2012. The Act not only enshrined competitive and commercial behaviour in law, but it also abolished caps on commercial income of NHS Foundation Trusts, so that trusts could in principle generate up to 49% of their income from commercial sources. This of course has coincided with a decade of austerity, with rising activity in hospitals not matched by reimbursement from the public purse. This financial pressure has served as a sharp incentive to trusts to seek out new opportunities to maximise both ‘core’ and ‘non-core’ income. By 2016, non-core income accounted for 9.1% of Trusts’ income, varying between 1.6% for ambulance trusts to 21.4% for community health trusts. In practice, income generation has taken many forms. In the English NHS, such ‘non-core’ activity ranges from maximizing revenue from ancillary services such as laundry or car-parking, which generated around £290m in England in 2019-20, through to commercial land sales. What might be considered ‘core’ activity ranges from generating revenue by hosting both commercial and non-commercial research, maximising income from private and fee-paying patients, and public-private joint venture activity, such as University Hospitals Birmingham building a £65m hospital in a joint venture with the private HCS Healthcare UK, or the Royal Marsden hospital opening a cancer treatment centre near Harley Street to directly compete with the private sector. The effects of some of these initiatives has not gone unnoticed, with rising public irritation at the escalating cost of hospital car parking, for example, and the occasional public furore when an over-ambitious private venture by a hospital, such as a music festival, goes wrong. The financial pressures driving this activity are sometimes visible, with revelations that half of the income generated through one-off commercial land sales went to fill holes in day-to-day budgets of NHS trusts. These commercial initiatives in the NHS, of course, depend on new behaviours among staff; to be alert to market opportunities, and to be willing and able to take financial risks in order to effectively exploit new sources of income – which has been described as a kind of public sector entrepreneurialism. How far this can or should be reconciled with traditional public sector values and ethos is a key question; does this imply an erosion of public sector values, or a modernisation and reinvention of public service built around innovation and enterprise? To find out what this increased public sector entrepreneurialism means for the people who work in the NHS, we looked at experiences in one English specialist hospital in the vanguard of commercialisation through the last decade. This hospital was distinctive in that it had a recognisable and prestigious ‘brand’ and a strong reputation for quality of care, nurtured by a large communications department. It was also relatively insulated from the effects of austerity through the 2010s, being much more financially stable than many other NHS trusts with a substantial charity arm. It was also more engaged with entrepreneurial activities, such as joint ventures with private companies, than most NHS hospitals. We spoke to doctors, nurses, and managers across the hospital about their experiences in the Trust and found that most were very aware of the distinctive mindset at the Trust, which they described as ‘progressive’, ‘business-focused’, and entrepreneurial. While some spoke positively of this, all recognised the distinction between this way of working and the traditional NHS way, and the challenges this posed to many staff. A key challenge related to the blurred lines between ‘commercial’ and ‘non-commercial’ activity, or between the public and private sector activities which take place on the hospital site. One way in which this boundary is managed by many is by compartmentalisation, with some revenue-generating units seeing themselves as a ‘private enterprise within an NHS organisation’, and thus needing to operate in a different way. Similarly, the strategic and professional way in which the charity and marketing departments worked, to build and maintain a strong brand reputation, were seen as reflecting a different kind of ‘drive’ to the rest of the Trust. Nonetheless, to some degree the charity played a key role in legitimising the principle of commercial engagement and a kind of innovative entrepreneurialism; if the charity could generate valuable revenue, why not other ventures building on the brand identity built up by the Trust? In this way marketing and branding supported other kinds of income generation activities by the hospital including outreach and joint venture activity. For many, this commercial activity raised ethical concerns which could not be assuaged by compartmentalising this activity. For some, the justification was that commercial success could be used to cross-subsidise core activities, although the degree of public benefit was viewed sceptically by some. Others, committed to the principle of ‘providing care free at the point of delivery’, found any payment for treatment unethical. On a personal level, some staff described their own discomfort with pressures to generate income. However, even staff with objections in principle felt that they needed to engage with the private sector ventures to protect their future career, having seen the direction of travel across the sector. So to what degree could we see evidence of the kind of mission drift and goal displacement associated with commercialisation in other public sectors? In one sense, this was minimised by work to decouple and compartmentalise commercial and entrepreneurial activities, focusing their activities in certain units such as research, joint ventures, and the charity. However, they similarly served to justify the principle of revenue generation. Arguments that this indirectly benefitted and supported the core mission meant that ethical dilemmas were more widely experienced across the trust. Normalisation also meant that many felt unable to separate themselves from this activity, as who knew when their future employment might depend on their exposure and comfort with commercial work? Our research does not suggest that public sector entrepreneurialism is normal or indeed widespread in the English NHS. However, there are ongoing pressures to exploit ‘increased opportunities for income generation from the commercialization of certain “noncore” NHS functions’, in the words of NHS Improvement in 2018 – and little prospect of the kind of funding settlement that would release pressure to seek alternative forms of income. In addition to fiscal questions of risk/reward, and ethical questions over certain forms of revenue generation, we seek to draw attention to the more insidious implications of the normalisation of commercialism and public sector entrepreneurialism in the NHS. As the conduct of staff shifts incrementally towards different ways of thinking and practising then there is a distinct risk that mission drift, goal displacement, and more acute ethical dilemmas will become more likely.____________________ About the Authors Damian E. Hodgson is Professor of Organisation Studies in the Management School at the University of Sheffield. Simon Bailey is Researcher at the Centre for Health Services Studies at the University of Kent. Mark Exworthy is Professor of Health Policy and Management in the Health Services Management Centre at the University of Birmingham. Mike Bresnen is Professor of Organisation Studies and Head of Department of People and Performance at Manchester Metropolitan University Business School. John Hassard is Professor of Organisational Analysis at the University of Manchester. Paula Hyde is Professor of Organisation Studies at the University of Birmingham. |
Tag: NHS
The Conservatives are shrinking the state – to make room for money and privilege
Boris Johnson’s talk of restoring sovereignty is a lie. He is handing democratic power to economic elites, not the people. George Monbiot writes in the Guardian 14th October 2020.
The question that divides left from right should no longer be “how big is the state?”, but “to whom should its powers be devolved?”. In his conference speech last week, Boris Johnson recited the standard Tory mantra: “The state must stand back and let the private sector get on with it.” But what he will never do is stand back and let the people get on with it.
The Conservative promise to shrink the state was always a con. But it has seldom been as big a lie as it is today. Johnson grabs powers back from parliament with both fists, invoking Henry VIII clauses to prevent MPs from voting on crucial legislation, stitching up trade deals without parliamentary scrutiny, shutting down remote participation, so that MPs who are shielding at home can neither speak nor vote, and shutting down parliament altogether, when it suits him.
He seeks to seize powers from Scotland, Wales and Northern Ireland: the internal market bill appears to enable Westminster to take back control of devolved policies. He imposes the will of central government on local authorities, refusing to listen to mayors and councils while dropping new coronavirus measures on their cities. He claws back powers from the people, curtailing our ability to shape planning decisions; shutting down legal challenges to government policy; using the Coronavirus Act and the covert human intelligence sources bill to grant the police inordinate power over our lives.
His promises to restore sovereignty are lies. While using the language of liberation, he denies power to both people and parliament. He promised to curtail the state, but under his government, the state is bursting back into our lives, breaking down our doors, expanding its powers while reducing ours.
Instead, he gives power away to a thing he calls “the market”, which is a euphemism for the power of private money. This power is concentrated in a small number of hands. When Johnson talks of standing back and letting the private sector get on with it, he means that democratic power is being surrendered to oligarchs.
Under the Conservatives, the state shrinks only in one direction: to make room for money and privilege. It grants lucrative private contracts to favoured companies without advertisement or competitive tendering. It gifts crucial arms of the NHS to failed consultants and service companies. It replaces competent, professional civil servants with incompetent corporate executives.
We need a state that is strong in some respects. We need a robust economic safety net, excellent public services and powerful public protections. But much of what the state imposes are decisions we could better make ourselves. No Conservative government has shown any interest in devolving genuine power to the people, by enabling, for example, a constitutional convention, participatory budgeting, community development, the democratisation of the planning system or any other meaningful role in decision-making during the five years between elections.
The Labour party’s interest in these questions is scarcely more advanced. The 2019 manifesto talked of “urgent steps to refresh our democracy”. It called for a constitutional convention and the decentralisation of power. But these policies were scarcely more than notional: they lacked sustained support from senior figures and were scarcely heard by voters. During his bid to become Labour leader, Keir Starmer announced that “we need to end the monopoly of power in Westminster”. He called for “a new constitutional settlement: a large-scale devolution of power and resources”. Since then we’ve heard nothing.
When challenged on its policy vacuum, Labour argues that “the next general election is likely to be four years away … There’s plenty of time to do that work.” But you can’t wait until the manifesto is published to announce a meaningful restoration of power to the people, and expect it to be understood and embraced. The argument needs to be built – and Labour local authorities, by developing powerful examples of participatory politics, need to show how Starmer’s promised new settlement could work. Instead there’s a sense that the parliamentary Labour party still sees its best means of enacting change as seizing a highly centralised system, and using this system’s inordinate powers to its own advantage.
For many years, Labour relied on trade unions for its grassroots dynamism and legitimacy. But while the unions should remain an important force, they can no longer be the primary forum for participatory politics. Even at the height of industrialisation, when vast numbers laboured together in factories and mines, movements based in the workplace could only represent part of the population. Today, when solid jobs have been replaced by dispersed and temporary employment, and many people work from home, the focus of our lives has shifted back to our neighbourhoods. It is here that we should build the new centres of resistance and revival.
Starmer has so far shown little interest in reigniting the movements that almost propelled Labour to power in 2017. But even if Labour wins an election, without a strong grassroots mobilisation it will struggle to change our sclerotised political system. Any radical political project requires a political community, and this needs to be built across years, not months.
The popular desire to take back control is genuine. But it has been cynically co-opted by the government, which has instead passed power from elected bodies to economic elites. The principal task of those who challenge oligarchic politics in any nation is to offer genuine control to the people, relinquishing centralised power and rewilding politics. Yes, the state should stand back. It should stand back for the people, not for the money.
• George Monbiot is a Guardian columnist
What has gone wrong with England’s Covid test-and-trace system?
It was supposed to be ‘world beating’ but experts say it is having only a ‘marginal impact’
Robert Booth Social affairs correspondentPublished: 19:57 Tuesday, 13 October 2020 Follow Robert Booth
When the NHS test-and-trace system was launched in late May, Boris Johnson promised it would help “move the country forward”. We would be able to see our families, go to work and stop the economy crumbling.
In the absence of a vaccine, the prime minister’s “world-beating” system would be worth every penny of the £10bn funding that Rishi Sunak announced in July. The chancellor said it would enable people to carry on normal lives.
Now as pubs are ordered to close, extended families are forced to stop meeting and intensive care beds fill up fast, the government’s Sage scientific advisers have concluded NHS test and trace is not working.
Too few people are getting tested, results are coming back too slowly and not enough people are sticking to the instructions to isolate, they say.
The system “is having a marginal impact on transmission”, as a result, and unless it grows as fast as the epidemic that impact will only wane.
So what’s going wrong?
Over centralised from the start …
Tasked in spring with rolling out millions of coronavirus tests, the health secretary, Matt Hancock, opted for a centralised system using private firms. The business consultancy, Deloitte, was handed a contract to help run testing through local drive-in and walk-in test sites, with swabs being sent for analysis at a network of national laboratories, many also outsourced. Serco was also handed a deal to run contact tracing, subcontracting work to other firms as well.
The stakes for their success were high. An Imperial College study found if test and trace worked quickly and effectively, the R number could potentially be reduced by up to 26%.
Local directors of public health knew this from experience of tackling sexually transmitted diseases and food poisoning outbreaks, but their role was limited, leaving many exasperated that they were being cut out.Advertisement
As the system got up and running over the summer, ONS surveys of the virus prevalence suggested NHS test and trace might only be picking up a quarter of actual cases.
In July, one of the system’s senior civil servants, Alex Cooper, admitted privately the system was only identifying 37% of the people “we really should be finding”. The clamour from mayors and local public health officials for a bigger role grew.
Finally this week the government admitted cities and regions should be given help to do more.
“We’ve always known that there was a need for a local element of test and trace, as a centralised system does not have local expertise and is not able to cut through the harder-to-reach communities,” Andy Street, the Conservative mayor of the West Midlands, told the Guardian this week.
The strain on a the centralised system has been clear. Sarah-Jane Marsh, director of testing at NHS test and trace tweeted last month: “The testing team work on this 18 hours a day, 7 days a week. We recognise the country is depending on us.” She is about to stand down after less than six months in the post.null
Laboratory bottlenecks
Website warnings that no tests were available exposed the testing crisis to the British public on an almost daily basis this summer, especially in September when schools went back.
Dido Harding, the system’s head, said last month the number of people wanting tests was three to four times the number available. National “lighthouse” laboratories in Milton Keynes, Cheshire, Glasgow and Cambridge, had hit capacity.
More than a quarter of people attending 500 local testing centres after being in contact with someone who had tested positive, were simply turned away because they did not have symptoms.
The scale of the task was shown when Harding told MPs around half of the available tests were being used by NHS patients, social care and NHS staff.
Such was the strain that tens of thousands of tests had to be sent for processing abroad.
And the need for testing will only increase.
https://interactive.guim.co.uk/uploader/embed/2020/10/tracing-time-chart/giv-3902Nnz1ZpgJG9cj/
Johnson has promised daily testing capacity of 500,000 by the end of this month. On Tuesday it stood at 309,000 .
Already a long way off from the target, the system will come under greater pressure over the coming weeks. On Tuesday, the government finally said visitors to care homes could be tested regularly to try and end the isolation caused by their visits to loved ones being banned. There are 400,000 care home residents.
Slow results
New laboratories in Newcastle, Bracknell, Newport and Charnwood should open within weeks and they can’t come soon enough. As far back as May, Sage experts said the speed of results had a significant impact on the reproduction rate of the virus. Turnaround times should be 24 hours or less and it was “essential” this capability was reached by the autumn/winter flu season.
Johnson pledged in on 3 June to “get all [non-postal] tests turned around in 24 hours by the end of June”.
But for the last week of September, the percentage of test results returned within 24 hours in the community testing was no greater than a third. Nearly nine out of 10 Covid-19 tests taken under the system used by care homes in England were returned after 48 hours in September. Kathy Roberts, chair of the Care Providers Alliance, told MPs on Tuesday she doesn’t have confidence in the government’s test-and-trace strategy.
“The percentage of returns is still too low,” she said. “It has improved for people on discharge but not for the workforce.”
Last month Greg Clarke MP, chairman of the Commons science and technology committee, asked Harding if the failure of the testing system was “driving the increase in the pandemic”.
“I strongly refute that the system is failing,” she replied.
Tech problems
The data blunder that caused nearly 16,000 coronavirus cases to go unreported in England last month when they disappeared from an spreadsheet, was not an isolated IT problem. The government’s first attempt to build an app to track infections was abandoned in June after months in development.
A new approach is costing an estimated £36m in development and running costs in the first year. The app allows users to check into venues and receive alerts if they have been close to someone infected, as long as the infected person tells their app. But it has yet to find its feet.
For a while people tested in NHS and PHE settings could not input their results, meaning thousands were being missed. A function which is supposed to alert people when they have been in a place where there has been an outbreak has only been used only a handful of times, despite more than 16 million people downloading the app.
Some employers have also been asking workers to turn the app off.
Contact tracing
Figures suggest contact tracers working through the national system have been less successful than local council officials. The percentage of people reached and asked to provide details of recent close contacts hit its lowest level since June at the end of September, with performance worsening steadily over the month. It means about 25% of contacts are not reached at all.
There have been embarrassing reports about contact tracers making no calls for days on end, some catching up on Netflix while being paid to do nothing.
By contrast local public health officials, some setting up their own call centres and redeploying environmental health officers and sexual health experts with local knowledge and properly trained in the job, reckon they are tracing close to 100% of contacts.
The difference mattered particularly in north-west England, where the virus took hold this summer and south Asian-heritage communities proved harder to reach. Ministers finally agreed to share real-time data with local authorities in August but only after several councils threatened to break ranks and set up their own locally-run system.
Local health officials complained the centralised system failed to join the dots on linked infections. For example, it might spot 40 cases in one postcode – but wouldn’t quickly grasp that the cluster was linked to a specific workplace, event, or pub.
“Local residents recognise and can relate to their local council, which is not always possible with a national system,” said Ian Hudspeth, chair of the Local Government Association’s community wellbeing board. “Council staff can go to people’s homes to make sure they are aware of what they need to do.”
People struggle to self-isolate
Sage estimates that at least 80% of a case’s contacts need to isolate for the system to work.
Last month, however, it found rates of full self-isolation were below 20% and particularly low among the youngest and the poorest people.
A study stretching from March to August, found only 18% of 1,939 people with symptoms stayed at home and people facing greater hardship were less adherent.
Ability to self-isolate was three times lower in those with incomes less than £20,000 or savings less than £100, according to a third study.
Additional reporting: Josh Halliday
For those who want to stop no deal, Jeremy Corbyn is the only hope
www.theguardian.com/commentisfree/2019/oct/04/jeremy-corbyn-mps-labour-leader-legitimacy
Many MPs are in denial, refusing to accept the Labour leader’s legitimacy. Yet he is the only one who can prevent Boris Johnson trashing Britain
Departing Tory leaders have developed an odd and presumptuous habit of demanding that the leader of the opposition resign too. “As a party leader who has accepted when her time was up,” Theresa May told Jeremy Corbyn in her final prime minister’s questions, preparing to leave her party to Boris Johnson and the country without a prayer, “perhaps the time has come for him to do the same.”
In 2016, David Cameron – who had called a referendum lost it, only to then break his promise and abandon the country in a moment of self-inflicted crisis – suggested Corbyn’s resignation would be a patriotic act. “It might be in my party’s interest for him to sit there. It’s not in the national interest. I would say, for heaven’s sake, man, go.”
Stranger still, many Labour parliamentarians agreed with them: Cameron’s speech took place in the middle of a full-blown, if woefully inept, coup.
When the 2017 exit polls on election night suggested that Labour had far exceeded expectations, increasing its vote share and seats while the Tories lost their majority, a BBC documentary showed the muted response of several Labour MPs. They were shocked not into jubilation, but silence; they had looked forward to his defeat, removal and “party renewal” even if it meant they had to go down with him. The former leader Tony Blair, meanwhile, put his head in his hands and said he didn’t understand this country any more.
The political and media establishments are still struggling with the choice the Labour party made in 2015. The fact that the decision was emphatic, had to be made twice following the failed coup, and was effectively endorsed by the electorate in 2017, has not been enough. On some level, that goes beyond the political to the psychological: they refuse to accept his tenure as legitimate.
This sense of denial runs deep – as though insisting he should not be the party leader in effect means he’s not. It is a delusion that recalls the author Doris Lessing’s observation of Blair’s declarative approach to politics: “He believes in magic. That if you say a thing it is true.”
Corbyn is the leader of the Labour party. He has a mandate. He represents something other than just himself. That is not a statement of opinion but of fact. One does not have to like it to accept it. But the failure to accept it will have material and strategic consequences. And, with a general election imminent and the future of the country’s relationship with Europe finely balanced, the moment of reckoning with that fact is long overdue. For there is no route to a second referendum without Labour; there is no means of defeating Johnson without Labour. The party remains the largest, and by far the most effective, electoral obstacle to most of the immediate crises that progressives wish to prevent. Once again that is not a case for Corbyn or for Labour, but for reality.
Earlier this week, when asked which was worse, a no-deal Brexit or Corbyn as prime minister, the Liberal Democrats’ Scotland spokesman, Jamie Stone, said: “It may be that somebody else may emerge from the Labour party. I think the ball is very much in the Labour party’s court to see what alternatives they could find.”
That is not going to happen. Liberal Democrats don’t get to choose the Labour leader. Labour does. The Lib Dems have long struggled to understand this. In 2010 Nick Clegg said he could work with Labour, just not Gordon Brown. Two years later they said they could work with Labour but the shadow chancellor Ed Balls must go.
The insistence that Labour couldn’t get the numbers in parliament to oust Johnson and make Corbyn a caretaker prime minister is a self-fulfilling prophecy made most ardently by those who won’t give him the numbers. But even if it wasn’t, it is a fallacy to assume that anyone else would get any closer. When pressed on which he would prefer – “Is it Jeremy Corbyn or is it no deal?” – Stone eventually showed his cards. “It is no deal every time.”
There is candour in this. It is effectively the position of his party and many others, including a few disgruntled Labour members, for whom a potential Labour government under Corbyn is somehow worse than the actual no-deal Brexit under Johnson that may soon happen. But there is a clear contradiction too. Some of those who have devoted the past few years to stopping any kind of Brexit now claim that the only thing worse than a no-deal Brexit – the worst kind of Brexit they could possibly imagine – is the leader of the only party that can stop a no-deal Brexit.
None of this is a reason to necessarily support Labour or Corbyn. There are all sorts of reasons, from antisemitism to an insufficiently pro-European stance, as to why progressives might decide not to back Labour at this moment; and the calculations are very different outside England and in those areas where tactical voting offers the best hope of getting rid of Conservatives. And given the redistributive agenda that Labour laid out at last week’s conference, there are all sorts of reasons why progressives might back it, too.
Political parties are not entitled to anyone’s support. They must earn it. The moment they start blaming voters for not supporting them, they are sunk. That’s as true for Labour under Corbyn as it was for the US Democrats under nominee Al Gore. But that does not absolve the voter from the strategic and moral responsibility of accounting for their vote.
In the second round of the French presidential elections in 2002, which pitted the conservative Jacques Chirac against the far-right candidate Jean-Marie Le Pen, a Communist party local councillor, François Giacalone, voted for the conservative. “When the house is on fire,” he said, “you don’t care too much if the water you put it out with is dirty.”
Right now, the house is on fire. Johnson’s first couple of months in office have illustrated that what’s at stake is not a contest between bad and worse. This is a leader who uses the police as props; breaks the law to undermine democracy; and stokes division with rhetoric that can and has been easily co-opted by the far right, pitting a section of the population against parliament and the judiciary. Johnson’s cabinet and its agenda, both with regards to Brexit and beyond, do not represent a mere shift to the right but a paradigmatic sea-change in British politics that, where Europe is concerned, may have irreversible consequences.
Those who last year were literally on the fringe of the Tory party conference have this week been running the show. The coming election will not just be about opposing Brexit – it’ll be about defending democratic norms. The key consequence of understanding that Corbyn is the legitimate leader of the Labour party is understanding that this fire cannot be extinguished without him.
• Gary Younge is a Guardian columnist
Using housing wealth to fund social care: why the Care Act 2014 is unfair
Posted: 04 Feb 2015 06:30 AM PST
Nicholas HopkinsEmma Laurie
The Care Act 2014 reinforces the expectation of leaving housing wealth as an inheritance, which perpetuates inequalities across generations, argue Nicholas Hopkins and Emma Laurie. Intergenerational fairness requires homeowners to use a greater proportion of their housing wealth to fund social care rather than relying on the state.
The issue of funding social care costs is one that provokes strong feelings. Many homeowners resent the idea of having to sell the family home to pay for residential care costs. But with an ageing population, a real concern is raised over who should pay. The Commission on Funding of Care and Support (the Dilnot Commission) was an independent body tasked by government with reviewing the funding system for care and support in England. Its report, Fairer Care Funding, provided advice and recommendations to government and was subsequently enacted in the Care Act 2014.
The Dilnot Commission’s overriding objective was to make the system of funding adult social care fairer as well as sustainable. The Commission took the view that it was fair to limit the extent to which an individual is required to draw on their own wealth, including housing wealth, to pay for the costs of their care. It also recommended that the home should not have to be sold during the owner’s lifetime in order to pay for social care costs.
To achieve these two objectives, the Care Act 2014 places a cap on individual liability for care costs and provides a scheme of Universal Deferred Payment (UDP). UDP is intended to prevent ‘forced sales’ of the home. Despite its name, it is not intended to be available to everyone. We consider that the measure is justified and that its operation could be confined to those who would otherwise have to sell their home. This could be achieved by making UDP available only to those who could not pay the capped sum from non-housing assets.
Our concerns with the Care Act 2014
Our principal concern lies with the Act’s treatment of housing wealth through the cap. Its effect is to preserve individual wealth and, in practice housing wealth, at the expense of the public purse. Ultimately, it will benefit those who will inherit that wealth. The use of public funds to preserve an inheritance lies at the heart of our criticism.
By passing a greater proportion of the costs of social care to the state, the Act will inevitably have undesirable – and unfair – consequence for the younger generation of taxpayers. We therefore advocate a phased scheme which would aim to change the expectation of leaving housing wealth as inheritance and, instead, inculcate an expectation of using housing wealth to fund social care costs.
This will be a controversial argument for many people. We understand the sense of unfairness felt by current homeowners at having to use housing wealth to pay for their social care costs and the desire to leave housing wealth as an inheritance. The ability to provide an inheritance is one of the bases on which homeownership has been promoted. Equally, there is understandable confusion about the different funding models for health and social care. While health care is provided free at the point of delivery, social care is means-tested and incorporates an assessment of a person’s assets to determine eligibility for financial support from the state.
The need for intergenerational fairness
Nevertheless, the wider concern of intergenerational fairness requires homeowners to use a greater proportion of their housing wealth. There is a growing recognition that issues of intergenerational fairness must form part of the ‘social contract’ between individuals and the state. In the UK, life expectancy has been growing while the birth rate has been falling. The consequence is popularly referred to as a ‘demographic time-bomb’, and the phenomenon of an ageing population is a policy concern that has been taken up at international, European and national levels.
But government policy on the need for intergenerational fairness is inconsistent. On one hand, the government has taken steps to increase the age of eligibility for the old-age pension and further increases are planned. On the other hand, it has passed the Care Act 2014 which entails a greater proportion of the costs falling on the state and, inevitably, the younger generation.
Changing expectations
Inculcating an expectation of drawing on housing wealth to fund older age care can address our concerns of intergenerational fairness. Such a policy reflects the principle of asset-based welfare, which entails expanding asset holdings among low-income households as a means of reducing wealth inequalities and promoting wealth-creating behaviour among citizens.
Successive governments since the 1950s have consistently encouraged homeownership and, as a result, housing wealth now exceeds other forms of investment to become by far the largest element in personal disposable assets. Homeownership has spread wealth more widely than any other form of asset or investment. Despite doing so, housing wealth is unequally distributed. Many older property owners have seen large, tax-free capital gains over the past few decades due to the rising value of property. The proportion of housing wealth held by older people is forecast to grow, while the term ‘generation rent’ has been coined to refer to those younger people who have no realistic prospect of buying their home. Inculcating an expectation that people will look to their housing asset, rather than to the state, to fund their welfare can reduce those intergenerational disadvantages by requiring homeowners to use the wealth in their lifetime.
Homeownership has not been explicitly promoted with the idea that the wealth will be drawn upon to fund the owner’s older age. Combined with the lack of understanding of the difference between health and social care, it is perhaps unsurprising that a strong sense of unfairness is felt at the prospect of housing wealth accumulated over a lifetime being dissipated by the requirement to fund a few years of social care. However, rather than attempting to change expectations, the Dilnot Commission’s proposals, as implemented by the Care Act 2014, appear uncritically to accept the perception of unfairness. The Act reinforces the expectation of leaving housing wealth as an inheritance, which perpetuates inequalities across generations. As a result, the funding model provided by the Act is neither fair nor sustainable.
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