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Welfare State and social policy

Pathways to London inclusive housing affordability

4th December 2021 by newtjoh

Although the Greater London Authority (GLA) was established in 2000, it only assumed responsibility to administer, to allocate, and to deliver centrally funded affordable housing programmes in 2012 within a policy framework set by, and negotiated with, Whitehall.

The current mayor, Sadiq Khan, is responsible for two overlapping centrally funded housing programmes: the Shared Ownership and Affordable Homes Programme 2016 to 2023 (2016-23 SOAHP or 2016-23 programme) and the Affordable Homes Programme 2021 to 2026 (2021-26 AHP or 2021-26 programme).

The GLA was allocated £4.8 billion in 2016-23 SOAHP central government funding to deliver at least 116,000 affordable homes by March 2022, a deadline that due to the impact of Covid on delivery was subsequently extended to March 2023.

By April 2021, around 72,000 dwelling starts and 34,500 completions from that programme were recorded. Of the remaining 43,000, around 17,000, according to the mayor, are to be started in 2021-22 and 26,000 in 2022-23, accordant with targets previously agreed with Whitehall.

In November 2020 £4bn from the successor 2021-26 AHP was allocated to deliver 35,000 affordable homes across London by March 2026. London-wide allocations from the GLA’s first bidding round for that programme were announced on 31 August 2021, when £3.46bn was allocated to 53 housing providers to deliver 29,456 homes, none of which have started yet.

The mayor expects the 2021-26 AHP – running alongside the extended and outstanding preceding 2016-23 programme – to provide a combined total of c.79,000 affordable new home starts by March 2026.

The Housing Committee of the elected London Assembly at its 19 October  meeting(the committee), coincident with the publication of its 2021 Affordable Housing Monitor (2021 Monitor),  considered issues relating to the past and future delivery of these two programmes.

This post uses most current up-to-date information that the committee, other forums, and the official affordable and other housing statistics published in November 2021 provide(d) to illuminate London-wide trends and issues likely to impact on affordable housing delivery until 2029.

Associated policy development implications at both central and local level are identified and related, where applicable, to the core themes of A Social Democratic Future, including the real fiscal crisis of the state.

The core conclusion is that the driving principle of the mayor’s successful 2017 Affordable Housing and Viability Special Planning Guidance should be extended nationally, but in a way cognisant with regional, sub-regional, and local housing market characteristics and values.

Such a policy shift would align to the line of current political least resistance to make the Section 106 process simpler, with greater certainty and transparency, making paramount the principle that the planning gain attributable to granting of residential planning permission should be recycled to the maximum possible extent to the provision of affordable housing and supporting social infrastructure.

It should be combined with changes in the public accounting treatment of housing investment that reflected its productive income and wealth effects and its self-funding capacity over a 30-year period.

This should tap into a discernible overlapping political and technical consensus that the provision of affordable housing must be mainstreamed through measures that directly reduce the cost and price of housing into both public and private business models, and thus blur the distinction between market and social housing, so lessening the trade-off between maximising social rented and total affordable currently aggravated by constrained central housing capital budget allocations.

1          Defining and tracking affordable housing

What precisely counts as an affordable home is itself a complex and contestable concept that tends to be tautological rather than illuminating.

The government’s definition was published in the 2012 National Planning Policy Framework, last updated July 2021.

Broadly speaking, dwellings provided at least 20% below local market rents (including service charges where applicable) and 20% below local market values in the case of discounted home ownership, including shared ownership, are counted affordable under that definition, which must remain at an affordable price for future eligible households or include provision for any receipts to be recycled for alternative affordable housing provision is required when public grant is involved.

Defining a dwelling as affordable, of course, does not make it by itself affordable for households of varying circumstances subject to local housing market conditions.

The GLA definition of affordable housing attempts to address that consideration, whilst maintaining conformity with the government’s definition of affordability and other programme funding conditions, where applicable, by requiring it to be made available “at a cost low enough for eligible households to afford, determined with regard to local incomes and local house prices”.

For example, the GLA defines London Living Rent (LLR) as an: “intermediate affordable housing tenure with a London-specific rent introduced by the mayor that will help, through sub-market rents on time-limited tenancies, households save for a deposit to buy their own home. Rents are based on one-third of the estimated median gross household income for the local borough, varied by up to 20 per cent in line with ward-level house prices, and capped to reflect the maximum affordability for an eligible household. Providers of LLR homes funded through the Affordable Housing Programme (AHP) 2021-26 will be required to offer tenants the opportunity to buy the LLR home on a shared ownership basis during their tenancy and within ten years. Finally, the benchmark rents also vary based on the number of bedrooms within the home”.

In planning delivery terms,  Delivering affordable housing (HP4) and Affordable housing tenure (HP6) policies of the 2021 London Plan, published in March, specified the following split of affordable products delivered (proportion of total affordable units provided expressed as 100%) expected to be provided in a development):

  1. a minimum of 30 per cent low-cost rented homes, as either London Affordable Rent or Social Rent, allocated according to need and for Londoners on low incomes (A1);
  2. a minimum of 30 per cent intermediate products which meet the definition of genuinely affordable housing (A2);
  3. the remaining 40 per cent to be determined by the borough as low-cost rented homes or intermediate products (as A1 and A2 define) based on identified need;
  4. Where the proportion of (total affordable) homes provided in in a development exceeds 35% (50% on public land or on industrial sites, and public sector landowners with agreements with the mayor across a defined portfolio of sites, or 60% in case of an appointed strategic development partner), their tenure (split) is flexible, provided that the homes are genuinely affordable, as A1 and A2

The presumption is that the 40 per cent to be decided by the boroughs under (3) will focus on social rent (SR) and London Affordable Rent (LAR). HP6 does, however, recognise that for some boroughs a broader mix of affordable housing tenures will be more appropriate, “either because of viability constraints or because they would deliver a more mixed and inclusive community”, in which case it should be determined through the local Development Plan process or through supplementary guidance.

Social housing is allocated with reference to statutorily defined need categories and is mainly allocated to those on low incomes or are otherwise medically or socially vulnerable.

Intermediate housing in the guise of LLR mainly caters for potential households in employment with moderate to average (middle) household incomes below £60,000; households with gross household incomes of up to £90,000 per annum can be eligible for some intermediate home ownership products, primarily London Shared Ownership (LSO).

As an indication of prevailing actual affordable intermediate costs, a proposed 100% intermediate affordable development in Ealing will offer one bedroomed dwellings attached with a market value of c£450,000; translating – assuming that purchased equity stake is 25% on mortgage with 10% deposit found paid – into a monthly cost c£1,239, including a £223 service charge; and two bedroomed units attached with markets value between c£550-600,000 translating into a monthly cost of c£1,500, including c£300 service charge. Properties will be initially offered to eligible local households demonstrating annual household incomes of £60,000 before higher income applicants are considered.

The official statistical sources

There are lies, damn lies, and statistics. Official housing statistics, of course, don’t propagate lies. They do, however, suffer from frequent definitional and consistency discontinuities, from subsequent revisions of previously published data, from gaps in coverage, and from reporting shortcomings (such as source data omissions and miscoding). All can impact on data accuracy, completeness, and transparency. Data owners can decide what to publish, in what format, over what period, and what is included and omitted.

Published data then gets subject to competing political spin narratives, selective in what data and what time periods are highlighted, presented to paint a picture of the past, present, and future that the narrator, accordant with their own organisational interests and preferences, want beholders to see.

All this makes the interpretation of housing data over time difficult, time-consuming, and an invariably less than definitive experience: confusion can consequently trump understanding.

It is important to understand what a particular statistical source in each case is describing and what it is not.

Tables 1 and 2 of GLA Affordable Housing Statistics reports affordable starts and completions that the GLA has funded or monitored as part of a wider regeneration programme. It can omit affordable housing activity undertaken by councils and other registered providers (mainly housing associations) not recorded by the GLA. It is thus a subset of total gross new affordable housing supply provided in London over any set period.

The affordable housing statistics series published by the Ministry of Levelling up, Housing and Communities (MLHC) in its Live Table 1011 is more complete, but it is only published annually in November. It “aims to provide a complete picture on affordable housing delivered, irrespective of funding mechanism”, including new build and acquisitions from the private sector, (although not losses through demolitions or sales), as well affordable completions reported in local authority as well as GLA statistical returns to MLCH, some section nil grant 106 units that the GLA in its 2019-23 returns may have omitted, as well as units funded through Right to Buy recycled receipts not counted in the GLA statistical series.

Although Table 1011S of that series reports total affordable starts only from 2015-16, Table 1011C provides a time-series for completions back to 1991-92, reproduced in Annex Table One.

The GLA and MLCH series are compared in Table 1 below.

Table 1 London2029

The MCLG technical note to the latest published 2020-21 series explains the variance between the two series, thus: “local authorities are asked to only record (in their LAHS return) affordable housing that has not been reported by Homes England or the GLA. To assist them in doing so and minimise the risk of double counting, Homes England (outside London) or the GLA (within London) sends all local authorities a list of the new affordable housing recorded in their administrative systems. However, despite best efforts, double counting may still occur if local authorities misunderstand the instructions on the form or if, due to differing definitions of completion of housing, local authorities considered that a unit had been completed in a separate financial year”.

It appears higher for completions, where it can reach 40%, as it did, most recently, in 2019-20, reduced last year to 8%. Around 76% of the 2020-21 starts in the MLCH series were recorded as funded either by Homes England/GLA but only about  a third of the same year completions.

Neither the GLA nor the MLHC affordable housing statistical series report net totals that take account of reductions in the affordable stock, including from right-to-buy (RTB) and from demolitions; both negative flows can be considerable.

A distinction on the margin can be made between losses due to RTB and demolitions: dwellings demolished are lost now and for ever as source of affordable housing and require the rehousing of previous occupants; yet when integral to a redevelopment or regeneration programme, they may be replaced in time.

Right-to-buy completions reduce the affordable stock and (all other things remaining the same) deflate the future flow of affordable housing opportunities (although receipts generated by the sale may enable partial replacement) but not the total dwelling stock: the dwelling sold can still be lived in by current and future occupants.

Also published annually each November, Table 118 Housing and Communities dwelling stock statistical series provides a net additional dwellings time series for London (E12000006) that is broken down into components, including new build completions, net conversions, and change in use, with demolitions netted off.

According to MLCH, it is the primary and most comprehensive measure of housing supply that provides the “only consistent data source for providing dwelling stock estimates and changes in net supply between census years in England (London), at least from 2006-7”.

That the series is adjusted to reflect the decennial Census result suggests the possible margin of error attached to it, however. And, like the GLA and MLCH affordable series it does not breakdown units provided by bedroom size (number of bedrooms).

It is not broken down according to tenure, and therefore it cannot be directly reconciled with the MLCH annual affordable housing series. It can only be inferred from both series, that gross affordable completions accounted about a third of total new build completions during 2020-21.

Programme phasing, starts and completions

The GLA affordable housing programme is subject to successive central government funding allocations, themselves subject to comprehensive spending review decisions. Each multi-year funding settlement then is allocated by the GLA to individual development partners following an application, competition, and moderation phase.

Development programmes then involve long lead-in times, requiring total scheme funding to be negotiated or identified, and the necessary scheme approvals to be secured and preparations undertaken, prior to any start on site.

Complex and multi-partner scheme developments take years to gestate and then complete. For example, the large-scale redevelopment of the Hackney Woodberry Down and Ealing South Acton council estates took or will take up to 30 years to complete.

The GLA’s Capital Funding Guide defines dwelling start as the date when the investment partner and contractor has signed and dated the building contract and the building contractor takes possession of the site or property and undertaken some necessary defined preliminary works, such as excavating for foundations or infrastructural drainage work.

The beginning of each programme cycle for such starts invariably is relatively fallow followed by a rapid pick-up that then is translated into a later bunching or concentration of completions towards the, or even beyond the end, of successive funding programme cycles.

For example, in 2014-15 over 18,000 completions were recorded (see Annex Table One London 2029), more than three times the volume recorded the following year, reflecting the concentration of completions at the end of the 2011-15 Affordable Housing Programme.

The latest stipulated date for 2021-26 AHP funded dwellings to start is March 2026 and the end date for their completion is March 2029: a potential gap of eight years between programme inception and end, and three between the start and completion of individual dwellings.

The preceding 2016-23 programme is attached with no backstop completion date, meaning that completions funded by that programme could possibly trickle-in towards the end of this decade.

In that light, October’s Housing Committee (the committee) was reminded that a family can only live in a dwelling when it is completed, not when it is started; on the other hand, assessments of programme delivery need to relate to the applicable programme funding and associated target arrangements.

Using GLA Table 1  affordable starts within the capital funded or reported by the GLA since 2008 have averaged annually, overall, around 11,000: 12,000 during 2008-12; falling to less than 9,000 in 2012-16; rising again to approach 13,000 during 2016-21, as Table 2 of this post catalogues in the next section.

Much care is needed in interpreting such overall averages, however, as they are sensitive to the choice of period surveyed. And any average taken over a period can mask variations marking that period or an underlying trend within an inherently shifting story, compounded as it is by programme phasing and the gap between starts and completions identified above.

Over 30,000 dwellings under the 2016-23 programme were started during 2019-21 suggesting a total figure of c43,000 remaining programme starts between April 2021 and March 2023, nearly double the average annual of 11,120 starts during the preceding decade (excluding any that may also be funded under the 2021-26 AHP).

Such a level of starts, if achieved, will then feed into subsequent 2021-26 completion figures, pushing them beyond the previously record 2008-12 completion average, plus some.

On the other hand, the smaller 35,000 dwelling 2021-26 programme will subsequently come on stream from 2023, pushing down the average annual start and then the completion rate towards the end of the decade.

A total of c108,850 expected GLA dwelling starts between the decade April 2019 and March 2029 (c30,500 2019-21 starts plus 43,000 remaining 2016-23 programme starts plus 35,000 2021-26 programme starts) by itself, if achieved, would provide an overall annual average of just under 11,000 for that period, and an even lower completion average. That figure, however, excludes the unknown number of starts that can expect to result during 2027-29 from any successor programme to the 2021-26 programme, and from any other additional allocations.

All of this, of course, shorn of context is prone to presentational cherry-picking.

Improving statistical reporting

Neither the GLA nor the MLHC affordable housing series break down start and completion activity according to bedroom category. This is an important omission insofar that much new affordable housing in London, as noted earlier, is delivered through multi-decade redevelopment/regeneration schemes. These often involve the phased demolition and replacement of existing social rented and other housing tenures by a higher number of one to two bedroomed units.

In that light, the 2021 Housing Monitor recommended that bedroom numbers should be included in the GLA data, which should also capture all gains and losses to the affordable housing stock, and that starts and completion data should also differentiate between funding programmes.

This website has asked both the GLA and MLCH to make efforts to reconcile its respective affordable housing series, and the MLCH its affordable and net additions series.

And, as the London Plan highlights, the growing importance of Section 106 in providing additional affordable housing supply within London means that it is crucial that their implementation and review mechanisms are monitored to ensure that the additional homes contractually committed are delivered in the form promised.

Its monitoring of affordable housing (HP7) policy, in that light, requires boroughs to have clear monitoring processes to ensure that the affordable housing secured on or off site is delivered and recorded in line with the requisite Section 106 agreement, and to share that monitoring information with the GLA to incorporate within its annual monitoring process, and, to underpin the accuracy of their statistical returns to MLHC.

These returns, in the view of this website, should record all individual housing obligations contained in section 106 agreements, and to track them according to whether they are:

  • delivered in accordance with the agreement; or,
  • remain outstanding; or,
  • were cancelled; or,
  • differed in quantum and composition to the original agreement.

2          What the published available statistics tell us and what they don’t

The most telling message conveyed by Table 2 below concerns programme composition.

Table 2 London 2029

It shifted from social rent (accounting on average for 64% of starts 2008-12) to affordable rent (55% of starts, 2012-16), then followed by shifts in favour of intermediate housing provision (50% of starts) and of social rent (31% of starts), both away from affordable rent during 2016-21.

The total and proportionate share of social housing should increase significantly further in the future on current plans. An August 2021 mayoral press release advised that 57 per cent of the 2021-26 AHP programme will be for social rent, of which half will be delivered by councils; shared ownership or London Living Rent accounting for the rest.

That increased 57% proportion compares to the 46% share that social rent took of the total number of affordable dwellings started in 2020-21, and the 64%, 30%, and 17% of total affordable completions that on average social rent accounted for throughout the 2008-12, 2012-16 and 2016-21 mayoral terms, respectively.

The 2021 Monitor also broke down starts and completion according to borough. Four boroughs completed over 2,000 affordable dwellings in total between April 2016 and March 2021 (over 500, on average, each year): Tower Hamlets, Newham, Southwark, and Ealing. At the top, Tower Hamlets, 4,306 completions, while the other three ranged from 2,709 in Newham to 2,070 in Southwark.
Four contributed less than 400: Richmond, Harrow, Havering, and Hillingdon, with Richmond reporting the lowest: 210.

With respect to social rent/LAR completions, Tower Hamlets, Newham, and Ealing all reported over 500 completions over the same period (18% to 23% of their respective total completions). Sutton reported two; Kingston, three; Harrow, four; and, Richmond, 16.

These headline figures, however, do not provide a good guide as to the progress of each borough in meeting the 2021 London net additional dwelling requirements that Annex Table Two London 2029 reproduces.

Ealing, for example, has a 10-year net completion target ending March 2029 of 21,570 dwellings. An October Planning Appeal decision noted that the borough is delivering, at best, 40% of its objectively assessed need for affordable housing while the council accepts that it cannot demonstrate a five-year supply of deliverable housing sites (consistent with it delivering its London Plan targets).

As the previous section noted, the GLA affordable housing statistics series only cover programme activity that the GLA monitors, thus excluding some local authority and housing association self-funded and nil grant section 106 activity. Nor does it breakdown starts and completions according to type of provision.

Table 3 provides that breakdown by utilising the more comprehensive and complete MLCH series

Strikingly, more than 50% of the total 10,800-odd affordable dwellings completed during the last two 2019-21 years were delivered through the nil grant Section 106 route – a progressive increase from the 13.7% recorded in 2014-15.

To put that secular trend into an even longer-term perspective, until 2013-14 (when they accounted for 12.7% of the total, a proportion that thereafter rose steadily year-on-year, as above) the share of the total affordable supply accounted for by nil grant Section 106 completions had had previously exceeded 10% in one year only: 2006-07 (see  Annex Table One London 2029).

Table 3: Affordable completions, according to tenure type and section 106 status, 2014-21

Table 3 London 2029

In tune with that,  GLA analysis of planning data, published in March 2021, reporting mayoral approvals of planning applications referred to the mayor during calendar year 2020 (largely because application concerned more than 150 dwellings), advised that 37% – the same proportion as 2019, a record – of the total 38,865 units approved (14,337), and 41% of habitable rooms (a better measure as it take account of dwelling size composition and mix) were affordable. That proportion had only reached 30% in 2017, after previously out-turning in the 18% to 25% range between 2011 and 2017.

Apparently discordant with that secular trend, however, MLCH Table 1011S indicates that only c16% of 2020-21 starts were expected to be funded through nil grant Section 106 route.

 Table 4 shows that successive ten-year average completions have not diverged from the 30-year average by more than 8%.

Over successive five year periods more variation is discernible, but the table provides little evidence that the political complexion of the government in power proved a major factor; the two lowest five year averages reflected, first, a squeeze on public housing investment in affordable housing during the early New Labour years; and, second, the during 2016-21, the tail end of fiscal austerity acting disproportionately on housing capital investment presided over by David Cameron and George Osborne, tempered in outcome by increased nil grant section 106 supply.

Table 4 London 2029

Completions recovered to reach record levels during the later New Labour years; as the previous section noted, new record levels can be expected at some point during the next decade as 2019-23 start levels subsequently feed into completions.

On the whole continuity interrupted by macro-economic, public expenditure, electoral, and programme cycles, rather than any overarching ideologically-led policy intervention, consistent with post-Thatcherite governments recognising the need for additional affordable housing, if not the means.

The primary and overwhelming message is that the delivery of affordable supply has grossly undershot assessed requirements and aspirations, regardless of the political colour of the governing party.

Table 5 below uses the MLCH net additions series. It records a near-doubling of net supply from the levels recorded in the early noughties to reach c32,000 by 2009. The impact of the GFC then resulted in a drop to c21,000 in 2012-13, then a progressive increase (interrupted in 2017-18) took it to a record c41,000 dwellings in 2019-20 (including c37,000 new build completions). It then dropped back, probably due to Covid-related impacts, by 9% to c37,000 (including c33,000 new build completions) last 2020-21 year.

A sharp fall in demolitions was also recorded in 2020-21.

Table 5 London 2029

Table 6 below advises that new builds account for most net additions, although between 2015-17 changes in use from office and other uses to residential reached 22%, prompting wider concern about the space and other standards. It dropped back later in the decade.

The source statistical series (MLHC, Table 118) is not broken down according to tenure. The relative negative impact of demolitions on affordable net supply outcomes can be expected to be higher: large scale demolition of existing social housing estates has generally been more prevalent in recent decades than redevelopment of privately owned stock, more predominant in in the 60’s and 70’s.

In that light, a Southwark Monitoring Report  covering the April 2004-19 period reported 15,237 planning affordable home planning approvals but a net increase in affordable supply of only 9,924.

The demolition of estates, such as the Heygate, close to the Elephant and Castle, subject to comprehensive and long-term redevelopment and replacement programmes can cause net affordable housing supply, taking account of demolitions, to subtract from gross affordable supply.

 Table 6 London 2029

The committee was told that housing associations and other social landlords face ‘competing priorities’ between maintaining existing buildings and developing new homes, with the cost of remediating fire safety defects and decarbonising homes reducing the capacity to build new ones. A central headwind echoed in the last meeting of the London First convened  Council-Led Housing Forum (the forum) held that same morning.

Richard Hill, vice chair of the G15 group of housing associations within London, advised the Housing Assembly committee that the ‘operating environment’ its members faced required them to re-focus on building safety and investment on their existing stock, causing their development numbers to go down, noting that housing associations face multi-million billion bill to fix safety issues over the next 15 years that came attached with an opportunity cost of around 72,000 new affordable homes foregone.

The London Plan, indeed, includes requirements for all developments of ten or more homes to be net zero-carbon and to incorporate sustainable urban green spaces as part of a wider drive for London to be a zero-carbon city by 2030.

The mayor in his August press release also confirmed that housing providers building homes funded by the new 2016-23 programme, on top of that core climate change sustainability requirement, will also have to meet new conditions on building safety and design, including:

  1. The installation of sprinklers or other fire suppression systems in new blocks of flats;
  2.  A ban on combustible materials being used in external walls for all residential development, regardless of height;
  3. Minimum floor-to-ceiling heights and a requirement for private outdoor space;
  4.  A ‘sunlight clause’ requiring all homes with three or more bedrooms to be dual aspect, any single aspect one- or two-bedroom homes to not be north-facing and at least one room to have direct sunlight for at least part of the day.

Switching to the crucial wider economic environment, deputy mayor for housing, Tom Copley, advised the committee that rising building costs along with shortages of materials and labour in the construction industry could “have a serious impact on scheme viability”, while Darren Levy, director of housing for the London Borough of Newham, starkly warned that: “We’re seeing materials, labour all increasing in cost. [There are] supply chain issues. There’s a general lack of stability. The labour market is becoming more challenging, there are fewer skilled operators available, and they have to a certain extent got a number of suitors in the construction industry in London… I do think, going into the next five to 10 years, it will have a significant impact into that future pipeline”.

On top of that, NIMBY-related opposition to developments that might meet London Plan and local plan requirements but are perceived as detrimental to the local environment and/or future house price prospects, will also need to be navigated.

One of the appealing characteristics of many parts of London is that high quality and high value residential areas are often cheek-by-jowl to social housing or mixed tenure developments. But residents of the former tend to possess more effective voice power in a local planning decision context to oppose and sometimes block high density new affordable housing developments.

The role of councils

On a positive note, a ‘renaissance of council housing’ was celebrated, which the forum was advised involved the delivery since 2018 of more than 8,000 affordable dwellings by London councils; a figure expected to rise to c.10,000 by March 2022, notwithstanding the recent impact of Covid.

As was noted earlier, councils have been allocated more than 50% of the 2021-26 programme for social rented accommodation, which is expected to translate into an additional c12,000 such units funded with GLA support over the next five years.

Southwark, for instance, has a longstanding commitment to provide an additional 11,000 council homes through ‘various means’ by 2043, as part of its efforts to maintain a net increase in the council stock; an aim helped in recent years by rising values that makes the right-to-buy increasingly unaffordable to existing tenants and by higher social housing re-provision levels after a period when losses of social rented stock resulting from estate -regeneration -linked demolitions and RTB’s exceeded gross new affordable provision..

Barking and Dagenham established in 2017 a wholly owned company, Be First, that with 400 hectares of development land, proclaims plans to “provide 50,000 high quality new homes and 20,000 new jobs by 2037”. More modestly, its 2020-25 business plan that the local cabinet approved in April 2020, envisaged “the delivery of 116 new homes in 2020/21 from four development projects and the commencement of seven new development projects to deliver a further 938 homes up to 2024-25, with an average of 73% affordable housing”.

Moving west, Ealing’s November 2020 Cabinet approved a £390million business plan for BLRP, a subsidiary of its wholly owned housing development company, Broadway Living. Along with the £99m grant that the council secured from the Greater London Authority in 2018, the investment will be used to build at least 1,300 affordable homes within the next six years. In total, the plan expects to see BLRP build 1,513 homes, with the sale and let of some of the homes subsidising the development of more homes for affordable let. The business plan projected that BLRP to pay for itself over the course of half a century by “recouping the initial investment through sales and rents”.

A lot can happen over such timeframes, however, and such local development company initiatives come attached with uncertain and elongated risk profiles embracing, but not exclusively, execution, development linked to market conditions, interest rate, and funding source, risk.

The experience of Croydon’s locally owned development, Brick by Brick, created in 2016 demonstrates their potential impact provides a salutary warning. It received £200m in development loans from the council, but by 2021, after its development programme stalled, had not produced any dividends or returns, contributing to its parent council and owner becoming in effect insolvent and unable to make a balanced budget.

Mr Hayes at the forum related a shift from the previous reliance on housing associations to develop affordable or acquire housing from developers to a reaction to the growth of ‘mega’ associations with confused commercial and social ends, drawing on his previous experience as Ealing’s regeneration-lead to note the actions of two associations in embarking on a bidding war for sites contrary to the local public and social interest.

Councils with their greater democratic accountability and their ability to co-ordinate planning with provision activity and to overview local housing and other markets are relatively well-placed to step-in and step-up provision to fill the gap left by HA’s hamstrung by post-Grenfell pressures to spend on their own stock.

Councils, however, compared to private housebuilders, face higher development costs, including across their material supply chains; in that light, moves to aggregate purchasing across organisations and to secure greater vertical integration of their development activity (such as setting up in-house construction arms) can be expected.

On a different but related note, drawing on his current role at Be First, he also noted the rising value of industrial land, reaching £6m per acre, as a constraint on direct provision, although he felt that values would plateau into the medium-term.

The forum was also told that some London authorities are also approaching their Housing Revenue Account (HRA) borrowing cap and that, overall, the scope for councils to expand further direct provision beyond current plans is likely to be limited.

Taken in the round, the conclusion must be that council provision of social housing will remain a sub-theme rather than a transformative one in London housing the next decade.

The funding environment

Pat Hayes, the current managing director of Be First, also highlighted at the forum possible policy risk, cautioning that the current mercurial ‘right-wing populist’ Johnson-led government, gyrating between radical market- and state-led interventions, could simply decide to move the policy goalposts concerning council provision.

The biggest risk, as it seems to this website, is the replacement of Johnson by a successor more wedded to Rishi Sunak’s proclivity for a smaller state and fiscal conservatism – a far from unlikely scenario, even though one still likely to be tempered by the wider political imperative to retain the recently won Conservative – in the absence of a more precise description – ‘working class’ and ‘red wall’ vote.

Certainly, central government cannot be relied upon to provide increased funding support. Although the 2021 Spending Review (SR21) did announce an additional £1.8 billion in total for housing supply, on top of the existing £11.5 billion investment through the Affordable Homes Programme (2021-26), of which £7.5 billion is over the SR21 period, 65% of the funding will be for homes outside London.

The government’s political driver to target resources to the North and the Midlands – the home of its ‘red wall’ seats – to further its Levelling Up agenda combined with the chancellor’s commitment to bring down the share of national income taken by public debt within three years, means that any further increase in centrally supported housing investment for London is unlikely.

The £4.9bn that Tom Copley advised the committee that is needed ‘every year for 10 years’ to provide affordable housing on the scale needed will remain ‘for the birds’ in the absence of imaginative and radical systemic change to the housing finance system, requiring at least some measure of cross-party support.

The concluding section will return to that.

Changing programme composition

The funding and other sources of affordable housing are multiple subject to frequent change. The average amount of public grant or other support required to deliver affordable housing varies according to tenure, location, and bedroom mix, the prevailing policy environment, as well as wider macro-economic and housing market conditions.

Public grant support was squeezed down practically to nil during the 2014-19 period when public housing investment became a key victim of fiscal austerity. A social rent unit will require more than twice as much public support than an intermediate unit.

As way of example, the GLA’s Building Council Homes for Londoners fund offered £100,000 per Social Rent/London Affordable Rent compared, compared between £28,000 and £38,000 for London Living Rent, London Shared Ownership (LSO) or other genuinely affordable intermediate unit started between April 2018 and March 2022.

Programmes comprising 90% social housing and discounted home ownership, respectively, will generate quite different numbers of additional housing opportunities for households of different social-economic characteristic.

Politics abhors a vacuum, and Tom Copley at October’s committee highlighted that the mayor had successfully argued (or, put another way, the government for its own reasons had been willing to accept the principle) for the majority of the 35,000 homes to be provided (started) by 2026 to be social rent dwellings, the “most affordable and most needed” homes, noting that “the government has come full circle from when it originally wouldn’t allow social rented homes to be created”.

He further pointed out that the 2016-23 programme of 116,000 dwellings was attached with £4.9bn grant support compared to £4bn for the 35,000 dwellings currently expected to be delivered through the 2021-26 programme.

The average unit public grant cost of £42,000 to provide each of the 116,000 affordable dwellings under the 2016-23 programme will rise (mainly due to the change in programme composition towards the more grant-intensive social rent, but also due to build cost inflation and the cost of design, quality, sustainability, safety and equality, diversity, and inclusion benefits) to a projected c£114,000 for each of the expected 35,000 dwellings of the 2021-2026 programme dwellings.

The reversion back to social rent should help to contain the central government housing benefit bill to a lower figure than would be the case if the same units were to be provided at the ‘affordable rent’ tenure (higher rents require more benefit where tenants are eligible, which the majority are) and at the margin should enhance work incentives; crucially, too, the shift from intermediate to social rent should more directly assist authorities to get a greater number of homeless families out of expensive and unsuitable temporary accommodation.

The downside, however, is the much higher subsidy requirement involved in providing a social unit and the resulting trade-off that exists at any given total level of grant availability between, on the one hand, maximising social housing and, on the other, total affordable numbers, largely explains why the total number of affordable dwellings that the 2021-26 programme will deliver (start) will deliver less than a third than its predecessor (expected delivery according to current conditions and plans).

The cross subsidy model

Providers, mainly the mega housing associations, ‘stretched’ receding levels of public grant over the last decade, buttressed by reserves providing a capital risk buffer, and by building units for market sale to cross-subsidise the provision of affordable homes, between and within schemes, for example, when large council estates are progressively demolished and replaced with a higher number and density of predominately private dwellings, which when sold to finance succeeding scheme phases.

But, as noted above, post-Grenfell and other spending pressures bearing down on such providers will curb its future scope.

Across recent decades the predominate development model has been cross subsidy, certainly within London and the main urban conurbations. The process has helped to maintain gross affordable supply during a period of constricted public grant support availability.

But the cross-subsidy model will not by itself provide the affordable housing on the scale required; certainly, in the absence of a scale increase in public grant that the current unreformed public expenditure and wider policy environment will not provide.

It suffers also from other shortcomings that can militate against or even undermine its purported purpose. Cross-subsidy is intrinsically sensitive to wider market conditions, which – as in the wake of the 2009 Global Financial Crisis (GFC) – can interrupt, delay, or even forestall development progress.

The model encourages – and even at the margin is dependent – on providers to maximise market sale proceeds. This incentivises them to market and sell units, for example, to foreign investors or wealthy parents of foreign students, pushing-up prices way beyond the reach of local people on moderate to above average local incomes.

Even where developers can only maximise sale proceeds by targeting local buyers, many of whom are likely to have far from high household incomes, who then, in effect, cross subsidise the affordable units, the numbers of which, in turn, in the absence of additional public grants support, can be crimped when market sales proceeds are limited by local purchasing power.

More fundamentally, but related to above, the cross-subsidy model is predicated on, and perpetuates, a housing system that become increasingly riven and driven by multiple market failures, concentrated in the more economically buoyant sub-regions concentrated south of the Humber and Trent and east of the Tamar.

Use of nil grant Section 106

London in recent years have, as Table 3 demonstrated, increasingly has come to rely upon nil grant Section 106 planning agreements (obligations) to deliver affordable housing. It is, in effect, a mechanism to partially recycle or ‘tax’ the uplift in value secured through residential planning permission; as such it is integral to the cross- subsidy model: a palliative to the imperfections of the broken wider housing market on which it relies.

In the past, information and expertise imbalances between local authorities and developers allowed the latter to game the Section 106 system to their own advantage, increasing developer profit at the cost the number of affordable units provided: St. Mary’s Residential Case study provides a high profile Southwark example

The progressive step-increase in the proportion of total new gross affordable supply taken by nil grant Section 106 since 2013 provides some evidence of greater local authority focus and effectiveness in negotiating and then securing delivery of higher levels of affordable housing within regeneration and other schemes using the cross-subsidy model (as well as to the sterling and painstaking work done by organisations, such as the Southwark-based 35% Campaign.

A key catalyst of that step-increase was the 2017 Affordable Housing and Viability Supplementary Planning Guidance (2017 SPG), now formally enshrined in the 2021 London Plan, supporting its polices including HP5 and HP6 (discussed below), are to be implemented, which must be taken into account as a material consideration in planning decisions.

A streamlined Fast Track Route was introduced for schemes that include at least 35% cent affordable housing, and 50% on public or redeveloped industrial land that enables them to progress without the need to submit detailed viability information and without late viability review mechanisms which re-assess viability at an advanced stage of the development process.

This, according to the mayor, “provided greater certainty to the market, sped up the planning process, and has helped to increase the level of affordable housing secured in new developments”. The consequent greater consistency and certainty has substantially improved outcomes.

Schemes that conversely do not provide the threshold level of affordable housing or meet other relevant policy criteria, or that provide off-site or cash in lieu contributions, must continue to follow the Viability Tested Route and are subject to viability scrutiny and late, as well as early, review mechanisms.

Tom Copley was asked at the committee whether more affordable housing could be squeezed from private developers through the Section 106 route.

He was not hopeful, however, no doubt taking his cue from his peer, the Deputy Mayor for Planning, Regeneration, and Skills, former Hackney mayor, Jules Pipe, who a month earlier advised the September London Assembly Planning and Regeneration meeting in a Question and Answer session that continuing to rely on developer section 106 contributions to provide affordable homes,  is “not a viable way of delivering the amount that we need as a capital city even combined with housing grants. Neither is sufficient….it is still obviously a very valuable tool and we would be loath to lose it. If anything, it needs to be enhanced, but quite how … when you are still requiring all these other things from a development, it will only pay for so much. Going back about ten years, it would have been standard for developers to expect about a 20% return. I think we are getting them down to about 12.5% on many of the developments that we see. Much below that, the real estate community will say, “Well, actually, we do not get enough return in London, we will go and develop elsewhere, thank you very much.”

That last point is addressed below.

4          What needs to be done  

The 2021 London Plan (plan), based on a Strategic Housing Market Assessment (SHMA) undertaken in 2017, publicised that London needs to deliver each year c66,000 net additional completions across all housing tenures for the next ten years, two thirds (c43,500 or 65%) of which should be in social or affordable tenures.

Yet the Planning Inspectorate report that reviewed it concluded that over the next 20-25 years capacity only existed to deliver only 52,000 net new homes per year. Consistent with that, the total ten-year target for new dwelling additions across London contained in the London Plan (reproduced in Annex Table Two) only totals 522,870 dwellings. Little evidence exists to provide confidence that authorities are on track to meet their targets with some, such as Ealing, reported earlier, unable to demonstrate sufficient progress.

The stark fact is that the past, the current, and the planned future provision of both total and affordable homes within London, as demonstrated in this post’s data tables, will continue to fall well short of the plan’s target and capacity.

The improved levels of annual net additions achieved in recent years, reported in Table 5, running at c40,000 still are less than two-thirds of the SHMA requirement, while the proportion of that total taken by affordable dwellings seldom exceeds a third.

Much therefore must change if future delivery is to approach declared needed levels.

On a positive note, a general cross-party – national and local – political acceptance has developed that new dwelling supply, and the share of affordable housing within that total, should, indeed, increase.

That acceptance, albeit sometimes masked by tactical discordant rhetoric – whether emanating from Whitehall or City Hall – has, however, been largely limited to the payment of lip service to a recognition that the ‘housing market’ does not work, save for some measure of government pragmatism in terms of policy change at the margin, such as lifting of the HRA borrowing cap.

But the radical and concerted changes to the strategic policy framework that real progress requires has stubbornly remained backstage.

Why land and multiple housing market failures bedevil new housing opportunity

The slippery slope began with the progressive divorce of the twin-principles enshrined in the 1947 Town and Planning Act that both development control and value vested with state. During the 50’s and 60’s the reduction and abolition of development (betterment) and changes in compulsory purchase legislation, in combination provided scope for developers to realise future gains from value uplifts attributable to the granting or even hope of residential planning permission.

That process and its resulting consequences has been clearly charted by the work Derek Bentley has done for Civitas, most specifically in The Land Question, which by piecing together various sources, noted that between the mid-1950’s and 1990’s, the average price of land attached with residential planning permission, at 2016 prices, spiralled from £150,000 per hectare to £1.3m, surging again to £5m by 2007, reaching £6.2m prior to the onset of the GFC. Values have risen subsequently. Land in agricultural use without prospect or hope of development is attached with an average value of £22,000.

This website in  The Measurement of Land Prices used similar sources to report 1994-2010 valuation trends of land vested with planning permission, while noting problems inherent in the compilation of land price indices (largely ceased since 2010) which try to provide weighted averages of an enormous array of transactions that vary according to site size, location and connectivity, other site circumstances, on the density of its development, and on the planning conditions imposed, as well, of course, on actual and expected future market conditions,

More recently, indicative land values of a hectare of land attached with residential planning permission across London ranged from £6m to more than £35m.

Technical detail should not, however distract from the clear and instructive story that Figure 1  below paints of the upward step-change in land prices that commenced in mid-fifties accelerating across cyclical oscillations, subsequently.

Figure 1

The financial liberalisation of the eighties, lubricated by the secular downward trend in interest rates, easier access to mortgage finance, and growth of dual income households, increased monetary demand for housing.

It was not accommodated by supply, constricted, as it was,  by the cessation of mass council building programmes and by a tendency towards market concentration in the private housebuilding sector.

The prospect of higher market sale proceeds, crucially, bids up the future cost of development value of land, propelling prices further upwards, sometimes in a frenzy to be followed by a subsequent bust that then compresses supply even further. Higher and rising proportions of residential development value, up to 70%, are now accounted for by land.

The housebuilding industry has been transformed from one marked by dispersed multiple small and medium-sized suppliers in often local markers competing on both quality and price to an oligopolistic structure dominated by a few large, mainly national, builders. The three largest Persimmon, Wimpey and Barratt, account now for around a quarter of the market, compared to 1988, when Daily Telegraph columnist, Liam Halligan, in his recent book, Home Truths, advised that 40% of completions were provided by 12,200 companies.

The end-result, now widely noted and recognised across the political and ideological spectrum, is that the these now dominant companies have become price-givers driven by an incentive to restrict supply to maximise their short-term profit rather than output, allowing them to make supra-profits – as much as £60,000 or more per house built, and to pay chief executive and other salaries and bonuses in the millions, while engaging in restrictive practices, such as inserting covenants that involve regular doubling of ground rents on properties that could be sold freehold.

It is a ‘market’ in name for a product – vital to individual and community well-being – distinctive in that it has risen in price so much in both absolute and relative terms in tandem with a quality decline, where consumers can exercise so little real choice. It is truly a market broken by the imperfections and distortions outlined above.

Two pathways – given the prevailing and expected future political and financial environment – appear to provide the best and most feasible routes to future London and national housing affordability.

1         Public accounting for productive housing investment

Across the short-to-medium term, there is little or no prospect of any further step-increase in central government housing investment funding arriving to push up that total substantially to lessen that trade off; the downside risk, rather, is that fiscal conservatism will have re-exerted itself within the Conservative government by the time of the next spending review.

Even in the unlikely event that a Labour or hung parliament was elected in 2023-24, a scale increase in housing investment would require it, not only to set fiscal rules that lift the current 3% of GDP ceiling on investment expenditures, but to juggle and prioritise competing public investment demands in such a way that both maintains financial market confidence and avoids construction industry material and labour shortages.

Recent speeches by the Labour leader and his shadow chancellor have emphasised that Labour next in office will be ‘fiscally responsible’ and will not ‘throw public money’ at problems for the ‘sake of it’.

Quite so, but also redolent of New Labour whose early headline adherence to previous Conservative spending plans to demonstrate its fiscal probity resulted in a squeeze on affordable housing investment during the early noughties, which had deleterious economic and social consequences.

A symptom of the real fiscal crisis of the state marked by a mismatch between the public expenditure requirements of the UK and the political and electoral willingness for them to be met through salient and efficient forms of taxation, or borrowing where economically and financially sustainable and appropriate.

Given that, it is both vital for, and incumbent on, the housing sector to make as strongly and clearly, as possible, both the economic and financial, as well as social, case for increased affordable housing investment, and to integrate that with supporting supply side reform to the construction industry.

Affordable housing investment due to rising rents and values, can be self-financing over a 30 year or plus time span. An increased supply of social housing should reduce and deflate the future costs of keeping priority households in expensive and unsuitable temporary accommodation.

A strong invest-to-save case, therefore, can and should be made, alongside, and integrated, where possible, with innovative reforms to the financing of affordable housing and its associated public accounting treatment consistent with the above.

2        A root remedy to engage with an overlapping political consensus: deflating future land prices directly by embedding affordability requirements 

The 2017 SPG  adopted the Existing Use Value Plus (EUV+) approach (current use value of a site plus an appropriate site premium), to determine the benchmark land value. It serves to embed known and increased affordable housing requirements, crucially, into the generation of shared future public and developer expectations on expected sale receipts and thus acceptable planning gain surpluses, then feeding into future land value and price expectations. That is getting to the root of the matter (addressing a core housing market failure: escalating land prices based on speculative rent.

Housing Policy Five (HP5) incorporated into the 2021 London Plan (para 4.5.4) confirmed that the approach seeks to embed affordable housing requirements into land values and create consistency and certainty across London, noting earlier where there had been a relaxation in affordable housing and other planning requirements, it typically led to higher land values, not an increase in housing delivery. It further advised that the 35 per cent affordability threshold level will be monitored and reviewed in 2021 to determine whether it should be increased, with any changes consulted on as part of an updated Affordable Housing and Viability SPG or through a focused review of the London Plan.

Jules Pipe did shed doubt, however, in September, as the preceding section noted, whether much more affordable housing can be squeezed out of the Section 106 route at the London-level, at least without wider, supporting, and concerted changes to the national policy framework.

A point, indeed, that this website’s  March 2018 Response to London Plan consultation advised that it : “fully supports the aim and content of the Mayor’s AHVSPG (2017 SPG) and believes that it sets a needed template for national housing policy reform as part of a needed package to repair Britain’s broken housing market. This requires the effective direct deflating of land values and a reduction in developer profit margins. But by the same token it is concerned that its intentions to be achieved requires similar reinforcing strategic policy reform at the national level, without which there is a possible danger of a developer ‘strike’ occurring at London-level as the largest housebuilders/developers migrate to locations where they can continue to enjoy excess super-profits. Cross party support for a sustainable reform – based on a credible and sustainable tailored incremental approach – is again a pre-requisite for the effective implementation of the needed package of reforms”.

The driving principle of 2017 SPG to close the gap between existing use and developed land value across all planning authorities should now be extended nationally, but in a way cognisant with regional, sub-regional, and local housing market characteristics and values, where necessary. In some lower value areas an EUV+ of, say, 30%, could, unlike London, render specific affordable housing thresholds almost superfluous.

In short, greater universality and consistency in ends and purpose at a national policy level, which allows a locally tailored treatment, rather than a uniform ‘one size fits all’ prescription, is required.

Such an extension and deepening of the principles of the 2017 SPG would directly reduce the cost of new housing: the root of the matter.

It would align along the line of current political least resistance to make the Section 106 process simpler, with greater certainty and transparency, making paramount the principle that the planning gain attributable to granting of residential planning permission should be recycled to the maximum possible extent to the provision of affordable housing and of supporting social infrastructure.

To take one example of that, the 2017 Conservative Manifesto  (p41) committed a future Conservative government to ‘work with private and public sector house builders to capture the increase in land value created when they build to reinvest in local infrastructure, essential services and further housing, making it both easier and more certain that public sector landowners, and communities themselves benefit from the increase in land value from urban regeneration and development’, consistent with an overlapping political and technical consensus that the provision of affordable housing must be mainstreamed through measures that directly reduce the cost and price of housing and that blur the distinction between market and social housing, into both public and private business models.

The corollary is, of course, is that London political stakeholders should gravitate towards such a broad-based cross- party campaign given that London’s housing outcomes largely depend upon the national policy framework.

Whether any government, especially a Conservative one with strong links with the housebuilding industry with its now entrenched vested and lucrative private interests, would possess the will, focus, and strength of purpose to secure such a change, remains open to doubt. After all, not much has come from the 2017 manifesto pledge.

Perhaps, before long, political necessity will breed boldness to do what is right. The time for helping that moment along is now.

Annex Table One London 2029

Annex Table Two London 2029

 

Introduction

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Filed Under: Housing, Macro-economic policy, Time for a Social Democratic Surge, Welfare State and social policy Tagged With: London

Johnson’s Social Care Plan: social democratic opportunity?

25th September 2021 by newtjoh

Promises to fund a sustainable and equitable social care system fit for a wealthy 21st century state, thus banishing remnants of a Victorian one reliant on a Poor Law welfare model, have been broken by successive governments.

On September 7 to redeem his pledge on entering Downing Street in July 2019, in effect, to finally ‘Get Social Care Done’, Boris Johnson announced his government’s intention to fund £36bn additional expenditure on health and social care expenditure over three years starting in April 2022, through a 1.25% increase in employee and employer national insurance (NI) rates.

Barely a week later the Commons had passed the necessary legislation with a 56-vote majority, with only ten Conservative MPs voting against.

By deploying political panache, has Johnson finally broken out of the social care circle to nowhere, or is his Plan a clever funding sleight of hand that will mainly offer piece of mind to wealthy homeowners concentrated in London and the sub-regions with the most buoyant economies and house prices, protecting the inheritances of their lucky heirs?

The devil of course, will depend, not only, as ever, on the backing detail of subsequent policy announcements but in the scope and nature of any future implementation process and subsequent funding support for social care.

What can be said now, is that Johnson’s Plan is largely confined to a new funding mechanism – the Health and Social Levy, operative from April 2023 – designed to meet his Party’s NHS pledges in the post-Covid environment, with a relaxation of social care means-testing combined with an introduction of a £86,000 cap on user lifetime contribution, tacked-on.

People with modest assets will remain at risk of losing most of their assets and possibly even their home if they need long-term residential care. Transferring the primary payment burden to working households through a payroll levy on earnings received by employees and paid by employers is economically sub-optimal and distributionally unfair compared to alternative sources including income tax.

In that light, this extended post first provides background to Johnson’s Plan, before going on to link its provisions, as they are currently known, to their expected efficiency and equity impacts.

It then considers the implications for future reform within the wider political context set by the real fiscal crisis of the state: that is the structural need and demand for social expenditures has and will continue to outstrip political (based on electoral) willingness to pay, without shifts in political methodology and electoral engagement.

Finally, the scope and space that Johnson’s Plan potentially provides such a needed shift is discussed.

The social care system in outline

Social care is the name given to the range of care and support services to help frail and disabled people to remain independent, active, and safe – for example, help with getting out of bed, bathing, and preparing cooked meals, and getting necessary medication, provided in a residential care home or at home (domiciliary) setting.

It is a local authority responsibility, generally discharged through the commissioning of services from independent care providers. For-profit providers account for 83% of the care home beds and the voluntary sector a further 13%, with the remaining 4% of care home beds run by local government or the NHS. Readers are signposted for further information to the briefing and the bibliography produced this month by the House of Commons library.

The focus of this post following Johnson’s Plan is on care for the elderly, but sight should not be lost that adult social care is not just or even primarily about older people. Demand for support from working-age adults has increased more than twice as rapidly as from pensioners – partly due to falling mortality rates and medical advances: the life expectancy for someone with Down’s syndrome, for instance, has almost tripled over the last four decades. The provision and funding of care for people of working-age must be ‘fixed’ as completely as much it must for older people.

In the past councils used to provide residential care in its own homes and staff until limitations on available capital and funding availability encouraged a shift to private providers who could raise capital easier and convert or purpose-build homes.

Between 1980 and 2018 the number of local authority residential care beds fell from 141,719 to 17,100; during much of the same period, the number beds provided by independent providers (whether owned by the largest private equity-owned providers, housing associations or charities) increased to 243,000 from 76,811.

In recent decades the care home industry has also consolidated. Four private companies owned by private equity or hedge fund investors now dominate the market. They and other entrants into the market were attracted by favourable demographics and property valuations – at least in London and south-east and other sub-regions benefiting from buoyant property prices – and a revenue stream underpinned by state funding.

This encouraged some over-expansion funded by debt, leading to Southern Cross going bust in 2011 and the then-largest provider, Four Seasons, having to be rescued by another private equity purchaser in 2019.

Squeezed LA fees and increased staffing costs exert significant headwinds. These are likely to grow in intensity along with pressures to improve the pay and conditions of frontline care staff in post-Covid and Brexit-environments marked by staff shortages and growing vacancies.

The annual cost per person in residential home sits generally in the £30,000 to £50,000 range, depending on level of care/nursing support provided and location.

About half of the £15-20bn income in the social care industry still comes from the state, with the remainder paid by self-funded residents, who can pay more than 40% more than LA-funded residents.

A feature of the industry is that such funders, in effect, cross-subsidise LA-funded residents. A 2016 Competition and Markets Report  (which also provides substantial background, albeit not up-to-date, information) advising an average differential of £236 a week (over £12,000 a year).

In outline, the essential features of the current means-tested funding system are:

  • Care home residents with capital exceeding £23,250 (the upper capital limit) are not eligible for any local authority funding support. They must pay all their costs above that limit;
  • Care home residents with capital between £14,250 (the lower capital limit) and £23,250 (the upper capital limit) are eligible for funding support, but must contribute a ‘tariff income’ of £1  per week for every full or part £250 their assets above the lower limit, towards the cost of their care;
  • Care home residents with capital below £14,250 are eligible for full funding support and are not charged any ‘tariff income’: their capital is effectively completely disregarded;
  • The non-mortgaged value of the person’s home (housing equity) is not counted as an asset if a spouse or dependent also lives in the home, nor is the value of the home counted towards any means-tested assessment of individual contribution to domiciliary care;
  • A person eligible for local authority funding support is also required to contribute part of their income towards the cost of their care, whether residential or domiciliary; subject to any earnings or other disregards, including an amount each week for personal expenses and (if applicable) household bills, called the Personal Expenses Allowance for people receiving residential care; and the Minimum Income Guarantee for people receiving domiciliary care;
  • There is no cap on the lifetime care costs, which are thus unlimited beyond the upper capital limit of £23,250; meaning that an individual needing residential care or long-term support can pay thousands of pounds for care over their lifetime: even to the point of expending their assets to the point that they, or more usually their family ultimately need to resort to selling their home on their behalf.

In the words of the Resolution Foundation’s, Torsten Bell: “The cap stops you losing your house, the floor stops you losing everything”.

The lower capital (asset) limit of £14,250 can be considered  as the ‘absolute floor’ below which no individual care contribution (other than for personal expenses payable out of pension or other income) is required, rather akin to the personal tax allowance on which income tax is not payable.

Contributions are then levied on a sliding scale until the upper capital (asset) of £23,250 is reached, above which contributions on assets are, in effect, then charged at a 100% marginal rate with no cap or upward limit.

A low limit or floor on the asset (capital) above which user contributions are required is thus combined with a lack of a cap on total lifetime expenditure limiting liability.

It is estimated that one in seven households needing care for long term severe disability (due to dementia, for example) must sell their home to pay for their residential care or spend more than £100,000 on care in total.

The NHS and Social care: siblings in name only

The NHS and social care provision and funding systems could not be much more different.

NHS treatments for both chronic and acute medical treatments, including emergency treatments for catastrophic events such as accidents, heart attack or strokes, are free at point-of-use, as are elective treatments, General Practitioner (GP) and out-patient services.

Provision and access across the board is rationed by available budgets, human and other resources, and policy guidelines assessed with reference to clinical need.

UK-wide tax subvention predominately funds the NHS with a variable quarter met by an annual transfer from the National Insurance Fund secured from employer and employee contributions.

The secular trend of health expenditure has been inexorably upwards during the last fifty years in annual real increase and in ratio of total public spending and GDP terms.

Unpicking the first outturn indicator, the Institute of Fiscal Studies (IFS) in a 2019 commentary  reported that UK public spending on health grew in real terms by an average annual rate of 3.6% between 1949−50 and 2018−19, but lower than 1.5% during the post-2010 fiscal austerity years.

Annual outturn expenditure often exceeded the budgeted planned allocation, as governments topped up health spending to meet particularly acute emergent demand and other pressures that could not be accommodated within allocated budgets.

Social care is local authority funded, accounting for over half of the total spending of many councils.

The local authority sector was the worst affected by post-2010 fiscal austerity. Adult social care spending per person was 7.5% lower in real-terms in 2019–20 than 2009–10, with reductions concentrated in the 2011-16 period.

Central government financial support is provided to cover the annual general expenditure of individual councils, not their social care activity specifically. Revenue support grant is based on an assessment of the ability of each council to meet local needs from its own council tax base, itself subject on residential property valuations frozen since 1992. Some councils had their grant allocations slashed by as much as 65%.

Council tax levels levied locally for many decades have also have been subject to strict centrally imposed limits.

Since April 2016, councils have been empowered to raise an additional dedicated social care precept of up to 3% without needing to call a referendum;  additional time-limited specific grants in support of their adult social care activity were also allocated centrally. These measures of limited amelioration were widely recognised, however, as papering over the cracks caused by the deep and wider Whitehall squeeze on local authority funding.

At an individual level, social care provision is severely means-tested. As the preceding section outlined, it is only free for people possessing assets less than the lower capital limit of £14,250 in value (termed here: the lower absolute floor), with individuals needing residential care required to pay all costs when their assets (including their housing equity) exceed the upper asset threshold of £23,250 (termed here: the upper floor).

Yet when people become older and frailer, the distinction between the medical and social care dimensions of their situation tends to blur to the point of indistinguishability.

Health expenditures, according to a September 2016 Office of Budget Responsibility (OBR) report, at constant 2020-21 prices rise slowly and steadily from an average per capita c£1,500 for cohorts of people in their mid-forties, before doubling in the 60’s cohort to c£4,000, then doubling again to over £8,000 for cohorts in their late eighties and later (Chart 2.3).

The OBR report, with the relevant literature generally, highlights that proximity to death is a more important influence on health spending than is age, per se: hospital costs increase significantly in the final months of life for an average individual regardless of their age; a higher proportion of older age cohorts will be subject to the much higher costs associated with the final months of life when it can occurs regardless of age.

In need and demand terms, the chance catastrophic curse of dementia and other age-related disabilities have and will continue to affect more and more people as the population ages: according to the Office of National Statistics, the proportion of the over 75s within the UK population doubled since 1967; looking forward, the number of over 85s is projected to double again over the next 20 years.

These are events that individuals cannot predict (other than indirectly through genetic history or indirect markers), prevent, or plan for through insurance (theoretical possible, but no such market currently exists) or other means.

The need and case for reform has been clear and urgent for decades.

Social Care reform: Waiting for Godot

Spasmodic efforts over the decades by governments of varied hues to introduce reform to address that gaping hole in welfare state protection were nullified by subsequent procrastination and inaction.

Speaking to the Labour Party Conference that followed his historic 1997 election victory, Tony Blair declared that: “I don’t want [our children] brought up in a country where the only way pensioners can get long term care is by selling their home“.  In accordance with his government’s  manifesto promise, a Royal Commission was established, which in 1999 recommended (with minority member dissent) that: “all long-term personal care should be provided free, funded from general taxation”.

Its proposals, other than that nursing care in nursing homes would be made free (funded by the NHS), were soon kicked into the long grass: the cost was considered counter to the New Labour’s fiscal commitments and other priorities. Only the newly devolved Scottish administration in 2002 introduced free personal care in 2002.

A 10-year hiatus followed, marked much more by talk than action. Green Papers, policy, and official and independent review announcements grappled (unsuccessfully) mainly with issues centred on the development of the personalisation of care and the development of individual care budgets.

Then a ‘Big Care Debate’ (rather echoing the ‘Great Education debate’ that then prime minister James Callaghan launched in 1978) was conducted in 2009.

That year, Andy Burnham, the-then Secretary of State for Health did publish proposals for a ‘national care service’. They, however, failed to get cross party-political traction (now needed that New Labour electoral hegemony was clearly waning and uncertain): the compulsory contribution funding model that he advanced proved a sticking point in the lead-in period to an imminent general election.

Nonetheless, a White Paper, Building the National Care Service, was published just before that 2010 general election.

It committed Labour to establish another commission “to help to reach consensus on the right way of financing a National Care Service… that will be led by local authorities, in partnership with the NHS, and working with third sector organisations, the private sector and communities… which will meet the needs of people when they need help, free when they need it (that) will be for all – whoever you are, wherever you live, whatever your circumstances”.

That ambitious rhetorical reach was accompanied with the rider that new service would need to be built ‘in stages’ within a context set by needed ‘fiscal consolidation’.

After Labour lost power at that election, the new Conservative-Liberal Democrat coalition government asked Andrew Dilnot, Oxford economist and former Institute of Fiscal Studies (IFS) director, to chair another commission, with a remit to deliver an affordable and sustainable funding system or systems for care and support for all adults in England (Dilnot).

Dilnot published in 2011. It declared that “Our system of funding of care and support is not fit for purpose, and has desperately needed reform for many years”, accompanied with the clarion call: “Now is the time to act”.

That call was underpinned by a systematic and evidenced reform agenda. Its core proposals were:

  • Individual lifetime contributions towards social care costs capped to between £25,000 and £50,000; £35,000 was the posited “most appropriate and fair figure” for that lifetime contribution cap (the cap);
  • The means-tested upper asset threshold (the upper floor), above which people are liable for their full care costs, to be increased from the then (and still current) £23,250 to £100,000;
  • Individuals possessing financial and/or housing assets between £14,250 (lower asset threshold or absolute floor) and the proposed new £100,000 upper floor, to pay a contribution (around 30% of eligible assets) towards their residential care, with the state paying the remainder;
  • Local councils to decide how much care is needed and its cost in each individual case;
  • The cost ‘meter’ on individual contributions would then start until contributions of each individual reach the prescribed lifetime contribution cap; then it would stop, save that residential care residents should incur a charge for on-going ‘hotel and food costs’, capped at £7,000-£10,000 per year;
  • Councils to assume that people funding procuring privately provided care themselves will spend the same amount as someone publicly supported but possessing the same needs;
  • The means-tested threshold for home care to disregard the value of the recipient’s home, with individuals needing such care to continue to receive income means-tested support;
  • People born with a care and support need or who develop one in early life should immediately become eligible for free state support to meet their care needs, not subject to any means test;
  • National eligibility criteria and portable need assessments to be introduced to ensure greater consistency of treatment.

In short, Dilnot’s proposals kept the capital means-test absolute floor personal allowance at £14,250, but greatly extended the range of income in which individuals qualified for partial support from £23,250 to £100,000, within which a proportional 30% charge would be levied on their capital assets, until a £35,000 lifetime contribution cap reduced their marginal contribution or tax rate to nil.

Dilnot’s analysis and proposals attracted general approval. Such approbation did not translate into effective and timely legislative action, however: it took four years for the Coalition government to enact the 2014 Care Act – and then largely at the instigation of Lord’s cross benchers and again on the cusp of another general election.

When the Conservatives won that election in 2015 with an overall working majority, it then postponed indefinitely the implementation (including legal backing for a £72,000 cap) of the Act’s provisions, for reasons connected to the continuing period of fiscal austerity presided over by the chancellor, George Osborne.

When Theresa May went to the polls in May 2017 in the aftermath of the 2016 Brexit referendum that had forced David Cameron’s resignation as prime minister, and with George Osborne also gone, her ‘strong and stable government’ election banner, to all intents and purposes was torn down by the half-thought-for social care plans that she then chose to highlight (at the behest of key advisers wanting to broaden Conservative appeal to northern working class voters) during the campaign.

The upper asset threshold or floor below which councils pay for all or part of a person’s social care was to be raised from £23,250 to £100,000, but that Dilnot proposal was yanked together to the inclusion of the housing equity asset worth of homeowners still living in and needing care at home into the capital means test calculation, as it is for people receiving residential care (which did not follow Dilnot).

To soften that pill, the facility for people receiving residential or nursing home to have the cost of their care taken from their estate after their death (deferred) was extended to people receiving care at home.

May’s proposals were quickly dubbed the ‘dementia tax’.

They meant that individuals would receive state support towards their needed social care costs if they possessed less than £100,000 of financial and property assets.

But once that £100,000 upper capital limit was passed the marginal withdrawal rate would become 100% (all care costs to be met by the individual receiving care form their capital where not met by income). That would mean that a person, for instance, with savings of £10,000 and housing equity of £200,000– would, in the absence of a cap, potentially faced losing most or all their assets, save for the £14,250 allowed for by the absolute floor.

That is because everyone possessing more than £100,000 assets and receiving care would then face a marginal contribution or withdrawal rate of 100% on their assets once the new £100,000 upper capital threshold was passed instead of, as they currently do under the current system, £23,250.

It would also have meant that people possessing moderate, but not insignificant, assets, greater than £23,250 but less £100,000 in residential care, would have – subject to the detail of the scheme if it had been progressed (such as the absolute floor level and the rate of withdrawal levied between £23,500 and £100,000) would have paid less.

Take, for instance if a 30% contribution or withdrawal rate was levied between £14,250 and £100,000; then someone receiving care in a residential home owning £100,000 of assets would have paid a maximum of c£26,000 under May, compared to potentially c£80,000 under the current system.

But faced with a furore, Mrs May soon retreated, talking about introducing a cap ‘at a level to be proposed in a future Green Paper’. Her proposals were already effectively dead, however. They are a widely considered to have contributed to the subsequent reduction of the Conservative overall majority to six.

The inclusion of housing equity into the asset means-test for home care was puzzling.

The equalisation of the application of the asset means-test between recipients of residential and home care was advanced as justification; yet the latter is more supportive of independent living and by its nature is less expensive to the public purse.

It also served (disastrously) to focus attention on that people receiving home-based or residential care could potentially much of their housing equity, and away from the keystone proposal of a near fivefold increase in the means-tested upper capital floor threshold: hardly an astute or indeed helpful piece of political presentation.

Shell-shocked by the experience and embroiled in the Brexit saga that finally sunk her premiership, social care reform was put again on the Whitehall backburner.

Then the day after becoming prime minister in July 2019, Boris Johnson, elected Conservative party leader by his MPs and party membership on a ‘Get Brexit done’ platform, declared in front of his new home, 10 Downing Street, that he would also fix “the crisis in social care once and for all with a clear plan (that) we have prepared”, with legislation to follow that year, so that “nobody needing care should be forced to sell their home to pay for it”.

Johnson’s Social Care Plan

It was not until 8 September 2021 that his  government published its plans in the command paper: Build Back Better: Our Plan for Health and Social Care (the Plan), which proposed:

  • A lifetime contribution cap on personal care costs of £86,000 (using the powers available in the 2014 Care Act) to be introduced from October 2023. On reaching that cap, people receiving care will no longer be required to make any contribution towards their care from either their income or capital;
  • The upper capital limit (the threshold above which somebody is not eligible for local authority support towards their social care costs) to rise from £23,250 to £100,000, operative from October 2023 (the threshold limit for each member of a couple to be £50,000);
  • Lower capital limit (the lower asset threshold or absolute floor below which no contribution towards care costs from capital is required) to rise from £14,250 to £20,000;
  • People with capital (assets) between £20,000 and £100,000 to contribute up to 20% of their chargeable assets per year (in addition to their income);
  • The capital means test will be based on total assets, including both the value of a person’s home and their savings, except that for a person needing to continue to live in their own home their housing equity – as under the current system- will be excluded from the assessment of total chargeable assets (the housing disregard).
  • The amount of income that care recipients can retain after contributing towards their care costs (the Minimum Income Guarantee and the Personal Expenses Allowance) to be increased in line with inflation from April 2022 onwards.

In short and simplified form, from October 2023 onwards, anyone with assets or savings worth less than £20,000 will receive full state support; anyone with assets worth between £20,000 to £100,000 who cannot pay for their care from their income will become eligible for capital-means tested help with their care costs up to a 20% proportional charge on their eligible assets until the overarching £86,000 cap is reached when their liability to meet costs form either their income or capital ends.

Applying the tax analogy applied earlier, the personal capital allowance is increased to £20,000; a 20% contribution, withdrawal or ‘tax’ rate is applied on capital asset wealth between £20,000 and £100,000, subject to an absolute cap lifetime contribution rate of £86,000, beyond which the marginal tax rate on both income and capital then drops to zero.

The Plan was both incomplete and lopsided insofar that any detail on future care provision was largely absent. It was also not rooted from consultation with the public or private providers of care, nor meshed with medium and long-term costings of funding requirements related to a minimum-defined standard of care provided regardless of postcode, nor were alternative delivery options calibrated to a future wider care vision.

It ringfences only £5.4bn of the £36bn to be raised from the NI increase for social care funding (£1.8bn cf. to the annual £12bn-plus proceeds of the NIC increase). The rest will go to the NHS. Although the Plan expresses a weak and unconfident hope that that limited share “could possibly increase towards the end of the three-year 2022-25 period”, the additional future allocations required for the establishment of a fit for purpose client responsive care system are clearly contingent on the prevailing NHS funding situation.

The scale of the Covid-related backlog combined with continuing rising costs and the rising real demand profile of the NHS (estimated to require annual real increases in expenditure of c4% per annum to accommodate) means that the social care sector can expect a continuing long wait for their release.

More Waiting for Godot, then – at least unless significant new funding is made available for social care on top of what the Plan currently proposes.

The Plan is indeed and instead predicated upon local councils continuing to meet demographic and unit cost pressures through council tax and other receipts, and from ‘long-term efficiencies’.

This is within a funding environment where the overall level of local government funding (which will impact upon level of the total level of revenue that each council can raise) is to be determined ‘in the round’ in the forthcoming Autumn 2021 Spending Review (para36).

To all intents and purposes that will be driven by Treasury-driven pressures to close the unprecedented Covid-related fiscal deficit. The fiscally hawkish chancellor, Rishi Sunak, wants to cut the deficit from 12% per cent of GDP in 2020-21 to 4.5% in 2022-23: a big ask, dependent on the economy bouncing back both sharply and sustainably, and one that almost inevitably will rule out additional borrowing for either health or social care purposes.

Social care will consequently continue to be provided by councils in England subject to constrained annual funding allocations and to restrictions on their council tax revenue-raising capacity.

On the expenditure side, care costs are almost certain to rise faster than inflation, with care worker vacancies over 100,000 and rising, during a period when the backlog of care cases, as estimated by Age Concern, could reach 1.5m. Under the government’s plan self-funders will also be able to ask their council to arrange their care to ‘help them find better value’.

It is also doubtful that without dedicated training and other investment in human skill capacity and conditions that sufficient trained and motivated staff will be available to meet a growing level of future demand need, whether that is derived from the government’s plans, a loosening of rationing constraints, or from demographics. Most care worker vacancies in the recent past have been taken by migrants; this is unlikely to be possible without modification to current post-Brexit immigration policy. Given such a backdrop, it remains to be seen whether the £500m included in the Plan to support social care workforce-related reforms will prove sufficient.

Is the Plan, therefore, a mere political presentational sop to its core Conservative over 65 and homeowner voter constituency, and, as such, subject to a high risk of future unravelling when buffeted by future on-the-ground reality?

The centrepiece £86,000 cap figure is certainly suggestive of Treasury penny-pinching, which does not augur well for the securing of sustainable funding for a future and sustainable client-centred and responsive social care service.

At a distributional equity level, suffers from two, paradoxically, linked problems.  First, a cap means that once reached represents a ‘cliff’ that when crossed means liability  (or put another way, the its marginal tax rate) becomes zero; and, second, the £86,000 proposed cap is set high enough to still wipe out or take out a substantial proportion of the housing wealth of homeowners residing in low house-price areas, including many in Red Wall seats, breaching Johnson’s manifesto promise.

Both can be traced back to Dilnot. The fundamental problem is that a cap by definition does not rise proportionately or progressively with housing asset wealth, either at an individual or regional level: a shortcoming that has been compounded by subsequent and regionally skewed housing asset inflation.

Back in 2011, Dilnot had noted that someone who had lifetime care costs of £150,000 could lose up to 90% of their accumulated wealth, before asserting that the report’s proposed combination of  a £35,000 lifetime contribution cap and an extended means test floor would ensure instead that no one going into residential care would have to spend more than 30% of their assets on their care costs (Dilnot termed this as the asset depletion rate; used interchangeably in this post with contribution, withdrawal, or ‘tax’ rate).

Yet that still presented a distributional equity problem shown in Table 1: the asset depletion rate peaks for households possessing around an initial £100,000 asset stock (product of the c30% contribution applied on assets applied above the £14,250 absolute floor up to the £100,000 upper floor, before dropping sharply regressively as asset wealth rises), begging the equity-based based question of the fairness of taking c30% of the the assets of homeowners of modest assets when a  lower proportionate and capped share is taken from more asset-rich households.

Table 1

Initial level of wealth Maximum individual spend on care Maximum asset depletion rate
£ £ %
40,000 9,000 22.5
50,000 12,000 24.0
70,000 18,000 25.7
100,000 28,000 28.0
150,000 35,000 23.3
250,000 35,000 14.0
500,000 35,000 7.0

Source: Author adaptation of table that was included in Dilnot Policy Paper

As it stands, the Plan’s £86,000 cap is set high enough to risk some homeowners living in low house price areas, or in retired person or leasehold accommodation that have lost capital value over the last ten years, who need residential care accommodation, to still lose their homes. It will also heavily impact upon tenants reliant that have some but modest financial savings assets, especially such individuals receiving care at home; it thus discriminates in favour of those with housing equity rather than financial asset wealth.

The incidence of user contributions, as Table 2 indicates, under the Plan will in future peak for people requiring residential care who possess assets within the £150,000-£175,000 range (incurring  an asset depletion rate of nearly 50% – compared to the Dilnot 30% level); incidence (the maximum depletion rate) then falls becoming ever more sharply regressive for people with housing equity or other wealth above that level, noting that apparently as many as one-fifth of those aged 65 or above now own more than £1,000,000 in assets compared to the c.£300,000 average asset wealth of someone aged 65.

Table 2

Initial level of wealth Maximum individual spend on care Maximum asset depletion rate 
£ £ %
50,000 6,000 12.0
75,000 11,000 14.7
100,000 16,000 16.0
125,000 41,000 32.8
150,000 66,000 44.0
175,000 86,000 49.1
200,000 86,000 43.0
225,000 86,000 38.2
250,000 86,000 34.4
300,000 86,000 28.7
500,000 86,000 17.2
1,000,000 86,000 8.6
2,000,000 86,000 4.3

End results are more clearly perverse and inequitable under Johnson’s Plan:  someone with £175,0000 worth of assets might have to pay £20,000 more than a neighbour with £150,000, but the same £86,000 as someone owning £1,000,000 or £2,000,000, while the ‘average’ pensioner owning  £300,000 assets will lose a lower proportion of their assets than someone owning less than half of that, but a much higher proportion than asset millionaires needing long-term care.

A recent Conservative Chancellor, Stephen Hammond, put the message that it partly conveys – slightly paraphrased – thus: “we are asking lower income workers, such as supermarket shelf fillers, to subsidise the inheritances of affluent homeowners”. Put another way, the Plan caters more for the future financial interest and peace of mind of the voters of Amersham and Chesham that it does for their counterparts in Consett.

That takes us to how the Plan will be paid for: its centrepiece.

The Health and Social Care Levy (the Levy)

For the 2022-23 year only:

Employee National Insurance Contributions (NIC’s) on earnings and employer NICs (both Class 1) on earnings paid, and self-employed (Class 4) NICs charged on their trading profits will increase by 1.25%, which will mean that:

  • Employee NICs will be levied at a 13.75% rate between the current NIC £9,564 lower earnings and the £50,268 upper thresholds; earnings above the upper threshold will attract a rate of 3.25%.
  • Employer NICs will be levied at a 15.5% rate on employee earnings above £8,840.
  • Self Employed Class 4 contributions on profits will be levied at a 10.25% rate on trading profits above £9,568; and 3.25% on trading profits above £50,270; self employed weekly flat rate Class 2 NIC contributions (set at £3.05) are unchanged.

The Plan also includes a 1.25% increase on the tax levied on company dividend income (when received outside the tax free wrappers of Individual Saving Accounts (ISA) and Self-Invested Personal Pensions (SIPPS), and the first £2000 of dividend income received outside these wrappers). It is expected to contribute £600m a year within the total £12bn raised for health and social purposes (£13.2bn in total, minus £1.8bn compensation paid to public sector employers for their NIC increase).

From April 2023, the NICs above will revert to their former 2021-22 levels but the increase of 1.25%  on the rates levied above the lower and upper thresholds will be collected separately and additionally under the umbrella of a dedicated Health and Social Care Levy, provided with its own legislative status and dedicated line on employee pay slips.

23% of families in England contain someone above the SPA. Even when the social care levy is applied on earnings received by people over the SPA, the IFS reported on 7 September that only about 2% of its total revenue from the Levy will come from pensioner families, compared to the 14% share that they would contribute from an increase in income tax yielding the same level of revenue.

This is largely because NICs, unlike income tax, is a payroll tax that is not levied on state or private pension income (when received at whatever age) – the predominant pensioner income source. Nor is it levied on certain categories of investment income, including property income, such as from buy-to-lets and share dividends.

People above the State Pension Age (SPA), not in employment, will thus escape any additional contribution (save for the dividend tax increase, if applicable to them), despite them belonging to the demographic with both the highest average wealth levels and the one most likely to need social care, at least in the short-to-medium term.

Compared to the employee NIC schedule, the income tax schedule also contains more progressive rate bands. Its basic rate of 20% begins to take effect only once individual taxable income exceeds the £12,750 personal allowance; the employee NIC lower earnings threshold is lower at £9,564.

That divergence means that people on very low annual earnings, including those on the national minimum wage, can pay more in NIC than they do in tax, or pay NIC even though they are not liable for tax.

The Levy’s tax burden (incidence) will fall overwhelmingly therefore upon working age employees and employers; this is in accord with the long-term trend for the tax burden to shift towards people of working age and away from pensioners;  secular trend not offset by new liability for working pensioners to pay the Levy.

A working-age person with average pre-pandemic earnings (£28,388) will pay 20% of their income in income tax, NICs, and the new levy; a pensioner receiving the same amount in pension income will pay just 11%: almost half the rate of the working-age employee.

That secular trend has been paralleled by a reinforcing one of untaxed – save for limited inheritance tax and capital gains tax liability on sales of non-primary residence homes – individual real housing wealth growing greatly to the particular benefit of wealthy pensioners and their heirs.

Working households spend a higher proportion of their net income than do wealthy pensioners and as the NIC increase differentially impacts on working households more than would an equivalent revenue-raising income tax rise, its overall downward impact across the economy on take home pay, consumption and employment, all other things being equal, will be higher, so constraining the future profits and investment capacity of firms and earnings of working age individuals.

The increased NIC employer contribution rate will likewise add pressure on firms to adjust prices upwards and wages downwards, especially in competitive sectors inhabited by small businesses whose labour costs account for a high proportion of their total costs. Such businesses often employ low paid workers (the employer NIC rate of 13.8% is levied above a very low annual threshold of £8,860, except for employees aged under 21 or for apprentices aged under 25).

Another horizontal inequity (different outcomes for different groups with otherwise the same income circumstances) associated with the Plan is that the combined NICs rate on employment income (including employer NICs) will rise from 25.3% to 28.8% compared to a rise from 9% to 10.25% for a self-employed worker: an increase of 3% rather than 1.5%.

This will widen the relative tax benefit of self-employment arrangements – which are often designed to minimise tax liability relative to PAYE working – and thus can be expected to induce perversely behavioural changes tending to reduce total revenue raised.

Overall, therefore, according to a range of independent commentators, Johnson’s choice to raise revenue through an NIC in preference to an income tax increase will prove both economically deleterious and socially inequitable compared to what could have been the case with possible revenue-raising alternatives.

That said, recognition is due that given the political obstacles that Johnson faced in raising the equivalent amount in tax or borrowing, his recourse to the third best (or even fourth best if additional borrowing is included)  NIC funding route in preference to wealth and the income tax rises, was probably necessary, while its political execution and management was efficient and effective.

That brings us around the underlying problem, of which the current health and social care crisis and Johnson’s Care Plan belated and imperfect response to it is simply a symptom.

Social Care and the Real Fiscal Crisis of the State

Johnson’s Plan required him to explicitly jettison his personal (made in the signed foreword titled Boris Johnson’s Guarantee) Conservative Party 2019 manifesto commitment not to raise the rate of income tax, VAT or national insurance.

That core Conservative principle since 2015, his fix NHS funding and social care commitments and the chancellor’s deficit reduction intentions, proved irreconcilable.

Essentially, the Levy is a new tax raising mechanism to raise and earmark an amount equivalent to around 0.5% of GDP first and foremost to close the endemic NHS funding gap.

That latest gap, which while grossly aggravated by the Covid pandemic, stemmed from earlier Conservative austerity under-funding.

Health spending, after adjusting for the growth and ageing of the population, stayed broadly flat between 2009−10 and 2016−17, before rising over the three years to 2018−19, remembering that average real increases throughout that decade was c1.5%, well below the post-war average annual real increase outturn of 3.6%.

That below trend outcome may have been been sufficient to meet demographic pressures, according to commentators, but it was not enough to also meet all the other upward ‘relative price’ pressures (such as, new medical technology and treatments, and as a labour-intensive industry: wage pressures) that continuously characterise the NHS.

The real focus and purpose of Johnson’s Plan is to provide a mechanism to secure additional funding for the NHS to overcome record waiting lists and other pressures  that  Covid and  previous underfunding bequeathed: an electoral imperative.

That the Levy can also possibly part-fund his social care pledge is but a collateral secondary benefit: the commitment of his chancellor to accelerate closing the fiscal deficit and reducing public debt would have otherwise precluded its progression.

Johnson and his advisers calculated that the chosen NIC funding-is more electorally palatable than a direct income tax increase: the erroneous post-Beveridge perception lingers that NICs constitute a social insurance contribution paid by working people to pay for their pension and NHS care and other ‘hard times’ contingencies from accumulated contributions (never true from the outset of the post war welfare state). Employer NICs and their indirect and delayed impact on take home earnings and consumer price levels are also far less visible in their effects on take home pay than is an income tax hike.

In that he followed a path previously trodden by Labour:  in 2002, when New Labour chancellor Gordon Brown raised national insurance rates to boost NHS spending (but on a temporary time-limited basis  during a period when waiting lists had reached record levels) it was apparently seen in Treasury circles as ‘the most popular tax rise in history’, when it was then, as it is now, a relatively regressive imposition compared to an equivalent income tax rise.

The UK does not have an embedded continental-style part social insurance welfare state funding model: it has a pay-as-you-go model contingent on short-term political decisions, rather belied by the fact that in 2020-21, national insurance raised c£147bn, more than VAT at 128bn, and not that much less than the total £198bn raised that year from income tax.

Pensions accounted for £101.bn, nearly two-thirds of NI receipts that year. As the the new state pension is dependent on a 35-year contribution record, to state that NI is simply another tax is not entirely accurate. But other benefits are only loosely related to the contribution record of recipient individuals; in any case, they do not provide an adequate replacement of previous employment income nor necessarily provide one above the poverty line. Each year the amount raised by NI generally exceeds often substantively that paid out in benefits, explaining why a variable quarter-odd can be transferred to support health expenditure for which there is no state insurance scheme.

The NHS, as noted in an earlier section, is predominately funded from other general taxation sources, and social care from a mix of local authority and user own funds.

The final total that individuals can be obligated  to pay towards their lifetime social care has been, is, and will remain under Johnson’s Plan potentially prone to chance catastrophic events outside their control: quite contrary to the founding principles of national insurance and the welfare state.

One of the core overarching themes of ASocialDemocraticFuture is that the structural need and demand for social expenditures has and will continue to outstrip political (based on electoral) willingness to pay: that is without shifts in political methodology and electoral engagement: the real fiscal crisis of the state (the crisis).

The Conservative enshrined self-denying ordinance on raising income tax, NICs, or VAT was just the most extreme and obvious case in point of that crisis, reflecting earlier New Labour practice.

The resulting reliance on stealth taxes such as insurance premium tax, or more materially on failing to align tax thresholds with inflation (fiscal drag) so steadily bringing steadily more people into the higher tax bands are both its consequences and symptoms (it is estimated that  1.3m new and 1m higher rate taxpayers will result from the 2020 Budget decision to freeze tax allowances from 2022-23 for the remainder of this parliament).  Cross-party local competition to freeze annual tax council levies, whether practised by Conservative shire or Corbynite metropolitan councils, another.

The public policy and funding neglect of the social care sector – related to the weak political voice of its users – cannot be divorced from the massive contribution that care homes made to Covid-related excess deaths: the most shameful and shocking consequence of the crisis, but others, such as  inhumane conditions in prisons, inadequate and dangerous mental health services, and cuts in care support for vulnerable young people and youth outreach work, generating death or serious harm, provide obvious other examples.

Put into a wider international context, Britain’s social expenditures remain relatively low to European norms as a proportion of national income – the overall UK tax burden (with the Health and Social Care Levy included), expressed as a per cent of national income is expected to reach 35.5% in 2023-24 with the Levy and the earlier Corporation Tax rise included; that compares with 39% in Germany and 40% in France (noting that definitional and compositional issues mean that the comparison is not strictly like-for like).

It is high, however, historically. A tax-take of 35.5 per cent of GDP would be the highest rate reached since 1950 at the height of the post war reconstruction drive.

The core structural problem is threefold. The level of social expenditures across some key areas, including health, and education, and, of course adult social care, are too low to attain universal standards compatible with individual human dignity and collective needs, in tune with the expectations of a population living in one of the world’s wealthiest advanced economies and one of its longest established welfare states.

Second, little apparent willingness exists within the electorate to action the trade-off between welfare state benefits received and taxes contributed. Benefits can be long-term and their costs not easily relatable to individual consumption or experience; a prime example is social care: the prospect of our future need for social care whether due to old age frailty or dementia is thrust to the very back of our minds; by the time it could be needed we will not be in a state of mind to calibrate what is being offered to our past tax and NI contributions.

Increases in tax, in sharp contrast, invariably result in tangible impacts upon household budgets in the the-here-and-now. Most of us might profess an abstract willingness to pay more for better services yet faced with a choice at election time to pay less or more in practice next year, the calculous of personal interest tends to take over.

Unsurprisingly, political parties vying for votes for power and presence within a competitive electoral market-place subject often to headline soundbites and headlines that can hide or distort the real facts, promise improvements in services but are less than forthcoming and honest about the how these are going to be paid for; or promise that both can be reconciled when they can’t; or even worse , simply ignore or put on the back burner needed reforms, such as to council tax or to social care.

During recent decades that reality has become an unassailable foundation of political principle and discourse, amply demonstrated.

The third, and end-result, is that the funding public services expenditures is not only insufficient and inefficient but inequitable in content and form, as are the taxes raised to pay for them in incidence and impact. Expediency, in short trumps both efficiency and equity.

It is no surprise therefore to this website that Johnson has not honoured yet his ‘fix social care’ pledge, resorting rather to a NIC funding presentational fix that will result in economically sub-optimal and unfair – and ultimately unsustainable – distributional outcomes.

That said, at many levels, the Levy does mark a potential crossing of the Rubicon in social and fiscal policy terms. Its scale and presumed period of imposition (at least three years, but permanency is implied by is dedicated legislative status) with its revenue ringfenced for health and social care expenditure purposes, define the clearest departure in tax public policy since the Thatcherite and subsequent New Labour repudiation of the alleged ‘tax and spend’ days of the full employment and welfare state post-war consensus era.

Whether Covid-enforced or not, Johnson’s government has unfurled the ‘party of low tax’ banner (never true for the majority, in contrast to the wealthy or high-income minority) from the Conservative pole, replacing it with one of ‘needs-must’ when events demand.

Well, what does that or might mean for the future shape of social democratic political process and outcome?

Politics and Social Democratic values (methodology) and social care reform

The future development of Johnson’s Plan into the medium- and long-term, including the Levy, will be contingent on the result of next election, expected anytime from 2023 onwards.

Labour, accordingly, will not necessarily have to identify a funding source to pay for a future need-based and sustainable social care system that it might offer to the electorate: it will already be there; that is unless the Levy is put in cold storage or NICs reduced  before then on the ground that ‘improvements in the economy now allow for needed reduced tax burdens on working people’.

Labour could commit in government to re-distribute the Levy’s proceeds; or to replace it in full or part with an alternative and more equitable and economically efficient funding source, as part of a wider shift towards wealth and property-based co-payment taxation (where individuals and the state share contributions for defined purposes) without therefore necessarily having to increase the overall tax burden.

Labour’s leader, Keir Starmer, has already slammed Johnson’s Levy as an unfair imposition on working people, but has declined to set out firmly Labour’s alternative. Other prominent Labour figures outside the shadow cabinet have been less shy.

Andy Burnham, the former New Labour Health Secretary and current Metro Mayor of Manchester, has led the way, arguing that: “The fairest way of providing social care is on NHS terms through a national care service, and the fairest way of raising the funding to pay for it is by taxing wealth, not work. The government should be looking at reforming taxes and reliefs on assets, land, pensions, property and excessive earnings and profits before hitting younger, low-paid workers with the bill”, before reprising an earlier decade-old “10% levy  imposed on estates” proposal.

But that could have done by the Brown government of which he was a member. It wasn’t.

Labour did not propose funding social care in 2010 through increased taxes on wealth and property because of fears concerning their electoral impact and immediate practicability. That remains the case.

Wealth taxes are easier to prescribe than deliver in practice. They require the liquidation of assets, unless their payment is delayed until death or at time of asset transfer, or unless the rate levied is set low enough to be paid from current income, which would mean reduced coverage and yields unless its incidence was limited to the very rich; that then would suffer from problems of avoidance, and also limited yields.

A wider base embracing those, for instance, own housing equity exceeding a set threshold, rubs against the fundamental problem of how to treat the asset-rich but relatively income-poor pensioner and working families.

In the absence of a cross-party consensus – unlikely – an opposition party linking social care or other reforms to new taxes on people’s assets and homes that would make tangible inroads into the day-to-day budgets of households would invite almost certain electoral and policy defeat – at least in the absence of a compelling and understood engagement narrative that demonstrates and links enlightened self-interest at an individual voter level to economic and social rationality and fairness at the societal level.

No easy answers. The biggest elephant in the room is council tax, currently a property rather than wealth tax. It is demonstrably is unfair and inefficient both in incidence and in its impact on the housing market. Households in low price areas pay more both in absolute and proportionate terms than those residing in areas where average house values exceed £500,000.

An august range of independent bodies have called for reform for decades, most recently and clearly summarised in a Fairer Share campaign manifesto,  endorsed by  former Conservative Minister and current social policy activist, Lord David Willets. All, however, without moving the political dial seemingly an iota.

Such a ‘big bang’ reform would take time to implement, require transitional arrangements, and would be subject to cancellation by successor governments, even assuming a party proposing it as a flagship policy commitment rather than a vague aspiration was elected. Although a nil net cost reform would produce many more winners than losers, the crisis presupposes that such a far-reaching and substantive reform should  result in greater fairness, efficiency and revenue, thus providing an opportunity – in the absence of cross-party consensus -for electoral competitors to paint it as a tax increase.

That, of course, further underscores the need, however, for a shift in political narrative and methodology concerning the link between social benefit and tax contribution.

Given the opening that Johnson’s Plan provides, variants of a housing and other asset levy calibrated to household total net housing equity and other financial asset wealth, which could be paid in lifetime instalments or delayed to when downsizing or death occurs, does seem to offer the most immediately opportune  and fair way forward. Inevitably, however, it will attract the catchy ‘death tax’ epithet from opponents and media during the cut and thrust of an election campaign.

Certainly, a progressive levy on wealth would be patently fairer than either the current or the Johnson Plan arrangements, where individuals needing care face chance contingency.

But it would mean: ‘spend now: get the money to pay for it later’, requiring, meanwhile, the needed expenditure for health and social care  reform  to be met from other tax sources, or from borrowing. That is unless an institutional mechanisms could be established, perhaps with public guarantees, that transparently could allow the levy to be paid by variants of equity release  mechanisms outside public borrowing totals.

Other variants of the same theme, could be to phase out the Levy, replacing it with a widened capital transfer tax covering primary residence transfers (the current exemption costs around £25bn to £30bn in taxation foregone), using the same justification that that wealth rather work is being taxed to provide better health and social care and security for all.

They would however involve inroads into family housing equity, with incidence falling on those who need or choose to move often – a problem that could mitigated perhaps, however, by a linked reduction in Housing Stamp Duty. Proceeds could then justifiably be ringfenced, not just for the funding of health and social care, but also for the mainstreaming of affordable housing into public and private sector provision models.

Or the Levy could be retained with its incidence recast within a wider alignment of NI and tax lower thresholds, as was promised in the 2019 Conservative manifesto.

Another tax relief currently costing around £25bn a year is pension contribution relief. That could undoubtedly be targeted better to the benefit of low- and middle-income earners, and transferred in part for health and social expenditure purposes.

What can be said with certainty is that the Labour opposition must set the debate and future agenda, meshing both it a values-led vision for the welfare state in general and health and social care. Now is the time or never.

In that light, the most relevant recent official pronouncement by the current Shadow Social Care Minister  Liz Kendall in April 2021 , which, notwithstanding its worthy emphasis on “taking a ‘home-first’ approach by increasing the use of early help and technology to help people live independently for as long as possible and expanding the options between “care at home and at care homes”, tended to follow usual groove of generalised critique and future unspecific aspiration. Future efforts should be marked and developed through a detailed and broad-based strategy and policy development process, both within the party and with external stakeholders.

A successful and sustainable reform requires that it is rooted on a vision of what the future social care system should look like and its relationship with the NHS or whether, indeed, the NHS should become the National Health and Care System (NHCS); the total level of funding required over the medium-term to realise that vision; the possible share and implications of that total met by public and private sources (including user charges) with respect to both equity and efficiency drivers; and how minimum client-need based universal standards can be combined with user choice and provider innovation and flexibility.

Such an electoral and stakeholder policy engagement process would depart from the political mores or methodology that governments and parties have increasingly applied since the advent of New Labour times, one more dependent on tactical news-release and more recently occasional Twitter and like pronouncements.

A necessary and vital departure, however, not just for effective and sustainable social care reform, but for wider social democratic ends. Otherwise Johnson could well determine outcomes, for better or worse, over the next decade.

 

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Filed Under: Health Policy, Social Care, Welfare State and social policy

Starmer’s Story Must Be Labour’s Story

29th March 2021 by newtjoh

Christened by working class parents to commemorate the Labour founder, Keir Hardie, the young Starmer trod an upward mobile professional journey through grammar school, redbrick university, and Oxbridge into select Bar Chambers. Becoming a doughty legal defender of organised strikers, anti-capitalist campaigners and death row inmates, he then ‘took silk’ as a QC, providing a pathway to his appointment Director of Public Prosecutions in 2008 – an establishment role he excelled in, exhibiting rationality and competence tinged with radicalism.

Succeeding Frank Dobson – a former Health Secretary but unsuccessful first Labour London Mayoralty candidate – to the inner city, and still largely working class, safe seat of St.Pancras, Starmer quickly but quietly learnt his Westminster ropes. In October 2016, Jeremy Corbyn appointed him Shadow Brexit Secretary – an appointment based not on political affinity, but on a recognition that his skill profile best matched the requirements of the post, surmounting concerns within Corbyn’s inner circle that it would simply provide Starmer with a stage for a continuing audition for the top job.

Which it did. By far the most effective Shadow performer in the Commons, Starmer effectively critiqued the Brexit position of both May and Johnson governments. Elected Labour leader in April 2020 at the height of the first Covid wave, he soon established himself as a measured but effective leader of the opposition, whose gravitas contrasted sharply and favourably with both a Prime Minister almost habitually reliant on bluster and boosterism and with a predecessor invariably out of his depth at the dispatch box.

But doubts began to surface that Labour’s new leader, while brilliant at discharging a brief and in forensically unpicking an opponent’s case, lacked the ability to create and personify a political counter narrative that could resonate within, yet alone beyond, Westminster. It was also noted that his six Brexit tests and espousal of a ‘People’s Vote’ had proved counter-productive in political and economic outcome terms. After a honeymoon period, apart from taking the whip away from Corbyn, his leadership style was characterised by caution and indecision with a proclivity to tack to the prevailing wind of the day in a way that often smacked more of tactical opportunism than strategic vision.

Since 1945 only three Labour leaders, Clement Attlee, Harold Wilson, and Tony Blair have won electoral power at Westminster – all following a long hiatus for Labour in Opposition. The first two did so not by dint of their personalities but rather by their ability to manage and to link a desire for change within the population, the last by a more presidential project that personified ‘New’ Labour’s colonisation of the centreground.

The December 2019 Tory capture of ‘Red Wall’ seats won with an enlarged working-class support base, along with the party’s practical collapse in Scotland, means that to become the fourth, Starmer  – discounting a return of a substantial number of SNP seats in Scotland back to Labour – must secure the largest ever electoral swing that Labour has ever achieved in England of over 12% compared to 10.7% in 1945.

Has Starmer really got what it must take to overcome not only that unprecedented electoral challenge – likely to be compounded by boundary changes favouring the Conservatives – but also concurrently the immense structural social democratic wider political challenge of reconciling necessary fiscal and political responsibility with the accommodation of ever-rising rising demand and need for increased health, social care, and education social expenditure, on top of equitable social security reform – the true underlying fiscal crisis of the state – as well as the secular tendency for education and age rather than social class associational factors to determine voting behaviour, requiring the cultural and the economic to be ever finely balanced in political calculation.

In the short term, policy reviews and prescriptions can wait. Starmer must first build a sustainable value base that can support and illuminate a coherent overarching political strategy chiming with majority concerns covering affordable housing, quality neighbourhood schools, and the building safe and secure communities endowed with well-paid jobs, that some of the more thoughtful members of his Shadow Cabinet, like Rachel Reeves, have begun to build.

Starmer cannot recreate Blair’s presentational elan, but he can mesh such a strategic framework to his personal back story: the son of a disabled mother and toolmaker father who forged a successful career by hard work and application, subsequently marked by public service. He should dare the Mail and Telegraph to sneer at such an epitome of Middle England endeavour and aspiration for honest and in the scheme of things modest material reward.

Starmer as a person and Starmerism as a political project should be joined and projected, linking, by way of contrast, the entitlement and real elitism of the Prime Minister’s back story to his opportunistic and hollow ‘chancer’ policies.

A case in point is the Johnson’s government’s Levelling Up agenda. It relies upon a mix of big ticket and local bus depot-type infrastructural projects with thinly spread centrally determined funding-streams, themselves subject to manipulation for party political advantage.  Starmer must seize as Labour’s own, the emerging overlapping consensus, manifested recently by Bank of England’s chief economist Andy Haldane speaking on behalf of the soon to be defunct Industrial strategy council, that sustained local growth needs to be rooted in local strategies, covering not only infrastructure, but skills, sectors, education and culture, measured by defined understandable transformational outcomes: improved educational attainment and opportunity, the generation of new and well-paying jobs, and the spread and mainstreaming of affordable housing.

He will also need to tap an enlarged fiscal space for government borrowing, evidenced by Biden’s Stimulus and Climate Change Package, taking the opportunity to be both bold and lucky, as Johnson did to combine ‘ getting Brexit done’ with electoral success.  Unlike Johnson, he also must be honest and straight-talking about linking future social benefit and justice to contribution. It is not just about the economy, but also about values and vision. The policies will follow.

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Filed Under: Economic policy, Welfare State and social policy Tagged With: Starmer

Future funding of health and social care

6th January 2018 by newtjoh

Some measure of cross party consensus is needed on how to secure additional and sustainable funding streams for the NHS in order to bridge the current funding gap. This has been variously estimated as lying between 2-4bn in terms just surviving the current seasonal winter demand increase, and 20-30bn in terms of approaching best european levels of provision.

Local authority funding of social care in the community likewise must increase. But increased health and social care funding presupposes that sufficient political maturity and commitment to national rather than party ends, is present across the parties, a widely over-optimistic assumption, that also presupposes that there is cross-party acceptance that reducing the budget deficit should be downgraded in priority further (with respect to current as well as investment expenditure) and/or on the design and general acceptance of new levies/taxes to fund health and social care expenditure.

A problem with the latter is that such hypothecated charges – raised through national insurance and council tax bases – tend to be regressive without wider reforms of those systems: again, such reforms are not on the foreseeable horizon; especially so given the political crowding-out effect of the brexit process.

A possible way forward that the May administration could initiate in any future Green Paper on social care funding is to propose an additional social care levy on the top council tax band. This could be part a part of a package involving a cap on user charges on high worth wealthy homeowners unfortunate enough to suffer long-term continuing conditions, such as dementia, requiring expensive residential care.

It would, at least, lift the exiting fear of such households that they could lose entirely or most of the inheritances that they hoped to pass on to their families. It might also offer a better match between contribution, risk, and benefit than the present system does, as well better accord with the old fashioned, but still pertinent concept, of citizenship.

Another possible idea is for the Government to issue public health bonds with the coupon or interest calibrated to the achievement of defined delivery and public health results.

More high quality research that actually decomposes the input demands on, say, A&E services, is also probably needed. This would seek to quantify the relative contribution, and actual costs, of age-related conditions, differentiating between presenting circumstances. These can include acute emergency episodes, such as strokes and fractures, as well as premature discharge, lack of suitable primary care alternatives, such as domiciliary assistance with moving, shopping etc at home. Secular trends in drink and drug related ;attendances, accidents at home and work, should be similarly constructed. Costs and admissions related to car accidents and fires at home, for instance, should have reduced over the last 30 years. Have they?

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Filed Under: Welfare State and social policy Tagged With: health and social care funding

Beveridge 2.0

17th December 2017 by newtjoh

The LSE is holding a conference February 2018 focused on how the future development of the welfare state can best overcome the challenges of globalisation, ageing, technological change and automation, income inequality, and related pressures on demand for services, their costs, and public capacity and willingness to pay for them.

The new director of the LSE has provided a broad but succint summary scoping analysis in

Asocialdemocraticfuture will aim to contribute to that debate through its
policy and research area.

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Filed Under: Welfare State and social policy

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