A National Social Care Service would be a total disaster
Even if we generously assume that a National Care Service would not lead to efficiency losses, crude rationing of care services, and an explosion in waiting times, it would still be a bad idea, because it would lead to the politicisation of key decisions in the sector, says Kristian Niemietz
Britain spends about 2.6 per cent of GDP on social care. That may not sound like a lot compared to how much we spend on, for example, pensions and healthcare, but all three of those spending areas are closely correlated: they rise jointly, because they are driven by the same demographic developments. Our neighbouring countries are all facing similar issues: if there is a way to drastically cut social care spending while still meeting care needs, nobody seems to have discovered it yet.
Under the current system, people who have savings are initially expected to pay for their own social care needs. Once they have depleted most of those, the means-tested safety net is activated, and local authorities have to pick up the tab. Local authorities receive national government transfers to cover those costs, but those leave a gap, and local tax-raising powers are extremely limited.
Prime Minister Burnham has now floated the idea of a National Care Service or “a system that works on NHS principles”. What this means in detail is not clear at this stage. Extending the full NHS model to the social care sector would require the nationalisation of all independent social care providers, analogous to the nationalisation of healthcare providers in the 1940s. But for logistical reasons alone, that is probably not what any government (other than maybe a Green Party/Your Party coalition led by Zack Polanski and Zarah Sultana) would really want to go for.
Creating a monopsony
A more likely outcome is that Burnham’s plans will lead to the establishment of a single-payer social care system, where social care will be publicly funded, but can still be privately provided.
Either way, there are at least two reasons to believe that a state-funded system would end up considerably more expensive than the current one. The first one is obvious: providing social care free at the point of use without means-testing would lead to an immediate jump in demand. The extra demand will come from marginal cases, that is, people who could use social care services, but who do not (yet) rely on them because they have other options, such as family support or independent living with adjustments.
Secondly, under a state-funded system, there would be political lobbying for higher wages in the social care sector, for the simple reason that there would now be a political decisionmaker who can be lobbied on such matters. Under the current system, there isn’t one – who would you lobby, exactly?
Would the government cave in to those wage demands?
In theory, it could go either way. A state monopsony purchaser of social care services would have enormous market power, which it could also use to suppress wages. But given the likely political power dynamics, that seems implausible. We know from our experience with the NHS that in a political showdown between an unpopular government and a trade union representing health workers, the latter always wins. In fact, in his Golders Green speech, Andy Burnham already argued that care workers should be among the best-paid people in the country. From that starting position, you cannot then turn around and say that the nationalisation of social care spending was really a wage-suppression technique all along.
Even if we generously assume that a National Care Service would not lead to efficiency losses, crude rationing of care services, and an explosion in waiting times, it would still be a bad idea, because it would lead to the politicisation of key decisions in the sector. And who would look at British politics right now, thinking, “I really want these guys to have even greater powers over my life”?
Kristian Niemietz is head of political economy at the Institute of Economic Affairs