Agenda for Later Life report – 3 coalition principles

In our latest post on highlights from the Agenda for Later Life 2011 report we reflect on the three key governing principles of the coalition government so far: deficit reduction; localism and the ‘Big Society’; and radical structural reform.

From the day that the Coalition Agreement was published in May 2010, it became evident that the new administration would be founded on a set of strong governing principles. The Government’s overriding priority has been its total commitment to eradicating the budget deficit within five years. The Spending Review was a mixed bag for people in later life. The headlines were mainly positive, particular with respect to spending areas most directly associated with later life, with protection for the NHS and key age-specific entitlements.

But behind the scenes, it was clear that everyone in later life would be hit hard as the heaviest users of public services in general. In particular, local government in England faces a transformation, as it loses 26 per cent of its central government grant over the period 2011/12 to 2014/15, with poorer areas the worst affected. As councils have announced their budgets in recent months, it has become clear that vital services for later life will be hit hard. There are also concerning changes to social security benefits, including cuts to Local Housing Allowance, Council Tax Benefit and Employment Support Allowance (paid to people in their 50s and early 60s).

A hugely significant long-term change was the surprise decision to switch social security uprating from the Retail Price Index to the Consumer Price Index, which almost always increases at a lower rate since it excludes housing. While this will not affect the basic State Pension or Pension Credit Guarantee, all other benefits, as well as many occupational pensions will now be lower in the future. For example, if CPI remains around 0.9 per cent lower than RPI over time, the Pension Policy Institute calculates that by the time a 65-year-old with a public-sector occupational pension reaches 85, he or she can expect to be receiving 8 per cent less income, from all sources, than if today’s system were preserved.

The second major theme of the Government is its commitment to the overlapping concepts of ‘localism’ and ‘the Big Society’. Although these terms are much debated, the Government’s agenda breaks down roughly into four dimensions:

  • a continuation of Tony Blair’s commitment to opening up public services to independent providers, but with an increased emphasis on the potential of non-profit and employee-owned operators
  • accelerated devolution of power from Whitehall and the English regions to local level
  • a commitment to giving citizens more say over public decisions, and the ability to run services and amenities if they wish
  • a desire to see a surge in autonomous community activity, charitable delivery and philanthropy.

So far the most concrete manifestation of these principles have been the Localism Bill and the removal of almost all ring-fencing from local government funding. However, localism and Big Society should be thought of as principles that inform all policy thinking, rather than a specific list of activities.

Many of the Government’s intentions are laudable, although it remains to be seen whether the strategy that ministers are adopting really can succeed in influencing deep-seated social behaviours or in changing the institutional norms of the public sector. But the flurry of enthusiasm and piecemeal initiatives may be sidestepping the need for a fundamental debate about the role of the state. The philosophy of the Big Society is that government should enable communities to solve problems for themselves, rather than impose answers. The lines of responsibility between the state and communities are deliberately intended to be fuzzy; and diversity, and indeed failure, is seen as a strength rather than a weakness. This is a fundamental challenge to the traditional statist view, which sees central government as a provider of enforceable entitlements, a guarantor of consistent minimum protection and the main driver of innovation and strategic change.

In our view there are real tensions, because the need to sometimes drive through responses to long-term challenges, or to provide consistent protection to very vulnerable people, have not disappeared. Two examples illustrate the point. First, in the name of localism, the Department for Communities and Local Government has pulled back from requiring house-builders to adopt inexpensive Lifetime Home standards, even though there is complete recognition that new homes will need to be readily adaptable for future frail and disabled occupiers. Second, the Department of Health was unable to provide designated protection for social care users, in the face of wider local government cuts, despite extra money from the Department being made available and the extreme vulnerability of this group.

The third key theme has been the Government’s willingness to embrace radical structural and funding reforms and push these changes through at a rapid pace. Across schools, universities, employment programmes and welfare there are proposals for wholesale rather than incremental reform. But without doubt, the key reform with implications for later life is the radical restructuring of the NHS. This includes some unambiguously good news, particularly the creation of independent Public Health services within local authorities. But we have doubts about whether the proposed changes will turn around the many shortcomings in the NHS’ care for older people. We want to see a greater focus on whether the right care is being commissioned and how to raise expectations about its quality. With almost half the NHS budget spent on people over 65, Age UK is hoping that the new NHS Commissioning Board will establish an investigation on how to prepare the service for ageing, as part of its responsibilities for defining the outcomes the NHS should aim to achieve.

With only a year of a five-year parliament over, the coalition Government’s appetite for reform could go in one of two directions. On the one hand, the pace may slow as the log-jams build up and ministers turn their attention to thorny questions of implementation. The other scenario is that the Government embraces a second wave of mid-term reforms, to refresh the coalition’s programme as both the Conservatives and Liberal Democrats look to the next election. This could mean that there is still capacity to drive through fundamental changes that ministers say they want to achieve, but have not yet turned proper attention to. State pension reform is the first example, and with a clear consensus on the policy direction between the private sector and civil society organisations, the prospects for a new system will turn on long-term affordability and views on the political advantage reform may bring. We want the Government to use its proposed Green Paper to sign up to the long-term goal of totally eradicating pensioner poverty, through a simple, generous, single State Pension.

Wholesale reform of social care is a different story, since there is no off-the-shelf reform that will either respond to the different priorities of the two governing parties or marry the varying perspectives of the many interested parties. The Dilnot Commission’s task is to assemble a complex deal, which will resolve the crisis facing social care while also proving acceptable to the Treasury and to the coalition partners’ political and ideological requirements. Although the task is formidable, Age UK is optimistic, because there is now such a head of steam behind reform. We believe a viable ‘offer’ can be constructed that significantly increases the quality and availability of care for low-income groups, while also extending some financial protection to mid- and high-income groups, albeit in a very different form to the Labour Party’s proposals for a National Care Service. On top of this we hope there will be scope for voluntary arrangements for home protection, safeguarded by the Government.

However, two significant obstacles remain. First, if reform depends on nationally consistent entitlements and funding arrangements, will this be acceptable to a Government that is so committed to localism, especially if there are far-reaching implications for local government finance? Second, where will the money come from to pay for it? This question was curiously underplayed in the Dilnot Commission’s interim statement, but it is clear that any solution that really does eliminate unmet need will require very significant new resources from a tax-funded or compulsory-insurance scheme. The Commission will need to need to make difficult recommendations about how this money should be raised to strike a fair and affordable balance between generations and income groups. One possibility is that it will recommend that large components of the disability benefits system are absorbed into the new arrangements, leaving some people receiving support for care but not for disability-related living costs. If these proposals proceeded along the lines envisaged by Labour when in power there would be a huge impact on older people with moderate and middle incomes, a little above the threshold for means-tested support today. Just as importantly, it would be an extremely risky move politically – and the Government has already witnessed a backlash from cutting much more modest disability benefits.

Author: Andrew Harrop

Director of Policy and Public Affairs, Age UK

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