Home / Royal Mail / ALEX BRUMMER: The real cost of Rachel Reeves’ secret social care raid

ALEX BRUMMER: The real cost of Rachel Reeves’ secret social care raid

Last month, my 96-year-old relative, an Auschwitz survivor, was finally discharged from the bright new Louisa Martindale building at the Sussex County Hospital after a five-week stay.

As so often before, her fighting spirit prevailed over a Covid infection, pneumonia and a sodium imbalance.

Her hospital stay could have been several weeks shorter. That would have freed up a bed in an NHS under severe pressure – had the medics been assured that a social care package, involving two daily visits, could be put in place.

Axed: Chancellor Rachel Reeves ditched proposals to cap the cost of social care for the elderly and infirm

This was required for discharge, even though she has a live-in housekeeper.

Labour talked endlessly of strain on the health system in the run-up to the Election, pledging 2million more appointments a year. 

Keir Starmer has also claimed his ban on smoking outside pubs and in public areas would ease pressure on the NHS.

What the Prime Minister failed to say was that Chancellor Rachel Reeves, in her ‘Fixing the Foundations’ audit of the public finances on July 30, axed, without warning, proposed changes to social care.

How the Aussies do it

Australian pension ‘superannuation’ funds are a major force in the economy and the stock market.

The system is based on compulsory contributions, with employers obliged to pay in 11 per cent of workers salaries. This rises to 12 per cent in 2025. Employees can also contribute.

As a result, Australians are some of the world’s most well-off retirees. The UK auto-enrolment pension system covers workers without company pension schemes.

Employers contribute a minimum of 3 per cent while employees pay in at least 5 per cent, making 8 per cent, which is regarded as insufficient to secure a comfortable retirement.

Amid the furore over cancelling winter fuel payments to the elderly, a serious effort to reform social care was abandoned.

The Tories had pledged to cap the cost of providing social care to the elderly and infirm at £86,000.

As part of the deal it planned to fund a better path from hospital to social care in October 2025. 

Reeves said the previous government had ‘not put money aside’ for this. Yet clearing hospitals of thousands of the cured, elderly and people with dementia, who should be in the care system, could ease burdens across the NHS. 

Successive governments have missed a golden opportunity to start fixing the social care system by establishing a social market model.

If governments had acted back in 2011, when the Dilnot Commission reported its findings on social care and proposed a cap, it is possible there would have been a decent pot of funding collected to make serious inroads into mounting care liabilities.

Gone: The Tories had pledged to cap the cost of providing social care to the elderly and infirm at £86,000

Gone: The Tories had pledged to cap the cost of providing social care to the elderly and infirm at £86,000

As with automatic enrolment for private pension savings, working people would be given the opportunity to ‘opt out’ – very few do.

The first decade of auto-enrolment brought 11million people under its umbrella, with a total pension pot of £114billion.

If the 2011 workforce had been automatically enrolled in a social care fund (again with provision for opting out) and paid in even a fraction of the pension subscription, by now there would have been a handsome pot of cash for those needing social care at home or in care homes.

And if those funds had been invested in the stock market, as in Australia’s superannuation scheme, the sharp rise in the global equity prices since the financial crisis of 2008 could have been captured. 

Individuals would have social care pots to let them keep the family home intact and face the last years of their lives without fear of falling between the cracks in the system.

Instead of a rational social market solution, or even a Government-backed scheme, Reeves has left families and the elderly in need of care without a parachute.

This ought to be a big issue for our politicians. The Liberal Democrats under Ed Davey campaigned in the Election on social care, saying they would use bank levies to pay for what is needed. Precious little has been heard from them since. 

Reeves’s embrace of fiscal orthodoxy is part of an effort to court favour in the bond markets. But enforcing austerity, on the back of pensioners, the very aged and infirm is not a good look.

After all, as Labour is fond of reminding us, it is the party that embraced the wartime William Beveridge report which pledged care from ‘cradle to grave’.

The latter part of that journey is now considerably more uncomfortable as a result of the Chancellor’s troubling decisions.

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