Kemi Badenoch’s second go at prime minister’s questions last Wednesday was judged a flop at Westminster but she did draw attention to one genuine issue: the impact of the national insurance rise for social care.
It is 14 years since the Tories sank Andy Burnham’s plan for a “death tax” to fund social care. Over that time, as demand has continued to rise, there have been patches and sticking plasters, including the social care precept, and the decision to fill gaping holes in the workforce with a surge in overseas workers.
But the basic picture, of overstretched staff, under-resourced councils, and families (including mine) juggling the emotional distress of a declining relative with the costs of ensuring that they are well looked after, has only worsened.
And so we find ourselves in 2024, with councils wondering how they can meet the costs of April’s tax increases. (Scotland and Wales take different approaches but many of the underlying pressures are similar.)
Eagle-eyed experts spotted a revealing late correction to official budget forecasts last week.
As Andrew Harrop, a former chair of the Fabian Society, pointed out, the Office for Budget Responsibility had initially assumed the Treasury would compensate the sector for the costs of the national insurance contributions (NICs) rise but later corrected itself.
The difference between the two published figures revealed that the OBR expects the employer NICs rise alone to cost social care employers £800m. That more than swallows up the £600m extra that Rachel Reeves promised the sector in the budget, and which Keir Starmer shot back at Badenoch.
Add in the (welcome) chunky rise in the “national living wage” in April, and workforce costs are likely to rise by more than £1bn. Harrop issued a warning: “If extra money is not found to compensate for the tax rise the consequences will be dire.”
This uncertainty is just the latest indication of social care’s neglected status. Short-term crunches such as these will keep recurring until politicians have the courage to agree a more sustainable funding model.
Social care reform is a live issue at the top of government, with Starmer expected to take the final decision about whether to hold a royal commission, or an internal government review. Such a review seems unlikely to unearth new solutions – though perhaps, as my colleague Polly Toynbee argues, it could help to make the argument for unpalatable ones.
Meanwhile, though, Angela Rayner and Wes Streeting are pressing ahead with a quietly radical plan that could yet be the key to prising open the problem. The pair convened a meeting earlier this month at which employers, unions and local authorities began discussions about negotiating minimum standards for pay and conditions in social care, which the government would then enforce across the sector in England, by law.
This idea, of a “fair pay agreement”, was part of the Make Work Pay agenda in Labour’s manifesto. It is ambitious: there are an estimated 18,500 care providers, ranging from individual homes run as small businesses, to big chains backed by private equity, via a whole ecosystem of charities. Even establishing who should sit around the table is a challenge.
While it has been named a fair pay agreement, it could potentially be a vehicle for progress on other aspects of care workers’ lives, such as shift patterns and allowance for travel time.
Career progression is another issue. Staff with five years’ experience earn just 10p an hour more than new starters.
One relevant model is the vast Agenda for Change bargaining unit, which covers more than a million workers across the health service. But unlike there, the taxpayer does not foot the entire bill for social care: an estimated 37% of residents in care homes are self-funded, for example. That makes ministers’ role more ambiguous.
Also unlike the NHS, union density in the social care sector is relatively low. Unions, including Unison and the GMB, hope that representing workers in a formal arrangement like this will be a powerful recruiting tool – but at the outset there will be questions of legitimacy on both sides of the table.
Nevertheless, Rayner and Streeting’s engagement is a clear signal that the government is serious.
It might seem topsy-turvy to begin here – before we can say how any uplift be paid for. Yet perhaps the working conditions at the coalface of care are a more humane starting point for policy than the drive to cap consumers’ costs.
Even more so than for many other public services, social care is its workforce. Having modern, purpose-built infrastructure is helpful; new tech might save time in rota management; but, ultimately, care is made up of myriad human interactions.
Improving productivity – and quality – is likely to require a better-motivated workforce that does not have to be constantly recruited and trained as staff flee for better-paid alternatives.
Turnover was more than 25% in 2023-24; in other words, more than one in four care workers changed job. About one in 10 leaves the sector altogether each year.
The workforce development body, Skills for Care, reckons that the UK will need more than half a million additional care workers by 2040 to cope with rising need in an ageing society. There is no route to achieving that without raising the pay and status of caring as a profession. And it’s a feminist issue: almost 80% of care workers are women.
It will not be cheap: Skills for Care calculates that lifting hourly pay to £1 above the minimum wage, and allowing for better progression, would cost taxpayers £2bn a year – though the government’s impact assessment estimates that the treasury would get 40p of every £1 back in increased taxes and lower benefit payments.
Putting a floor under pay and conditions would also help to ensure that additional funding finds its way to the workforce instead of seeping out in profits.
Clearly, terms and conditions for social care workers cannot be divorced from the pressing need to ensure significantly more money flows into this sector, not just in the short-term but sustainably.
But opening up a conversation with the 1.6 million people doing this vital job, often on poverty pay, seems as good a way as any of understanding the shape of the challenge for social care, and what could be won if we crack it.
