IPR Blog

Expert analysis, debates and comments on topical policy-relevant issues

Topic: Public sector

Is reform of social care doomed?

  

📥  health, Political sociology, Public sector

For people who have worked in UK public policy in recent decades, whether as civil servants, politicians or advisers, there is something wearily familiar, and depressing, about the current debate on the reform of social care. A fair chunk of the period I worked in No10 Downing Street, between 2007 and 2010, was spent on social care policy: on reports commissioned from the Prime Minister’s Strategy Unit, papers drafted by committees of civil servants working up options for cabinet sub-committees, notes for political discussions between ministers, party conference announcements, and even legislation. None of it went anywhere. Cross-party talks were scuppered by the Conservatives, the Treasury dug in against reforms considered fiscally unsustainable, and Labour malcontents in the House of Lords blocked legislation that they thought was partial and incoherent. Nor did it get much better after 2010 – Andrew Dilnot was commissioned to review social care funding, but his recommendations were kicked into the long grass, while local government spending on care services fell under the heaviest of axes.

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Why has social care remained unreformed, when other public services have been subject to extensive, often unrelenting change? It is not simply lack of political will, though that has played a part. Nor can it be that the funding and organisation of social care is more complex and difficult to reform than other areas of public policy; pensions’ policy, for example, has been successfully reformed, on a largely consensual basis, in the last decade. The concepts of mainstream public policy analysis – punctuated equilibria, multiple streams analysis, or narrative policy frameworks through which policymakers make sense of the world – do not seem to provide much explanatory help. Instead, we should look to the political economy of welfare states.

The social care system (here taken to refer primarily to social care in England) is staffed by low-wage, largely non-unionised, predominately female employees working for private companies. There are no high-status, powerful professionals, like NHS hospital consultants, in social care – nor strong trade unions organising a high proportion of care staff. The workforce is heavily dependent on EU migrant labour. Services are mostly commissioned from private companies by local government, rather than provided by the public sector itself. Social care was kept separate from healthcare in the 1948 settlement, meaning that it has never benefited from the popular support and protective institutional aura of the NHS. Social care consequently does not generate institutional interests that are capable of powerful political expression: the labour voice is weak; professional vested interests are marginal; there is no national public sector body responsible for the service; and the business interest is uncoordinated.

Older people using social care are not politically mobilised, like parents of school children or NHS patients. Most of us are myopic about our future care needs; we tend not to plan ahead for the care we will need. For those suffering long-term conditions, like dementia, care will be needed for a long time – but for many of us, care services will be limited to end-of-life support of relatively limited duration. We know that we will need a pension for retirement, and health services throughout our lives, but not whether we will require social care. This means that the state is under limited pressure properly to fund and improve care services. In recent months, much of the political concern about social care has been generated by the knock-on impact that cuts to local government services have had on the NHS.

The social care systems of so-called liberal welfare states like the UK, Ireland, Australia and the USA, share many features. They are residual, relying heavily on limited means-tested safety nets, rather than providing universal coverage. Low levels of expenditure on means-tested assistance are funded from general taxation. At the same time, private care insurance is limited (non-existent in the UK case), but nor is there comprehensive social insurance or a compulsory care saving, as is typical of countries like Germany, France, Japan and Korea. Social care systems therefore tend to typify the welfare states of which they are a part: individualised, means-tested and general-taxation-funded liberal systems; universal, tax-funded Nordic systems in which care needs are decommodified; continental care systems that have developed from tripartite-funded (employer, employee and the state) social insurance systems; and East Asian systems in developed economies that have expanded compulsory care insurance coverage as their populations have aged, based on co-funded mechanisms.

Social care has also tended not to feature in Social Investment State (SIS) strategies that have dominated welfare state reform discourses in the UK and elsewhere since the 1990s. SIS conceptual frameworks prioritise employment and human capital investment, and privilege childcare and support for parental employment, over care of the elderly and adults with disabilities.

What then are the prospects for successful reform of social care in this latest round of policy debate? Substantively, the UK is unlikely to pursue the compulsory/social insurance or universal tax-funded reform options that have been developed in other welfare states – we lack the political economic foundations and politically mobilised social group interests for those kinds of reforms. More likely, ministers will tilt towards co-payment models or tax-incentivised private savings vehicles, with a floor of means-tested support. These will be partial and inegalitarian, however, since they do not pool risk across the population, and they tend to squeeze those who have income and assets just above the threshold for means-tests, while enabling those higher up the income and wealth distribution to buy better services, and forcing low-income families to rely on low-quality services – poor services for poor people. Meanwhile, ministers will put just enough funding into social care services to stave off collateral damage to the NHS, as the Chancellor did with an extra £2 billion over three years in his budget.

Pressure for change may depend on the politics of ageing. Turnout in UK elections is heavily skewed towards older voters, who currently form a solid bloc of support for the Conservative government. This demographic political inequality is commonly thought to explain why pensions and benefits for older people have received relative protection in the era of austerity, while inheritance tax is cut and wealth levies (the so-called "death tax") are abjured. Academic research into the politics of age is unfortunately more limited than that into social class or occupational groups (although it is a growing field and interest from think-tanks has been developing). The politics of social care may come to turn on whether the collective interests of older people and their families in the provision of properly-funded, comprehensive services, integrated with the NHS, can trump both the social class differences between them and the lack of broad coalitions of support that currently inhibit progressive social care reforms. For now, Whitehall watchers will not be holding their breath.

 

Three Facts about Debt and Deficits

📥  Economy, Public sector

Professor Roger Farmer is Distinguished Professor of Economics at the University of California, Los Angeles (UCLA) and Research Director at the National Institute for Economic and Social Research (NIESR). 

The Chancellor of the Exchequer, Philip Hammond, will present his Autumn Statement to Parliament on Wednesday. In the heated debate over austerity, this piece offers three facts about debt and deficits which, I hope, will help shed light on the issues he will face.

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Fact Number 1: UK Public Sector Debt is Not Large

The UK public debt is equal to £1.7 trillion and it is increasing at a rate of £5,170 per second (National Debt Clock UK). But although government debt is increasing at a rapid rate, that fact does not pose a threat to the solvency of the UK Treasury.  Government debt should not be measured in pounds; it should be measured in GDPs. When GDP is high, so are tax revenues, and so is the ability of the government to repay.

Chart 1 shows the ratio of government debt to GDP for every year beginning in 1692. Notably, this ratio has been as high as 250% – during the Napoleonic War – and almost as high again at the end of WWII.

Chart 1: UK Public Sector Debt

Chart 1: UK Public Sector Debt

Fact Number 2: Governments Do Not Repay Debt: They Grow Out of It

Chart 2 reproduces the debt-to-GDP ratio from Chart 1, but the time scale is limited to the years from 1920 to 2015.  Public sector debt is the upper solid line, measured on the right scale as a percentage of GDP.  The line marked by circles, measured on the left scale, also as a percentage of GDP, is the value of the public sector deficit, smoothed by averaging adjacent values. A positive number indicates that the public sector spent more than it received in revenue.

On average, the public sector borrowed more in every year from 1920 to 2015. Nevertheless, the debt-to-GDP ratio fell continuously from the end of WWII to the early noughties. The public sector borrowed more – but its debt, properly measured, fell.

Chart 2: Debt, Deficits and Interest Rates Net of NGDP Growth

Chart 2: Debt, Deficits and Interest Rates Net of NGDP Growth

George Osborne, former Chancellor of the Exchequer, planned to bring the government budget into surplus by the year 2020. That plan represented a break from UK post-WWII policy. A surplus of public sector borrowing is neither necessary nor sufficient to reduce government debt when debt is measured as a fraction of the government’s ability to repay.

Fact Number 3: Government Debt Should Not Be Zero. Ever!

Nation states borrow to provide public capital: rail networks, road systems, airports and bridges, for example. These are examples of large-expenditure items that are more efficiently provided by government than by private companies.

The benefits of public capital expenditures are enjoyed not only by the current generation of people, who must sacrifice consumption to pay for them, but also by future generations who will travel on the rail networks, drive on the roads, fly to and from the airports and drive over the bridges that were built by previous generations. Interest on the government debt is a payment from current taxpayers, who enjoy the fruits of public capital, to past generations, who sacrificed consumption to provide that capital.

To maintain the roads, railways, airports and bridges, the government must continue to invest in public infrastructure. And public investment should be financed by borrowing, not from current tax revenues.

Chart 3 shows that investment in public infrastructure was, on average, equal to 4.3% of GDP in the period from 1948 through 1983. It has since fallen to 1.6% of GDP. There is a strong case to be made for increasing investment in public infrastructure. First, the public capital that was constructed in the post WWII period must be maintained in order to allow the private sector to function effectively. Second, there is a strong case for the construction of new public infrastructure to promote and facilitate future private sector growth.

Chart 3: Public Investment as a Percentage of GDP

Chart 3: Public Investment as a Percentage of GDP

The debt raised by a private sector company should be strictly less than the value of assets, broadly defined. That principle does not apply to a nation state. Even if government provided no capital services, the value of its assets or liabilities should not be zero except by chance.

National treasuries have the power to transfer resources from one generation to another. By buying and selling assets in the private markets, government creates opportunities for those of us alive today to transfer resources to or from those who are yet to be born. If government issues less debt than the value of public capital, there will be an implicit transfer from current to future generations. If it owns more debt, the implicit transfer is in the other direction.

The optimal value of debt, relative to public capital, is a political decision. Public economics suggests that the welfare of the average citizen will be greatest when the growth rate is equal to the interest rate. Economists call that principle the golden rule. Democratic societies may, or may not, choose to follow the golden rule. Whatever principle the government does choose to fund its expenditure, the optimal value of public sector borrowing will not be zero, except by chance.

Recommendations for the Autumn Statement

What can we learn from these three facts and what should we look for in the Autumn statement?

We should not be too concerned about a debt to GDP level approaching 100%. We have been there before and we will go there again.  We should be concerned that public spending has shifted away from investment on the capital account and towards the current account.

Economics has the reputation of being the dismal science. It is a dismal reality that there are diminishing returns to the prolongation of life. As we invest an increasing share of resources into advanced drugs and new treatments, the additional benefits, measured in extra weeks of life, will shrink.

As the population ages and life expectancy increases there will be an increasing burden on pensions and the National Health Service. These expenditures are predictable and can be planned for by stabilising the deficit on the current account either through limits on expenditures or through increased taxes. Our politicians must choose how much, as a society, we spend on health. And this choice must be presented to the electorate.

Capital account expenditures should be separated from the current account and increased back to 1960s levels. Work by Paul Romer, the new Chief Economist of the World Bank, suggests that these expenditures have the potential to pay for themselves. He advocates the creation of new charter cities and the expansion of existing cities. The last coalition government’s proposal to create a ‘Northern Powerhouse’ is an example of an investment of this kind.

There are also strong economic arguments to consider education expenditures at all levels – primary, secondary and tertiary – to be a capital expenditure. Education is an investment in the British people from which we all gain. But as with all capital expenditures, investment in education should be targeted towards the areas that have the highest potential for social impact.

 

On November 22, Professor Farmer will speak at an IPR public lecture entitled Prosperity for All: How to Prevent Financial Crises.

This post originally appeared on the NIESR blog.

 

 

Cost over quality: sexual health in an age of austerity

📥  Economy, health, policymaking, Public sector

Dr Frances Amery is Lecturer in British Politics at the University of Bath and Co-Convener of the PSA Women and Politics Specialist Group.

Sexual and reproductive health (SRH) is a hugely important yet neglected area of public health. From access to abortion and contraception to treatment for HIV, SRH services are an essential part of efforts to address inequality. Yet SRH provision has been severely impacted by the NHS restructure precipitated by the 2012 Health and Social Care Act and by subsequent cuts to public spending.

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The policy background

Department of Health guidance on SRH provision is set out in A Framework for Sexual Health Improvement in England, published in 2013. The Framework was published amid widespread uncertainty about what the upcoming reforms to the NHS would mean for SRH services and calls for the government to clarify its approach, while responding to evidence of inequalities in the sector. In particular, campaigners and medical organisations called for a life course approach to SRH which takes into account the ways in which men and women’s needs change with age.

The Framework appears to address these concerns. Equalities issues are foregrounded throughout: the document draws attention to the need to tackle discrimination and stigma surrounding sexual health matters, to ensure equality of access to services, to promote good body image and self-esteem, and to raise awareness of issues surrounding consent. Throughout, the different needs of different social groups and identities are highlighted. Calls for a life course approach are also addressed in a section titled ‘Sexual health across the life course’.

On paper, there has been a clear attempt to respond to demands of various advocacy groups. But as many equality policy researchers have observed, good intentions on paper often do not result in equality in practice. Indeed, the Framework has come under fire from SRH providers and campaigners for putting forward ‘ambitions’ without setting in place strategies to achieve them.

Inequalities remain in sexual and reproductive health

In spite of the high-flown ambitions found in DH guidance, huge inequalities in service provision and access remain. A 2012 report by the All-Party Parliamentary Group on Sexual and Reproductive Health (APPGSRH) found evidence of some local authorities barring women over the age of 25 from accessing contraceptive services, and sexual health charities suggest that this situation has not improved. There are also regional variations in the coverage of abortion services, with Scottish women facing significant barriers in access, while abortion law in Northern Ireland remains incredibly strict. Many women are not able to access abortion and contraceptive services under one roof, meaning that the quality of the care they receive is compromised.

Meanwhile, clinics around the country face the threat of closure due to budget cuts. An example is the proposed closure of the genitourinary medicine clinic at Whipps Cross Hospital, which campaigners say will have a disproportionate impact on black and Asian men living with HIV. While closed clinics usually have their services integrated into a larger clinic at a different site – as is planned for the Whipps Cross clinic – there is often still a negative impact on the community as patients lose access to local services. Some patients may not be willing or able to travel the longer distances now required of them.

Particular difficulties exist regarding trans people’s access to services. Demand for trans services is booming, yet there are only a handful of gender identity clinics in the UK. Waiting times are astronomical, with some clinics predicting that new patients will have to wait four years for their first appointment.

Among all this, race is a cross-cutting issue. Black, Asian and minority ethnic (BAME) communities tend to suffer worse health outcomes than the general population, and sexual health is no exception: BAME communities bear a disproportionate burden of HIV, and BAME people can sometimes face more stigma and greater barriers when accessing sexual health services. This problem is worsened by the closure of clinics servicing local communities. There is also a lack of representation in service provision: for example, BAME trans people might never meet another trans person who shares their background when attending treatment and support groups.

Why aren’t we delivering adequate services?

The government’s ‘ambitions’ regarding SRH provision and related inequalities are hindered, in large part, by fragmentation in commissioning and service provision. Lack of centralised, top-down direction is not necessarily a problem for healthcare, and local networks can be key players in advancing healthcare services. But in this case, fragmentation has been accompanied by a lack of accountability within commissioning structures resulting in gaps in service provision. This was already the case before the Health and Social Care Act 2012 came into force, but has been worsened by the subsequent restructuring of the NHS.

The Health and Social Care Act abolished the existing structures responsible for commissioning services and replaced these with new Clinical Commissioning Groups (CCGs), as well as establishing new national bodies. Responsibility for commissioning the various services making up sexual and reproductive healthcare – including abortion services and HIV treatment – is now spread out among CCGs, local authorities and the national commissioning board, although the lion’s share of responsibility rests with local authorities. The APPGSRH argues that this has resulted in a further loss of clear lines of accountability, which means that commissioners are not able to work together effectively. These commissioning silos can mean that it is not possible to deliver integrated services under one roof, since abortion and contraceptive services, for example, are commissioned by different bodies. Public Health England, the new executive agency with responsibility for SRH (among other aspects of public health in England), has ‘reducing health inequalities’ as a key part of its stated mission, but little role in policy formulation. Initial claims that the body would ‘speak truth to power’ appear to have been forgotten, and it has so far shown an unwillingness to challenge government policy.

This has all been compounded by the politics of austerity and in particular by cuts to local government budgets. Since November 2015, local authorities’ public health budgets have been separated from the budget for NHS England. This means that they are not protected from the latter’s budget ring-fencing, and public health spending has dramatically fallen as a result. While local authorities receive their own ring-fenced grants for public health, there is evidence that these are being diverted towards threatened services in other areas. Austerity has promoted unequal health outcomes directly, as clinics and services close or relocate as a result of budget cuts. Some contracting models appear to prioritise cost efficiency over quality, further compromising the services on offer.

Cuts to SRH services are a false economy – they result in drastically increased spending due to unintended pregnancies and STI infections. We should be more concerned, however, with the adverse impact of cuts on disadvantaged communities. While Theresa May has expressed an interest in social justice, it remains to be seen whether she will address the trends set in motion under her predecessor.

 

Doing more with less: the challenges of public sector leadership

📥  future, Public sector

Marcial Boo, Chief Executive of The Independent Parliamentary Standards Authority.

Once upon a time, we were prepared to wait – and to make do. No longer. We all now expect immediate access to anything we want, and to same-day deliveries. If we get poor customer service, we’re straight onto Twitter to tell our friends, and we expect an instant response from the company concerned.

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It’s all very well that we want this from Amazon and Uber. But should we expect these same standards from the NHS, the police and other public services too? In fact, our demands are even greater; we expect that public service leaders will demonstrate the highest standards of integrity and value for money, and be subject to public criticism if they are thought to fail. Not only this, but we ask that all this is accomplished without raising taxes. This is what we expect of public services today – and rightly so.

In this demanding world, public sector managers need new skills – and this was the theme of an Institute for Policy Research (IPR) research seminar that I participated in last week, along with IPR Director Professor Nick Pearce and the Dean of the University of Bath School of Management Professor Veronica Hope Hailey.

One of the recurring motifs of our discussion was the sheer breadth of skills required by public sector managers. It is no longer enough to be good at strategy-making, planning and financial management. The modern public sector manager must also know how to manage contracts, to communicate through new media channels, and to draw on the expertise of a wide range of people and organisations. And with constantly reducing budgets. It’s not at all easy.

As a result, public sector managers need to learn resilience (to deal with the flak and keep going despite the odds), and to keep a healthy perspective by taking time out to see things from others’ points of view. They have to take a breather sometimes too. Perhaps most importantly, they need to retain their commitment to making our society a better place – something that was sometimes forgotten in the drive for central performance targets.

In our book, The Public Sector Fox, Alexander Stevenson and I describe how modern public sector managers from local and central government, the NHS, police and elsewhere – including academia – can learn the skills they need to survive in this demanding modern world for public services. The advice and tips in the book draw on our decades of experience, ranging from managing counter-terrorism programmes to regulating MPs’ expenses.

Work in the public sector is demanding. But it can be immensely rewarding too. To make our public services more successful, we must ensure that its managers have the skills they need to work effectively with limited budgets, high expectations, a sceptical media, and multiple interested parties, while meeting the needs of everyone who wants to live in a safe, clean and healthy society. It could hardly be more important.

Marcial Boo's book The Public Sector Fox is available here.

If you missed this IPR Research Seminar, you can sign up for our next one – a discussion of former COO of HM Government Stephen Kelly's experience rewiring the civil service – here.