Social care 2019: misery, poverty, anarchy

Following a 13-month inquiry, in January Human Rights Watch (HRW) concluded that older people are at risk of having their human rights violated by the way the UK government funds and organises social care. HRW accused the government of a ‘lack of oversight’, leading to millions having their needs improperly assessed and social care services denied. This was the first time that HRW has looked at the UK welfare system, and follows last year’s report by UN Special Rapporteur on Poverty, Philip Alston, who found that the UK government is in a ‘state of denial’ about the misery it is inflicting with its ‘punitive, mean-spirited, and callous’ austerity program. HRW’s assessment is timid: millions are already having their basic human rights violated, losing their dignity, health and lives, in a social care system groaning under savage cuts and the anarchy which has occurred since it was opened up to private capital in the 1990s. This anarchy is a clear indicator that capitalism is incapable of providing decent social care for the working class, and particularly for the elderly who are no longer of interest to capitalism as they cannot be subject to exploitation. Only a socialist system, a proper welfare state, can.

Funding crisis

In his most recent Budget, in September 2018, the Chancellor of the Exchequer Philip Hammond promised a £650m funding increase for social care. Since 2010 social care spending by local authorities has shrunk by £7bn, according to the annual review by the Association of Directors of Adult Social Services (ADASS). What Hammond labels an ‘extraordinary commitment’ is therefore just 9% of the last decade’s funding nosedive and 3% of the £20.4bn spent on social care by local authorities in 2017/18. The National Audit Office estimates that social care now accounts for 43% of all local authority spending. Liverpool Mayor Joe Anderson says that of the £174m raised by Liverpool City Council in council tax revenues each year, £172m is spent on adult social care (Financial Times, 31 January 2019).

Care is mostly funded by local authorities, which raise revenues primarily through business rates and council tax, and central government Revenue Support Grants (RSG). The UK government is aiming to totally eliminate these grants, and as of 2019/20, 168 councils (around half of the total) will receive no RSG at all. The Local Government Association says that between 2010 and 2020, councils will have lost 60p out of every £1 that central government previously provided.

Poorer local authority areas have less recourse to council tax and business rates, and are especially reliant on central government grants to fund social care and other services. A study by the Lloyds Bank Foundation found that local authorities in the North, Midlands and parts of London have shouldered 97% of the reductions in spending on social care, looked-after children and homelessness since 2010. Spending on these services by the poorest 20% of English councils fell by £278m in 2016/17, whereas the wealthiest councils, predominantly Conservative-controlled and in the South East, spent £55m more.

Local authorities have been protecting their social care budgets by concentrating cuts in other services. While real-term spending on social care has fallen by 3.3% since 2010, budgets for planning and development, housing services, and highways and transport have been slashed by 52.8%, 45.6% and 37.1% respectively. These cuts, together with rising wage bills, and rising demand, is the major reason for the increase in social care spending as a proportion of local authority budgets. Social care spending is not rising; it is falling, but less drastically than elsewhere.

A joint report from the House of Commons Health and Social Care, and Housing, Communities, and Local Government, Committees found that as a result of funding pressures, the number of people receiving publicly-funded care fell by 400,000 between 2009/10 and 2016/17. The King’s Fund health charity, in its evidence to the Committees, estimated that 1.2 million older people may have unmet care needs. The burden of care is being passed onto friends and family, whom the charity Carers UK estimates are providing what would be £132bn of care each year were it paid.

Misery, poverty, death

In February 2019, Age UK estimated that 54,000 people, or 77 a day, have died while waiting for a care package in the 700 days since the government first announced in March 2017 that it would publish a Green Paper on social care. Publication of the Paper has been delayed several times. The tightening of eligibility for council-funded social care has meant that 626,701 people, or 895 a day, have had requests for care refused since March 2017. Over one million older people have developed an unmet care need in that time, Age UK estimates.

22% of the care workforce are employed by local authorities or the NHS. The remaining 78% work in the ‘independent’ sector which is dominated by private for-profit provision. These private companies are reliant for around 65% of their income on local authorities, which pay the ‘personal allowances’ of care receivers as fees to private companies. The savage cuts mean that local authorities have been unable to increase these fees in line with rising (nominal) wages. According to the Competition and Markets Authority (CMA), fees paid in 2017/18 were on average 10% below total cost to the companies. This amounts to a £200-300m shortfall in funding across the UK.

This has two major consequences. Firstly, for-profit care companies have increasingly concentrated their marketing on those people who can fund their own care from savings, income or assets. Douglas Cooper, Project Leader at CMA told the Parliamentary Committees that the difference in fees paid by self-funders and local authority clients could be ‘very large – for large operators around 41%.’ This, he said, has resulted in a deteriorating service in poorer areas compared to richer areas. With a lower means-tested savings threshold of £14,250, however, increasing numbers of the elderly are being impoverished and getting into debt in order to pay for their care.

Meanwhile, facing little prospect of drawing substantial profits, many care providers are simply closing down operations:

The role of capital in the provision of social care is increasingly creating a divide between those who receive care because they can afford to pay for it privately; and those left to fend for themselves, or to be supported by the unpaid private toil of friends and family, because they cannot.

Deteriorating provision

Good social care must meet the needs of individual human beings. It is intimate and therefore highly labour-intensive: no new machine can allow a carer to assist twice as many people with dressing or personal hygiene. Productivity (measured in bourgeois economics as profit captured per hour worked) in social care is stagnant, and the wage bill accounted for 50.4% of the sector’s value in 2017/18; up 17% from 2011/12 in major part because of the introduction of the National Living Wage (NLW).

Care companies get around this problem by wringing ever more labour out of the workforce for less pay. They push down real wages by denying workers sick pay and payment for travel time between house visits, they pay under the minimum wage for so-called ‘sleep shifts,’ and intensify the workload. The academic Shereen Hussein estimates that 10-13% of care workers are effectively paid below the NLW. 58% of frontline care workers are on a zero-hours contract. Under immense pressure at work, leading a highly precarious existence, and not earning enough to survive, many workers simply quit: in 2017/18, 1068 people a day left a job in care. 33% of these left the sector altogether. This leaves the sector with a shortfall of 110,000 workers and subjecting those it cares for with ever-worsening conditions.

However, not everyone loses from all this misery and chaos. As with every other sector of the British economy, financial capital has its hands all over social care. The largest care provider in Britain, Care UK, which made £13.9m in profits in 2017, is owned by Bridgepoint Capital, a private equity firm with £16bn in total declared assets. In November, the Care Quality Commission (CQC), the public regulator of health and social care, warned that Allied Healthcare, a company which provides domiciliary care for around 13,500 people alongside out-of-hours GP services for the NHS, and which is owned by German private equity firm Aurelius, had failed to provide ‘adequate assurance’ that the company would have enough financing to operate beyond November (Financial Times, 6 November 2018). The CQC told the 84 local authorities with which Allied Healthcare has contracts to expect its collapse by 30 November. Eventually, Aurelius sold Allied Healthcare to the Health Care Resourcing Group of companies which has a turnover expected to reach £310m by 2019, staving off collapse for the present.

Allied Healthcare is no exception: the CQC ‘continues to monitor the position closely’ of Britain’s second largest provider of residential care, Four Seasons. Four Seasons is funded with credit from a number of hedge funds led by H/2 Capital, after Terra Firma, another private equity firm, borrowed £825m to buy the company in 2012. A restructuring agreement between the H/2-led investors and Terra Firma has missed several deadlines and the share price is falling. Four Seasons provides for 17,000 residents in 300 care homes.

Finance capital has been able to penetrate social care provision thanks to legislation creating a market in care, starting with the National Health Service and Community Care Act 1990. When the state runs care, profit plays no role. When run by private capital, however, providers require a surplus over and above what they spend: a profit.  With low productivity, little room for innovation, and a customer base which is mainly poor and is to a large extent supported through state welfare spending, social care is not fertile ground for productive investment by capital. It is, however, ideal for parasitism, as finance capital wrings the sector dry of what little surplus-value is produced, as it sucks up the welfare payments, incomes, savings, and assets of care receivers. It is a clear sign that capitalism, which must always draw a profit, is incapable of providing decent social care for the working class.

Caught between grinding austerity, rising demand, the anarchy of capitalist production and the circling vultures of finance capital, the future for social care is bleak. The crisis facing social care in the world’s fifth richest country is the clearest indicator that capitalism is incapable of meeting the needs of the vast majority of humanity. Human beings with care needs will only be able to live in comfort, health, dignity and happiness when care is run socially and private profit is banished. 

James Pike

Fight Racism! Fight Imperialism! 269 April/May 2019