Thursday 09 May 2024 5:45 am | Updated: Wednesday 08 May 2024 6:45 pm

Will it work? Paying carers more to solve the social care crisis

It’s an election year. Politicians are giving us a barrage of policies. But we often forget to ask the most important question: will they actually work? In this column I take policies on their own terms and asks whether they solve the problem they’re supposed to solve. This week, we’re looking at social care.

Social care has been “in crisis” my entire adult life. At its heart is a simple but seemingly intractable problem: it’s just too expensive. In 2011 the Dilnot Commission recommended a cap on care costs. Every prime minister since has promised to implement this. None has yet done so. So it’s great to see the Liberal Democrats place social care at the heart of their offer for the next election.

What’s the plan?

The Lib Dems propose a package of five measures: free personal care at home; a “more generous means test” for accommodation costs; moving towards “a preventative approach to social care”; raising the minimum wage for care workers and increasing state support for unpaid carers.

Some of these are too vague to evaluate (what is a “preventative approach to social care”?) while some are more concrete. But will they work?

Reasons to get excited

The Lib Dems implemented free personal care in Scotland when they were in a coalition government with Labour. And it’s worked – to an extent. Care home occupancy in Scotland has decreased by 11 per cent since 2012 (compared with a four per cent decline UK-wide). Users report relatively high levels of satisfaction with at-home care.

Increasing the minimum wage for care workers is rational. There are over 165,000 vacancies for care workers (a rate of around ten per cent compared with around three per cent nationally). Politicians tend to act like public sector workers (doctors, for example) should do their jobs out of the goodness of their hearts.

The Lib Dems’ proposal is more realistic: in a capitalist society, you solve a workforce shortage by increasing pay. The private companies (which run the majority of care homes) have relatively little market incentive to raise wages to attract staff. So the state needs to step in. That said, the average hourly rate for care workers is currently £12. The Lib Dems are only proposing to raise it to £12.42. It’s unlikely to persuade enough people to choose (highly demanding) carer jobs over similarly paid occupations.

Cause for concern

Ultimately, the cost of social care is a product of market failure. Care homes effectively enjoy mini monopolies. Most users have little or no option but to seek residential care. Those people are often geographically limited (such as by the need to be near family or inability to travel easily beyond their immediate locale). While there are “competing” providers in theory, the consumer rarely has a meaningful choice. As a result, care homes operate at an average 34 per cent profit margin (compared with the nine per cent UK average). Care is unaffordable because there’s no market incentive to make it affordable. If the Lib Dem plan is to subsidise costs by handing more public money over to private providers, it’s likely the cost of care will just rise further (with the taxpayer picking up ever larger bills).

Rather than address this, governments have relied on unpaid carers to pick up the slack. Yet, they are treated as “economically inactive” and limited to £81 per week “benefits”. This means 5m people are taken out of the official workforce and not fully compensated for the (very real) work they’re doing. The Lib Dem plan goes some way towards addressing this, with a £1,000 p.a. raise in carer’s allowance.