All posts by northlondonhousewife

Rants&Rambles

Care

If we’re lucky, we’ll grow old. The alternative, dying young, cannot be described as lucky at all and yet it seems looking around me and chatting with friends, there is more concern, more outright fear of the ageing process, of growing old and ill, of dying badly, than ever before.

In the UK, adult social care is often on the front page of the newspapers. There seems to be a steady stream of damaging horror stories. The UK health service, the NHS, pick up the bill far too often despite the fact that the one key factor of the care sector in England, is that care provision is almost entirely private, and despite the fact that the system is hugely expensive, possibly  financially crippling for the end users.

The shift in the sectoral provision of social care over the last thirty years or so is remarkable, and with funding in excess of £22 billion, this is a large and attractive market.

In 1979, 64% of residential and nursing home beds were still provided by local authorities or the NHS; by 2012 it was just 6%; in the case of domiciliary care, 95% was directly provided by local authorities as late as 1993; by 2012 it was just 11%.

This shift to the private sector has also been accompanied by a growing role for large companies with 50+ homes at the expense of small, family-run businesses – five large chains alone now account for 20% of provision and this figure is expected to rise.

Does this matter? The narrative is that users are indifferent to who provides a public service. Instead, it is the quality that matters. But the reality is that the two are inter-twined. The most obvious example is with the workforce which comprises 60% of the costs and is ‘sweated’ in order to sustain financial margins. Research has highlighted an array of poor practices – restricting annual leave, reducing the numbers of qualified nursing staff, increasing resident-staff ratios, removing sick pay, failing to pay the National Minimum Wage and increased use of zero-hour contracts. Moreover there is evidence that pay rates and staff retention rates are significantly lower in the private sector than in the smaller local authority and voluntary provider sectors.

It would be idle to pretend that this does not impact upon the quality of care. When private care homes are fending off financial problems, the quality of the care that they provide to residents has been found to diminish: the facilities deteriorate, staffing levels are reduced and additional ‘services’ for residents such as outings or entertainment, are cut back.

In the case of domiciliary care there has been wholesale adoption of a flawed ‘task and time’ model with units of as little as 15 minutes per client imposed in order to reduce costs. And in perhaps the ultimate ‘commodification’ of care, some local authorities have put care packages for vulnerable people out to tender in eBay-style timed auctions. Unsurprisingly the most recent annual report by the regulator, the Care Quality Commission, found that 41% of community-based adult social care services, hospice services and residential social care services inspected since October 2014 were rated as inadequate or requiring improvement.

The big private care providers are based upon such fragile and high-risk investments models (designed to maximise short-term financial returns) that they are at risk of market failure. There has already been one spectacular such failure – Southern Cross in 2011 – and a recent survey of local authorities reveals that most are expecting further failure in the coming year. The inappropriate nature of these high-risk financial models premised upon quick and unrealistic returns of 12% on investment has been brilliantly exposed in a report from the Centre for Research in Socio-Cultural Change. The bizarre situation now exists whereby some of the biggest private providers of health and care are using tax havens to avoid their fiscal responsibilities and then begging the taxpayer to underwrite their morally dubious investment techniques. The report sensibly proposes a maximum return on investment of 5%.

What can be done about this? Arguably successive governments have gone along with the privatisation policy to such an extent that a simple reversal is impossible. Reactions to the failure of Southern Cross led to greater market surveillance powers being given to the CQC, but these are weak and inadequate for the task. But this doesn’t have to be the end of the story. A combination of the following strategies will help to curb the worst excesses:

Strengthen Commissioning: Local authorities have, in the name of ‘reducing bureaucracy’, been stripped of the funding, knowledge, capacities and capabilities needed to manage change. These need to be restored and rebuilt, as does local government in general if George Osborne’s devolution rhetoric is ever to become a reality. Similarly, in a market that is now heavily reliant on the higher fees paid by ‘self-funders’ there is a need to improve the support they and their families receive in making choices at vulnerable stages in life.

Transparency Test: In England the government has been keen to encourage citizens to scrutinise the spending of public sector bodies, but less interested in extending such transparency to private companies in receipt of publicly funded contracts. A ‘transparency test’ could stipulate that where a public body has a legal contract with a private provider, that contract must ensure full openness and transparency with no ‘commercial confidentiality’. Non-statutory providers could also be made subject to local political scrutiny processes and to the Freedom of Information Act from which they are currently excluded.

Ownership/Taxation Test: The Southern Cross failure exposed the difficulty of regulating a private care provider owned by a mix of property investors, bondholders, banks, shareholders and landlords, among them the powerful offshore fund of the Qatari Investment Authority. At a minimum, the ownership of all companies providing public services under contract to the public sector, including those with offshore or trust ownership, should be available on the public record. At the same time a taxation test could require private companies in receipt of public services contracts to demonstrate that they are domiciled in the UK and subject to UK taxation law.

Workforce Test: Given long-standing concerns about the treatment of staff, a further test could be around workforce terms and conditions. All providers should be expected to comply with minimum standards around workforce terms and conditions, training, development and supervision. This could include outlawing attempts to get round the national minimum wage levels such as not paying travel time between visits or using tracking devices that pay people by the minute. Commissioning bodies could also include procurement requirements designed to oblige all care providers to participate in collective bargaining and to outlaw such practices as blacklisting workers for taking part in trade union activities.

Accountability Test: Unlike public sector services, those public services provided by contract by private companies are often immune from penalty or accountability for their performance, even in the event of failure. At worst the big contractors are subject to short-term bidding bans. Bringing democratic accountability into this situation is problematic. One option would be to explore the possibility of some form of public ‘right of recall’ where contracted out services are thought to be of unacceptable quality – say where 3 per cent of the adult electorate have formally petitioned the commissioning authority. More broadly Will Hutton argues for reform of the Companies Act to require businesses to deliver goods and services to meet social obligations rather than simply short-term enrichment – a statutory framework that goes beyond financial reporting to cover investment, workforce development, equitable pay scales, environmental and societal obligations.

Ultimately, however, we need to question the place of large tax-evading private chains founded upon risky financial models having any place in the realm of personal care and support where the free market cannot profitably supply the services needed to meet people’s needs. There may well be a place for a mixed economy of small, local private providers and voluntary sector providers alongside a revitalised role for local authorities, but the wholesale dash for privatisation in England cannot be deemed to have been successful in meeting the needs of service users.

Political

Universal

I am increasingly taken with the idea of a Universal Basic Income or benefit scheme  – the payment of a regular and guaranteed income to a country’s citizens as of right – despite the scoffing of many of my friends from both the right and the left

Worldwide, enthusiasm is beginning to gather pace. Trials are being planned in several countries while Silicon Valley incubator Y Combinator is to test a scheme in California.

In the UK, the idea is backed by the Green Party and the SNP, is being seriously examined by the Labour Party, and has support from the Royal Society of Arts and the pro-market think-tank, the Adam Smith Institute.

Here in the UK, growing interest is being driven by two deep-seated structural trends: the growing fragility of the jobs market and the inadequacies of the existing, increasingly punitive, intrusive, and patchy benefits system. With its built-in income guarantee, a universal basic income (UBI) would help relieve both problems.

It would bring a more robust safety net in today’s much more precarious working environment while boosting the universal element of income support and reducing dependency on means-testing. A UBI also offers a way of providing income protection as the robotic revolution gathers pace, and could be used to help ensure that the possible productivity gains from accelerated automation are evenly shared rather than being colonised by a small technological elite.

coins

Despite these benefits, the idea remains highly controversial.

Although support spans the political spectrum, the Right and the Left embrace very different visions of a UBI. Left supporters view such a scheme as part of a strong state, and a recognition that all citizens have the right to some minimal claim on national income. Supporters from the libertarian right, and some Silicon Valley enthusiasts, in contrast, favour a basic income as a way of achieving a smaller state.

Some critics view UBI supporters as utopian zealots for a new workless nirvana. Yet one of the central merits of a UBI is that it is non-prescriptive. It offers more choice between work, leisure (not idleness), and education, while providing greater opportunity for caring and community responsibilities. Under a UBI all lifestyle choices would be equally valued. It would value but not over-value work. A UBI would both acknowledge and provide financial support for the mass of unpaid work in childcare, care for the elderly, and voluntary help. By providing basic security it would offer workers more bargaining power in the labour market.

A UBI would, over time, change behaviour, and the results of the national pilots will provide important new evidence of the likely impact. Some might choose to work less, take longer breaks between jobs or be incentivised to start businesses. Some might reject low paid, insecure work leading to a healthy rebalancing of wage structures. Some might retrain or devote more time to personal care or community support, in many cases producing more value, if currently unrecognised, than paid work.

The net effect is more likely to promote than weaken the incentive to work. Indeed, incentives will be stimulated by lowering dependency on means-testing while tackling poverty would become less dependent on the ‘work guarantee’.

But can a UBI be made to work?

Critics claim that a UBI is simply not feasible because it would cost too much. Yet new evidence suggests that it could be made progressive and affordable. One recent report for the think tank, Compass, modelled several different alternatives to see how affordable and feasible such a scheme might be. These simulations show that a full and generous scheme, one that swept away the existing system of income support in one go, would be either too expensive or create too many losers. This is because the current benefits system, partly because of its reliance on means testing, is able to deliver large sums to some groups.

However, our study also found that a ‘modified’ scheme, one that still provided a universal and guaranteed income, albeit at a moderate level, and that initially left much of the existing system intact, would be feasible. Such a scheme –  while not a silver bullet – would offer real and substantial gains: a sharp increase in average income amongst the poorest; a cut in child poverty of 45 per cent; and a modest reduction in inequality, all at a relatively modest cost of £8 billion. This model would also strengthen the universal element of the current benefit system, thus reducing the reliance on means-testing.

This approach is not utopian – it is grounded in reality. It offers a piecemeal approach to reform, not wholescale replacement.  Such an approach reduces the risks of big bang reform, while offering flexibility for gradual improvements over time.  It could, for example, start with a UBI for children. This is evolution, not revolution.

Far from encouraging idleness, a UBI also offers greater flexibility in how to balance work-life commitments in a much more uncertain world and the gradual casualisation of much of the workforce. And far from promoting the end of work, a UBI would aim to tackle the greater risks of a weakened labour market, not aim to replace work. With opportunities likely to become ever more fragile, it is time that policy makers gave much more serious consideration to how a UBI scheme could be made to work.

Political

Money Pie

One of the biggest claims made by the Brexit campaign was that we could leave the EU and in doing so save ourselves £350 million per week that could be spent on the NHS instead. Despite being thoroughly debunked at the time, some people have clung to this “promise” and were somewhat vocal in their displeasure when campaigners such as Nigel Farage backtracked the day after the referendum.

Michael Gove, another out-campaigner and currently campaigning to be the next prime minister, has suggested he will pay £100million per week across to the NHS. And although significantly lower than the campaign promise, this remains a significant sum of money.

Is this new promise worth any more than the first?

First think about where the original figure came from. The sum of £350m a week is based on the Treasury’s estimation of the gross amount the UK contributed to the EU last year, which was £17.8bn, or £342m a week.

This figure is purely hypothetical because since Margaret Thatcher negotiated Britain’s rebate in 1984, the UK has been required to pay significantly less than the 1% of national GDP that member states are normally expected to pay into the EU’s collective budget.

The same Treasury figures clearly show Britain’s EU budget rebate last year was £4.9bn. Deduct that from £17.8bn and you get £12.9bn – or £248m a week. This is the sum now recognised by the independent fact-checking organisation Full Facts.

Plus, as Prof Ian Begg of the London School of Economics notes, the rebate is deducted before any payment is made, so it was simply wrong – and arguably deliberately untruthful – to say Britain “sends the EU £350m a week”.

The Treasury actually remits around £100m less a week.

Even the lesser weekly sum of £248m does not fairly reflect the cost to the UK of EU membership, because it ignores EU spending on the UK. Last year, the Treasury estimated these receipts from Brussels at £4.4bn, money spent mainly in the private sector but also distributed by public bodies, to farmers and poorer parts of the UK, such as Cornwall and south Wales, both of which voted “Leave”.

As pointed out by InFacts the EU also injects money directly into the UK’s private sector, for example, for scientific research through programmes such as Horizon2020. The most recent figure for this, from 2013, is £1.4bn.

Deduct both the rebate (£4.9bn), which is never actually paid, and the money that is paid but sent back (£5.8bn), from the gross £17.8bn annual “membership fee” and you arrive at a net figure of £7.1bn.

This equates to £136m a week, less than 40% of the amount splashed on the battles but still enough to make good on Mr Gove’s promised £100 million, unless …

Both the Treasury and the Bank of England are now warning of difficult economic times ahead due to the market uncertainty because of the Leave vote.

The size of the UK annual economic activity was £1,800 billion in 2015. Just a 1% economic change is £18bn a year or £346 million per week.

So if as a result of the referendum, the economy contracts by just 1%, we will be £210million out of pocket. Forecasts before the referendum ranged from a contraction of 4-8% to the economy.

At this stage it will be a struggle to maintain the amount of money we are currently paying towards the NHS never mind increase it.