When will the crisis in Social Care be resolved?

The problems in social care during the pandemic was more than just a lack of PPE to care homes. Firstly, many more people receive care in their homes than in care homes, and secondly, the chronic shortage of funds for both adult and children’s social care is an increasing problem.

Overall, we should have intensive care beds in hospitals for 25,000 people to accommodate normal winter pressures. In pandemic circumstances, I’m not sure of the number, but I do know that, in the last year, people were repeatedly not taken to hospital despite the fact that they were very sick. A substantial number of the 126,000 people who died, died at home with little or no medical intervention.

There are sometimes not enough beds in care homes either and, while this has generally been left to the private sector, it a good idea to have some recuperation beds which are under the control of the NHS or local councils.

I work for a home care agency and it is difficult to get staff, mostly because of the pay and benefits. Staff are required to use their own resources, they must have a car to drive to and between visits, and a smart phone to conduct business, log their visits, etc. All staff must pass the care certificate which takes approximately 10 days over 12 weeks and encompasses basic life support, safeguarding, moving and handling, health and safety, person centred care, medication administration, mental capacity, etc. These courses are delivered online and in person. Care workers generally earn minimum wage, or slightly more, for what is a very demanding and occasionally demeaning job.

Local authorities will provide funding for care to people who are very disabled – if there is capacity in the system. This is available to those whose savings are £23,500 or lower. In addition, should people not be able to pay their own bills, the local authority may provide financial services. Should people need 24/7 care, there is a possibility they will be rehomed in a care home. Again, the provision is not always accessible and the council pays lower rates than the services sometimes cost. Something which the providers see as unacceptable.

Teresa May got into a terrible mess during her prime ministership trying to propose that people who stay in their own homes should have a higher care cost cap and, the last time I saw anything about social care in the press, the Dilnot Review which proposed a £72,000 cap on care costs in care homes had not been implemented.

At any rate, Boris Johnson promised an oven ready deal on social care just as he proposed an oven ready deal on Brexit. Quite frankly, his oven must be broken because we haven’t seen anything remotely like something that is palatable yet. I doubt that we will in the days, weeks and months ahead.

* Gillian Douglass is a member of Tunbridge Wells Liberal Democrats

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103 Comments

  • John Marriott 29th Mar '21 - 11:04am

    ONLY when we ALL agree to PAY FOR IT!

  • If there is something we should have learnt during this terrible pandemic it is that our care system is in need of a severe upgrade and an injection of money for all our sakes, whatever age we are!!! Disability, illness and getting old has no respect of class.

  • As a former Cabinet member for Social Care who had to deal with some of the failures of the present system, I share Gillian Douglas’s concern about what has happened to the Social Care sector.

    I have no confidence a Conservative Government will ever deal with it adequately, and frankly, Liberal Democrat politicians have shown no detectable interest in the subject (other than serving as directors of private care companies) …. though a lot of their so called ‘core vote’ used to be amongst local government social care staff pre 2010.

    For a resume of the issues I suggest LDV readers should download BASW’s summary of Professor Bob Hudson of Durham University’s report :

    The failure of privatised adult social care in England: what is to be done ..https://chpi.org.uk › uploads › 2016/11 › CHPI-S… PDF.

    Also : Adult social care: is privatisation irreversible? | British Politics …https://blogs.lse.ac.uk › politics and policy › adult-social-… 14 Feb 2018 — The privatisation of adult social care is a 30-year process that has grown unchecked, made worse by austerity politics
    .

  • John Marriott 29th Mar '21 - 11:47am

    Perhaps I ought to expand on my original remark. I am quite frankly tired of people, and the politicians they elect, shying away from the fact that, as in most aspects of life, you get what you pay for. When my wife and I were living in West Germany, albeit over forty years ago, we were surprised how many Germans we met, who had gone to work in the USA in the 1950s and, upon retirement, moved back home, because, as they used to say, it was no country in which to grow old.

    We have a problem with care, particularly for the elderly, in this country. Why should those with assets, such as property, have to cash in almost everything to cover costs that are likely to be several thousands of £s per month until they reach a point where the state takes over?

    As the insurance industry seems reluctant to take any responsibility on board, the state should establish a scheme where people over a certain age, say 50, should contribute progressively towards future care. Isn’t that more or less what the Dilnot Review proposed? Yes, it will cost both individuals and the state and would be a massive undertaking; but surely it’s better than what we have now? The trouble is, the cynic might say, that everybody is willing to pay as long as someone else is paying! It’s time to get real.

  • The vast majority of both home care and residential care in England is now provided by private companies. A significant number of care home providers are large chains which are backed by private equity and are reliant on risky financial structures, leaving them exposed to collapse, with damaging consequences for care home residents.

    Although local authority budgets have been drastically cut by central government – forcing them to reduce the amount they pay to private providers – private providers can still achieve significant rates of return on their capital investment, 12% is normally expected. This is despite the fact that adult social care is essentially a low-risk sector – in other similarly low-risk sectors a 5% rate of return is considered reasonable.

    Both the quality of care in adult social care and the terms and conditions of the workforce have declined over the past two decades as a result of privatisation. The report also shows that turnover rates are higher, and rates of pay considerably lower, in the private care sector than in the public sector. In addition, 41% of community-based adult social care services, hospice services and residential social care services inspected by the Care Quality Commission since October 2014 were found to be inadequate or requiring improvement.

    Any time now when the Sunak bailing out stops, I expect a series of private care home crashes. We need an adequately resourced National Care Service.

    Lib Dems should get Bob Hudson and other experts to produce some serious policy recommendations.

  • Brad Barrows 29th Mar '21 - 12:39pm

    Meanwhile in Scotland, the Liberal Democrats voted against the SNP government’s motion committing to “establishing a National Care Service in law, on an equal footing to NHS Scotland, to provide national accountability, reduce variability and facilitate improved outcomes for social care users across the nation.”

    (The vote was on February 16th, 2021. Motion S5M-24134)

  • I bow to the knowledge of other contributors here but just to add that the thought of financing ones own future is extremely troubling as indeed it must be for the majority of people in the UK. The government seems to find extortionate amounts of money when it needs to but, as it has been said, we must all look at ourselves and demand an end to this terrible situation but I suppose spending billions of pounds on the likes of “SMART” motorways will always come first?

  • Sorry should have said ” future care”.

  • Brad Barrows 29th Mar ’21 – 12:39pm…

    I have noticed that, especially since 2010, our party seems to vote against policies whose aims are almost identical to our own.
    Because they don’t have the ‘LD logo’, perhaps?.

  • Joseph Bourke 29th Mar '21 - 2:52pm

    John Marriott has answered the question posed in the article – ONLY when we ALL agree to PAY FOR IT!
    The conclusions of the Resolution Foundation are stark. “We face a choice of funding the NHS through capital taxes or cutting our children’s pay packets.”

    The issues are now about who pays more and how much they pay.

    “The Conservative Party now faces the challenge of fighting elections without offering tax cuts – the manifesto of 2017 is a taste of things to come. The Labour Party faces the challenge of whether it is credible to say only the rich will pay more – taxing bankers cannot pay for everything. We are the first generation to have lived our entire lives under the modern welfare state.
    We have benefitted from Britain’s house price boom which has made home ownership unaffordable for our children. We have done so well compared with the younger generation in so many ways that we cannot just turn to them to pay for our health and social care.
    And it is this cost above all – paying for a service we particularly benefit from in our old age -which is pushing public spending inexorably upwards. We are going to have to make a contribution too. And when we look at how we should do this there is one obvious source – the wealth we are sitting on.”
    “Today, for every ten working age adults there are seven young and old people needing their support. This dependency ratio has hit a historic low and now it is rising inexorably upwards. By 2030, that ratio will rise to nearly nine.
    So we are entering a period when just to maintain the existing welfare state promise is going to cost more and more. By the end of the next decade this cost will rise by £20bn a year. By 2040 it will rise to £60bn.”
    That translates to an income tax hike of 15p in the basic rate by 2040, the burden of which will overwhelmingly fall on the generations following baby boomers.
    Is that kind of tax rise really the legacy we – a generation that owns half the nation’s wealth £13tn of wealth – want to bequeath to our children and grandchildren?”

    My answer to this inequity is Land Value Tax as this earlier article proposes https://www.libdemvoice.org/a-residential-land-value-tax-approach-to-funding-adult-social-care-59639.html

  • Helen Dudden 29th Mar '21 - 6:12pm

    I have been very concerned by the total waste of public funding by this government.
    We cant afford greed, or the me first ideals, of this government .
    We do need effort to bring standards back up, in our lives.
    The services for children with mental health issues, have gone beyond what can be coped with, our health services, are so over loaded ,how they will ever catch up.
    If I understand rightly, these warnings were given at the start of the virus.
    I personally, can’t just switch off to the fact it was wrong, and is wrong.
    Its time for a Public Account of what happens next.

  • John Marriott 29th Mar '21 - 6:23pm

    @Joseph Bourke
    Thanks for the compliment! Now I know that you are a massive fan of LVT; but I feel that, when it comes to social care, a hypothecated tax is easier to understand for most people, as long as it doesn’t end up like the Road Fund Tax.

    When I paid into the Teachers’ Superannuation Scheme all those years I accepted that my money was going towards paying for someone else’s retirement pension, just as now all those payments from currently serving teachers are paying part of mine. As for making contributions myself in my dotage, while exempt from NICs, I still ‘earn’ enough from my state and occupational pensions to be liable for Income Tax, which is as it should be.

    As I wrote originally, if we are not collectively willing to pay up, we get the kind of social care we deserve. Some of you may recall my earlier mantra “ many people in this country expect Scandinavian levels of services from North American levels of taxation”. The choice fo me is simple. LVT probably is fairer; Joe, and you are an clearly an expert; but you try selling that on the doorstep the next time you go out canvassing!

  • @Joseph Bourke

    @Joseph Bourke

    Your figures are somewhat misleading in my humble opinion. The issue on income tax is that I believe it’s only 25% of the tax take. (Another 18% is NI – a (different) income tax) – so effectively you need to divide your figure by 4. And you don’t mention whether you are taking into account inflation & GDP growth.

    The 2nd issue is that health care, social care & pensions are essentially an insurance scheme. Now in this country – it’s a PAYG scheme – we don’t have obamacare. But each generation pays for the older generation which are the main recipients of health & social care. The current older generation paid for the then older generation when they were young.

    Increasing also the older (retired) generation is paying more income tax. And it is likely with Steve Webb’s reforms to private pensions so that people opt OUT of workplace pensions rather opt IN and the setting of the basic state pension at pension credit level – people will be better off in their old(er) age.

    In addition labour force participation has increased MUCHLY (!) in the last 30-50 years – especially among women.

    I think also as Lib Dems we should also say the things that we would not increase and I do appreciate the difficulties of doing so. Interestingly in the early 80s I believe Government spending on defence was the same as that on health (I saw an old news clip on the Tories first budget on youtube). For our size we still spend tens of billions more than Germany on defence – much more on development aid.

    Personally I’d only increase benefits etc. by inflation rather than earnings while increasing education and health spending – you have to make choices.

    We need to “pick people’s pockets” in lots of different ways (!) – and I do agree with you that we need to increase property taxes although there are issues around that. But income tax is a fair tax based on the ability to pay. And I believe Germany – mentioned by John Marriott – has a 2% income tax/national insurance (paid by all ages) earmarked to pay for social care.

  • Joseph Gerald Bourke 29th Mar '21 - 7:08pm

    Michael 1,

    the resolution quote is not my figures. It is from David Willets (two brains) in this piece https://www.resolutionfoundation.org/comment/we-face-a-choice-of-funding-the-nhs-through-capital-taxes-or-cutting-our-childrens-pay-packets/
    japan has had to face this issue in recent years and the Nuffied Trust published a report on the lessons we can draw from their experience https://www.nuffieldtrust.org.uk/news-item/england-could-learn-lessons-from-japan-to-address-social-care-crisis
    “In 2000, Japan introduced Long Term Care Insurance (LCTI), designed to provide cover to all those over the age of 65, according to their needs. As such, the system is one of the most comprehensive social care systems for the elderly in the world, built around the aim of reducing the burden of care for families.”

    “In the UK, social care has been affected by a range of funding cuts to local budgets since 2010, which has increased pressure on the social care system. The situation is further compounded by a gradually ageing population. In Japan in 2016, those aged over 65 comprised 26.5% of the population; in the UK it was 18.4%.”
    “In Japan, people above the age of 65 apply to their local government, and a complex test is done to assess their needs. A care manager advises on how these needs may best be met, based on the budget they’re allocated and a knowledge of local service providers for (predominantly) community-based care. These comprise a range of organisations in the public, not-for-profit and private sectors. The providers that offer such services are often small organisations, embedded in the local community.”

    “The number of residential homes is restricted, with a strong emphasis on community care: a decision justified on fiscal grounds but also as the most supportive of well-being.”

    “The insurance is financed from premiums that are mandatory for all citizens aged 40 or above – the general revenue – and co-payments from the users. Due to the universal eligibility and the compulsory character of the premiums, and unlike the previous welfare and support schemes, the new system carries significantly less stigma and the services are very widely accessed.”

  • Gillian Douglass 29th Mar '21 - 7:56pm

    Lots of great suggestions, articles and comments. We do need a way to pay for the increased social programmes we all want and need but it won’t be easy and that is why the issue keeps getting kicked into the long grass.

  • It’s not just the amount of money and how you raise it. No doubt Joe Bourke and Peter Martin can have a lengthy private argument about that.

    It’s whether you want the bulk of it in the public sector (as per what the NHS ought to be) or in a fragile private sector with profits siphoned off to tax havens :

    “Care home operators under fire over offshore linkshttps://www.carehomeprofessional.com › care-home-op…
    10 Jul 2019 — While making a £1.9m profit last year, Barchester paid £100m in rent to another UK … companies and Akari Care, which is ultimately owned in the Cayman Islands. … Leading care provider, Orchard Care Homes, is another with offshore links

  • With reference to Brad Barrows comments about the situation Scotland – and why it’s the case, I’ve just remembered the exciting radical (?) election pledge by the Scottish Lib Dems back in 2015 :

    “To balance the budget by cutting less than the Conservatives and spending less than Labour or the SNP”.

    A paler shade of blue ?

  • John Marriott 29th Mar '21 - 9:48pm

    @David Raw
    I think I know where you are coming from. If we ever reach social care utopia, that is where we have enough money put aside to provide for the care needs of everyone in later life, if the majority of that care is provided by and in the private sector the chances are, where profit is a motivating factor, that charges will rise in line with the amount of cash available. If that care is provided by the public sector, then in theory, without the profit motive, costs should be less. However, that cannot be a given.

    In any case, thanks largely to the austerity programme foisted on local authorities during the coalition years, many council owned care homes in England closed and I cannot see that it would be easy to resurrect them. Perhaps a prerequisite of any future system of adult social care should be to build on the expertise of the CQC and create a kind of social care equivalent of OFWAT, OFGEM or any of the 90 odd regulatory bodies in the U.K. in order to see fair play between both sectors and with the power to make things happen.

  • Joseph Gerald Bourke 29th Mar '21 - 9:55pm

    David Raw,

    the care system is multi-faceted. As you will be aware. the great bulk of care is provided at home by family members supported by domiciliary care (home care) and to a lesser extent in sheltered housing accommodation. Care homes and nursing homes are a last resort for most families after first modifying family homes to install stair lifts, wet rooms and other such facilities.
    David Willets writes in his report “By the end of the next decade welfare costs will rise by £20bn a year (in real terms). But 2040 it will rise to £60bn. Politics is going to be very different as the baby boomers age. The age of tax cuts is over. Instead politics will be about who pays more and how much they pay.”
    Peter Martin may well insist we can just run ever bigger budget deficits to pay for it (and a myriad of other programs) by engaging unemployed workers or those on zero hours contracts to provide services without raising taxes (unless we get a spike in inflation). However, this assumes that there are hundreds of thousands of workers just waiting for a chance to enter these sectors. But there is a chronic shortage of care workers now (as well as in the NHS) and has been for decades.
    The social care workforce in England is bigger than the NHS workforce: in 2018, the number of people working in social care was estimated at 1.47 million. However, there are still significant shortages. In September 2019, Skills for Care published a report on the state of the sector’s workforce. It highlighted that in England, the average vacancy rate was 7.8% which equates to 122,000 vacancies. The turnover rate of staff was also significant with the report stating 440,000 social care sector left the sector in just 12 months.
    The APPG on Adult Social Care in its report https://committees.parliament.uk/writtenevidence/6425/pdf/ recognises the importance of achieving a cross-party solution to create a sustainable future for social care. Significant progress towards a cross-party solution was made under the coalition (as the Kings fund noted), but regrettably the agreed framework was never implemented.

  • Peter Martin 30th Mar '21 - 5:16am

    As perhaps we all might have predicted, this discussion has centred around a “who is going to pay for it” argument. The last comment was from Joe with him, equally predictably, accusing me and presumably others, of saying it can be paid for with higher Govt deficits.

    A higher deficit is caused by someone in the economy swapping their ££ for govt bonds and clearly this isn’t an indication of govt spending any money at all. It is a sign that others are saving more. No more. No less. Which is neither here nor there in the context of this discussion.

    But it does help to understand how the economy works if we are going to solve a very difficult problem.

    But at least we have avoided, so far, any mention of a UBI. Apparently we’ll all soon have nothing to do because the robots will come and take our jobs. Can’t we get some clever engineers to design a robot which will also be able to look after old people? Getting them ready for bed, cleaning up any mess they have created etc?

    It is all about resources. We aren’t going to provide sufficient of those if we don’t find them from somewhere. This will mean paying people more. If we don’t need so many bank tellers because of ATMs, just to pick one example, we can divert some resources without having to be any worse off. But we do need to recognise that the money that came from the banks to pay their wages will now have to be provided another way.

    So there may need to be an extra tax on the banks and on other industries which have shed labour, but this needs to be done to prevent inflation rather than to “find the money”.

    Funding our old age is a problem. Saving money isn’t necessarily a solution. If we all retire at once there isn’t anyone left to do the work. So we’ll end up with lots of money but nothing to spend it on. If too many people retire at once we won’t have enough to spend it on and this is more the problem at the moment. The dependency ratio is too high.

  • John Marriott 30th Mar '21 - 9:15am

    Oh dear, all those worthy well informed people trying to score points off each other. As for me, I’m not an expert on anything. All I know is that, at 77, I’m currently in reasonable health, a bit frayed at the edges, who will definitely be departing this life with less body parts than I started with. My wife, who is a a similar age and pretty fit, and I own our home and have a bit in the bank. The chances are that either or both of us are going to need some serious care in the next few years, for which we shall have to pay unless the rules change.

    Now, had such a care scheme been around, say, twenty years ago, based presumably on our ability to pay, we would have been more than willing to be involved and pay what was required of us, especially if it would of meant our not being required to dispose of our assets down to our last £23k, something worth passing on to our children and grandchildren.

    I could be really selfish and argue that why should I, who has tried generally to live within his means and put a bit aside for a rainy day, have to pay up front when people, who have been less careful with their money, get similar care for nothing. Now I know, of course, that many people, for a variety of reasons, have been less fortunate than me and my wife and family and deserve equal dignity in old age. That’s why I would not wish to go down that route. However, unless someone in high places grasps this particular nettle and acts, we shall be having this same argument when that rainy day has become a thunder storm.

    As I wrote at the start of this thread, we shall only resolve this crisis in Social Care when we ALL agree to pay for it! So come on, as Elvis sang, let’s have “a little less conversation and a little more action”. The black clouds are forming!

  • Peter Martin 30th Mar '21 - 10:18am

    @ John Marriott,

    We’re never going to be ALL agreed on anything. At the moment it’s something of a lottery for the younger generation. If their parents manage to survive until their final days without any social care they’ll inherit the the lot. But if they need lots of expensive care they’ll possibly end up with not very much.

    So it wouldn’t be too difficult to devise a system which takes out at least some of the luck to ensure that those who need more social care will bequeath more to their offspring and those who need less will bequeath less. I suppose it amounts to funding social care in terms of increased death duties if you want to look at it in more conventional terms.

    I’ve never understood the extent of opposition to increased death taxes. I’d much rather pay taxes after I’m dead!

    Also the “younger generation” who benefit from inheritances aren’t that young any longer. If their parents survive into their 90s they’ll probably be in their 60s and will likely be reasonably well established themselves. It’s better they pay than imposing crippling levels of taxation on the next generation down.

  • ………………When will the crisis in Social Care be resolved?………

    Sadly, as my mother used to say, “When Nelson gets his eye back!”.

  • @ John Marriott Correct, John, and as a sympathetic observer of your predicament just a few months older than you, I would add, moi aussi. But I might be going further by suggesting there are times when political parties have to set a lead.

    It’s called seeing the need and having the vision for radical progressive policies instead of being an unresponsive vacuum for careerists who fly off overseas with their knighthoods after they’ve been found out.

    That vision was exhibited by Lloyd George for a short time in his 1909-10 budgets, by Keynes and Beveridge in the 20’s/30’s, and by Attlee and Nye Bevan in 1948.

    As a devotee of Dangerfield you’ll know there was a raging debate inside Squiffy’s Liberal Party about the role of the state led by the ‘New Liberals’ back in those long gone days before 1914 and WW1. I’m with those New Liberals.

    When Tony Greaves and I were mere twiglets in NLYL and ULS playing snooker in the National Liberal Club back in 1964 we both believed Jo Grimond and the Liberal Party could be part of that genre.

    Sadly, 2010-15 demonstrated to me it was something different. Unless it wakes up PDQ to a very obvious need then it will be a case of ‘The Unremarkable Death of the Liberal Democrats UK’.

  • Joseph Gerald Bourke 30th Mar '21 - 1:44pm

    As Dilnot makes clear ““there is no consensus on where the money should come from. That is what is always politically most toxic for Governments. The debate is much more now about where the money should come from than about what the money should be spent on. My advice for any institution trying to build consensus would be try to focus on that.”
    This is what the coalition government started to do.The Kings fund in its 2015 report https://www.kingsfund.org.uk/blog/2015/03/coalition-governments-record-social-care writes “Arguably, the coalition has made more progress in five years than the previous government did in thirteen. The independent commission, chaired by Andrew Dilnot, reported within a year. To the surprise of many, his central recommendations were not only accepted but also embodied in legislation that will be implemented from April 2016.”
    The Care Act 2014 set a ‘lifetime cap’ on the contribution that any individual will be required to make towards care costs, with effect from April 2016. This was set at £72,000 for pensioners and lower levels were promised for working age adults.
    At the same time, the upper capital threshold to be used to means test publicly funded payments towards residential care was raised to £118,000 – a more than four-fold increase from £23,250. The coalition government also committed to keep the lower threshold at which care fees become fully funded, constant, in real terms, at £14,250.
    These provisions of the Care Act were suspended and then scrapped in 2017 https://www.communitycare.co.uk/2017/12/08/plans-cap-social-care-costs-2020-pulled-government/
    We have been awaiting a green paper on adult social care fora few years now. Parliament needs to do its job. MPs (including backbench conservatives), Peers and lobbying groups can pressure the government to address the issue of adult social care without further procrastination. But just calling for more spending without providing the means to pay for it is useless.

  • John Marriott 30th Mar '21 - 1:51pm

    @Jo Bourke
    Yes, I’m calling for more spending AND I’m suggesting where it should come from.
    PS What’s with the ‘Gerald’?😀

  • Peter Martin 30th Mar '21 - 2:52pm

    ” But just calling for more spending without providing the means to pay for it is useless.”

    It’s equally useless if you do say how you are going to pay for it! There be so many “just put a penny on income tax” pledges that even the most ardent of your income tax paying supporters will be hesitant about voting for you. What you need to take into account but never do is that an increase in spending will create an increase in revenue.

    At least it will in normal times. It doesn’t now because there’s much less to spend our money on and that means VAT revenue etc is well down.

    Of course even if you do spend a few extra billion into the economy, and it nearly all comes back in taxes, it doesn’t mean you should definitely do it. As always, the word ‘inflation’ needs to be taken into account.

  • Joseph Bourke 30th Mar '21 - 3:44pm

    Peter Martin,

    there are two principle sources of finance for government – Tax and borrowing. Borrowing is principally directed at longer-term investment spending that is consumed over a period of time, taxes at current spending.
    Economic growth is predicted to rise sharply next year by 7.3% as household spending returns to normal levels and tax receipts with it. Fiscal stimulus and/or job guarantees may be employed if unemployment does not fall quickly enough to relatively normal levels – 5.1% by 2023..
    The recent budget predictions indicates that public spending will be squeezed down if the economy stabilises as projected in two or three years times to maintain a deficit of around 4% and unemployment around 5%. Even if unemployment is reduced to the pre-covid levels of below 4%, tax receipts will be insufficient to maintain adequate levels of public services going forward whether it is healthcare, social care, welfare or local government services.
    As John Marriott writes above “ many people in this country expect Scandinavian levels of services from North American levels of taxation” That is never going to happen.
    The higher tax receipts generated by economic growth are largely absorbed by higher wage costs, benefit payments including housing benefit and the triple lock on pensions.
    Arthur C Clarke once quipped “The goal of the future is full unemployment, so we can play. That’s why we have to destroy the present politico-economic system.”
    The LibDem adoption of Universal basic income coupled with Universal basic services starts down this road in fully recognising the function of the tax and benefit system on addressing inequality.
    As to the medium and long-term Macro-economic policies that need to be adopted these are well set-out by Skidelsky and Hutton https://braveneweurope.com/robert-skidelsky-will-hutton-sustaining-and-creating-employment-now-and-post-covid. With respect to the social settlement they say the guiding principles must be universality of provision and fairness.

  • John Marriott 30th Mar '21 - 5:18pm

    @Jo Bourke @Peter Martin
    What is it about ‘experts’ like you two? Fiddling while Rome burns comes to mind. I have no idea what your financial circumstances are but I would guess that youth has finally passed you by. You may not be worried about providing for your old age; but I certainly am about mine. So, how about a little less philosophy and facts to prove your points and let’s have a few real practical answers to this pressing problem that we can all understand?

    PS What happened to the ‘Gerald’, Jo?😀

  • Joseph Bourke 30th Mar '21 - 5:39pm

    John Marriott,

    these are facts as furnished by the resolution foundation; the APPG on adult social care; the Nuffield Trust; the Kings fund and the OBR economic forecasts.
    Adult social care has to be funded. There are only two realistic options – a tax on wealth tied up in homes or increased levels of national insurance for wage earners and the self-employed.
    My recommendation is equity in homes https://www.libdemvoice.org/a-residential-land-value-tax-approach-to-funding-adult-social-care-59639.html
    As I posted in comments to the original article:
    Under the LVT proposal for a hypothcated social care precept the care is delivered free of charge at the point of use. To protect against the loss of homes the cost of providing adult social care is shared across all residential landowners, avoiding the situation where approx 10% of the population face care costs in excess of £100,000 and forcing the sale of homes.
    An individual in a large high value family home, would at no point face the loss of the home. A homeowners tax free allowance would be available to the remaining spouse/dependent as long as the property remains owner-occupied and is based on the size of the property. The tax is assessed on the land rental value to the extent that value exceeds the homeowners allowance.
    Over 55’s and homeowners on benefits may choose to defer payments until the property is sold or bequeathed and inheritors may avail themselves of a 10 year installment payment of any accrued taxes on bequeathed property.
    The key point is that the fear of facing catastrophic care costs in the last years of life is removed for all. A sustainable and affordable source of segregated funding is set aside for local authorites to meet their statutory duty to provie care for the elderly without the need for means tests. As a hypothecated local tax it is also removed from the political vagaries of central government funding and subject to democratic oversight via the elecion of local councils officials i.e. responsibility and accountabiity are brought together. Liberalism in action.

  • Peter Hirst 30th Mar '21 - 5:48pm

    The great thing about our NHS is that it is based on need. Social care would benefit from the same emphasis. To make the most from limited funds and if we all want to live for as long as possible then some restriction on choice is needed for the good of the majority.

  • @ Joseph Gerald Bourke Are you saying persons in rented accommodation won’t contribute even though they might well benefit ?

    That’ll go down well in Richmond, Kingston, Twickenham et al.

  • David Raw,

    persons in rented accommodation pay rents to landlords. The Landlords will contribute from the rents they receive.
    This is the report of the Health and Social care committee published in October last year https://committees.parliament.uk/publications/3120/documents/29193/default/
    The concluding paragraphs read:
    “20. We believe that the starting point for the social care funding increase must be an additional £7bn per year by 2023–24 to cover demographic changes, uplift staff pay in line with the National Minimum Wage and to protect people who face catastrophic social care costs. This represents a 34% increase from the 2023–24 £20.4bn adult social care baseline projected budget at today’s prices. In this report we have not examined how such an increase could be funded but we recognise the challenges involved and the need for innovative thinking to address them.
    21. But we are clear that this is only a starting point. It will not provide any improvement in access to care, which is urgently needed and would be improved through introducing free personal care as recommended by previous select committee reports from both the Lords and the Commons, which we continue to endorse as worthy of consideration. The full cost of adequately funding social care is therefore likely to be substantially higher than £7bn, potentially running to tens of billions of pounds. We recognise these are substantial increases at a time of severe financial pressure but the evidence we have heard both from those who use social care, and frontline social care workers suggests that the gravity of the crisis now facing the
    social care sector requires a bold response if we are to recognise the sacrifices made recently by the social care workforce and—most importantly—look after vulnerable people in our society with the dignity and respect they deserve. ”
    That is what we need to address this issue – £7bn per year funding to start with and funding potentially running to tens of billions as we go forward.

  • John Marriott 30th Mar '21 - 8:54pm

    This article has given several of our more cerebral LDV contributors opportunities to display both their knowledge and preferences. However, what is clearly missing in this display of erudition is any recognition of how serious the problem is. In a phrase, we are living longer. A few years ago actuaries calculated that the average life of male teacher’s pension, if he retired after the statutory service of forty years, was two years. Not any more. I retired early after 34 of reckonable service in 1999 and I’m still around. The question has got to be whether we allow my generation and those that follow the kind of dignified long end that was largely not the case in my father’s and grandfather’s day, when, in the case of the latter, the workhouse still stood ready and pensions, particularly for men, were predicated on being of relatively short duration. No wonder so many ‘end of salary’ pensions have disappeared.

    Yes, we do need “a bold response”, as Jo Bourke says. So, let’s be bold. Let’s put a bit of passion back into our deliberations. Yes, it will cost us billions. We should have the courage and honesty to tackle the funding of adult social care, together with the funding of local government as well as other issues, as JFK famously said in his ‘Moon Speech’ “not because they are easy but because they are hard”.

  • Peter Martin 31st Mar '21 - 5:05am

    @ John Marriott,

    I’ve given you my personal preference for a return to substantial death duties. Joe, as always, uses the opportunity to push for a Land Value Tax. That will work to a very limited extent but the Georgist idea of a single tax belongs, if it belongs anywhere, in the 19th century where it came from. There can’t be just a single tax. Many Lib Dems will be wanting to raise income tax levels.

    I’m not sure what you are saying. That we all have to agree? Well good luck with that. You’ve noticed that we are all living longer without conceding the point that maybe this means we have to work a bit longer too. I’d say we should, but there plenty of people who won’t agree about that as I’m sure you’ll know.

    I do agree that more taxation will be required. The important question is how much and who has to pay the taxes. I’ve introduced the question of why they have to be paid. They aren’t for the reason you think. I’m sorry if this is too complicated for you but if it was ultra simple the problem would have been solved by now.

    You might want to take a look at #4 of Warren Mosler’s “7 deadly frauds” in which he addresses the point that the US system of social security is “broken”. It isn’t. In other words he’s saying that though some extra taxes might be required to prevent inflation the situation is nowhere near as dire as the doom mongers are suggesting.

    http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

  • @ John Marriott. Yes.

  • John Marriott 30th Mar ’21 – 8:54pm……………… we are living longer. A few years ago actuaries calculated that the average life of male teacher’s pension, if he retired after the statutory service of forty years, was two years. …… The question has got to be whether we allow my generation and those that follow the kind of dignified long end that was largely not the case in my father’s and grandfather’s day, when, in the case of the latter, the workhouse still stood ready……..

    I wouldn’t count my chickens on either ‘living longer’ or ‘dignified long end’..The demise of the high street and retail sales have boosted the power of the internet shopping and delivery firms with their disregard of minimum hours/pay and ‘luxuries’ like toilet breaks and facilities..
    Add to that toxix mix the rise of Conservative MPs like Kwasi Kwarteng, Priti Patel, Dominic Raab, Chris Skidmore and Liz Truss (authors of ‘Britannia Unchained’) whose excoriation of the UK’s “bloated state, high taxes and excessive regulation” and who regard “British workers as “among the worst idlers in the world (who work among the lowest hours, retire early and have poor productivity), show the direction they intend the UK to take…

    We live longer because (largely) unions demanded that employees were no longer replaceable fodder and Atlee’s implementation of Beveridge’s ‘Welfare State’. Both unionised labour and the welfare state have been under ever increasing attack for the last 40 years.

    Of the three guiding principles in ‘The Report’ it’s “revolutionary moment in the world’s history is a time for revolutions, not for patching” should, post Covid, be this party’s mantra; will it?

  • James Fowler 31st Mar '21 - 2:22pm

    What John Marriot said.

  • Joseph Gerald Bourke 31st Mar '21 - 2:47pm

    The LVT solution to adult social care is not a single tax. It has no impact on the levying of the main taxes – VAT, Income Tax or National Insurance.
    The fairer share campaign https://fairershare.org.uk/ calculated that replacing council tax and stamp duty (that raise around 44 billion) with a proportional property tax would require an assessment of 0.48% of property value. To raise an initial £7 billion for adult social care would require an assessment of 0.076% of property value. With the average home value in the UK at £250,000 this would equate to an average additional precept of £190 per property on council tax bills – but assessed on landowners not tenants and progressively distributed so that lower value properties benefit from a locally based homeowners allowance and higher value properties pay proportionally more.
    So the question is – are property owners willing to pay an extra £200 or so per year both to meet their own care needs as they grow older and as insurance against having to sell their home for care costs in old age?

  • John Marriott 31st Mar '21 - 6:30pm

    @Peter Martin
    If it’s agreement you are looking for, the only agreement I would like to see on the horizon is that we agree to do something ASAP. Call me a dinosaur if you want; but I would like to pay a hypothecated progressive tax. The problem with just upping NICs is that the money generated could be syphoned off elsewhere. As for using property or land, as Mr Bourke continues to favour, I know that it doesn’t move; but, again, any money raised can go anywhere. Surely most people understand what taking out an insurance policy means. Sorry if I, a mere mortal, am incapable of appreciating some of your points. It must be terribly frustrating for you to have to deal with people like me, at least when you choose to.

    As for working longer you might have a point; but not one I could support. If you remember what I wrote earlier, if you want to shorten the length of time a pension might last, and therefore cut the need for care provision, as far as teaching is concerned, and certainly jobs that require physical rather than mental resilience, just raise the retirement age.

  • Joseph Gerald Bourke 31st Mar '21 - 7:11pm

    Andrew Dilnot was speaking at a conference recently https://www.politicmag.net/politics-news/experts-call-for-end-to-social-care-crisis-after-25-years-of-dithering-uk-news-reports-30086-2020/
    Simon Bottery, a senior fellow at the Kings fund commented:
    “There are many long-term problems with adult social care – but the most fundamental ones are how we decide who gets social care and how should it be funded.
    All four approaches here use money raised from the population – whether through tax or social insurance – to fund social care. This is called “pooling risk” and is how the NHS works. However, lots of people with real need miss out because they have too much savings or property to have their care paid for. So the most fundamental reform required is to provide more public funding to support more people who need social care.
    We could certainly make the current system more generous by raising the current savings limit. But people who didn’t qualify could face huge bills. The “cap” model tries to fix this, but could result in a complex system. An apparently simpler system is the “free personal care” system in Scotland. Yet there is critical detail about what counts as personal care and it is likely to be the most expensive of the options. One possible advantage of social insurance is that the money comes from a fund. However, it would be complex and take years to build up, so it would need to be supplemented in the short term.
    The solution overall?
    First, we need to accept that people who can afford it will have to help fund the costs of care.Then we should design a “mix and match” approach, which takes elements of some of the different systems and welds into one. It would inevitably involve compromise and trade-offs. But it is achievable.
    The Kings fund recently published a position on funding of social care https://www.kingsfund.org.uk/projects/positions/adult-social-care-funding-and-eligibility
    “In the past 20 years there have been numerous failed attempts to find a way forward, including 12 White Papers, Green Papers and other consultations about social care in England as well as 5 independent reviews and commissions. Successive governments have put off fundamental reform of the system, opting instead for short-term measures. The current government has promised to bring forward plans for reform but has not yet done so. By comparison, some other countries have managed to successfully implement funding reform. For example, Japan and Germany have introduced compulsory insurance for social care to complement their systems of health insurance.”

  • Joseph Gerald Bourke 31st Mar '21 - 9:07pm

    Peter Martin,

    MMT to be useful has to describe how specific policies would be different as a result of applying the principles enunciated. Warren Mosler in his bid for a senate seat seat in 2010 set forward three proposals for restoring American prosperity.
    The first was a “full payroll tax holiday” whereby the U.S. Treasury stops taking some $20 billion EACH WEEK from people working for a living and instead, makes all FICA payments for both employees and employers.
    The second proposal was for the federal government to distribute $500 per capita of revenue sharing to the state governments, with no strings attached, to tide them over and help them sustain their essential services.
    The third proposal called for a restoration of American prosperity through a federally-funded $8/hr. job for anyone willing and able to work.
    By the end of Obama’s second term, the number of persons with jobs, real median household income, stock market, and real household net worth were all at record levels, while the unemployment rate was well below historical average https://www.factcheck.org/2017/09/obamas-final-numbers/
    Even under Trump, US unemployment fell to 3.5% in 2019. You have to ask yourself how did this happen? Not just in the USA, but in the UK and other countries too.
    The MMT argument is a rather simplistic one that the government can create as much money as it needs to pay any bills subject to inflation. That has always been the case since the days of Roman emperors or Spanish ships bringing back hoards of gold from the new world.
    The issues for most developed countries today are demographic and environmental ones; whether it is Europe, Japan or China and revolve around how to produce the resources to meet the needs of an aging population with significant money claims on the productive output of a shrinking workforce and overburdened natural environment. Most probably, part of the answer will be higher inflation to reduce the value of those money claims; whether they be in the form of state pensions, private pensions, savings or other such claims on future output.

  • Peter Martin 1st Apr '21 - 8:37am

    @ Joe,

    MMT has already proved its worth. It is relevant to a consideration of all arguments, such as in this OP, about what we can and cannot afford. It is now widely accepted that the economic austerity of the post 2010 period was counterproductive. The mainstream view was that spending had to be cut and taxes had to rise to reduce the Govt’s deficit,

    MMT economists were saying this wouldn’t work because when Govt cuts its spending it cuts its income too. Increased taxes slow down the economy and also reduces the tax yield. In other words, the mainstream were either genuinely mistaking a counter inflation policy for a deficit reduction policy or they were being dishonest in their intent. I’d say it was a lot of both.

    At the same time though the Govt/BoE were busy slashing interest rates which did have the effect of speeding up the economy – temporarily. Another way to look at it is that lower rates were simply transferring the borrowing requirement from Govt to the private sector.

    So MMT can be seen as a lens through which to view and understand what is really going on in the economy. It’s a very effective BS detector for when mainstream economists and politicians try to pull the wool over our eyes.

  • Joseph Gerald Bourke 1st Apr '21 - 10:29am

    Peter Martin,

    you will recognise this quote “Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again.”
    Government budgets plan for spending first (based on the desired size of state provision as much as anything else) and only then considers the mix of financing of that spending between taxes and borrowing. Both the USA and the UK planned for lower deficits than occurred. This is the point about deficits – they are what they are and unemployment fell to historically low levels immediately prior to the pandemic regardless of planned deficits.
    The issue now is how to restore public service provision to adequate levels. It is not a question of balancing budgets, but rather maintaining a balance between the level of public spending and the level of funds extracted from the economy in the form of taxes with a view to the impact of deficits on inflation.
    This pandemic is an external shock that we expect to bounce back from quite quickly on the back of emergency relief and stimulus in the form of an investment super-allowance over the next couple of years.
    To meet public service needs going forward requires not only full employment, but enhancing the productivity of a proportionally smaller workforce. Developing a productive economy requires investment in skills development, infrastructure and technology and it is the investment in the capital stock that generates financial savings not deficits per se.
    Deficit spending will be required for many years, but that is almost exclusively required to finance increased investment spending at an estimated average of 4% of GDP. That is the level equivalent to a 2% inflation rate and 2% real growth. Persistent deficits above that level start to accelerate inflation and undermine confidence, when the economy is operating near to its capacity of capital stock and labour resources.
    To address public service reform then requires increased levels of taxation as seen in the Scandinavian countries. That brings us back to John Marriott’s starting point of “ many people in this country expect Scandinavian levels of services from North American levels of taxation”; and when will the crisis in social care be resolved? – Only when we all agree to pay for it! The issue is not that is doesn’t require additional taxation, but how that taxation will be equitably distributed.

  • Peter Martin 1st Apr '21 - 12:19pm

    @ Joe,

    I’m not quite sure what your point is. Yes there is a potential inflation risk after the recovery, and IF this occurs we’ll need to put up taxes to cool things down a little. But it might not happen. We’ll need to wait and see. Yes we need to ensure that our young people are properly educated and trained. I’d add that this should not mean they have to pay for it all themselves and end up with large amounts of personal debt.

    The Scandinavian countries need higher levels of tax than they would otherwise need because they have a mercantilistic outlook. This means they deliberately export capital to keep their current account in surplus and their currency lower than it would otherwise be. The influx of foreign money then needs to be taxed away to depress domestic demand and prevent inflation.

    This is immediately obvious from MMT theory but not something you’ll get from the mainstream.

  • Joseph Bourke 1st Apr '21 - 2:45pm

    Peter Martin,

    You can have a high tax or low tax economy and have full employment and economic growth either way. The Asian tiger economies are generally low tax economies and have relatively scant social security provision relying heavily on private savings and family provision. The Nordic and Northern European countries have higher tax levels because their societies choose to have a high level of public service provision.
    All international trade has to balance. If you import more goods and services than you export than you have to sell capital assets to make-up the difference, Those assets may be property, businesses, corporate stocks and bonds or government bonds. The reason exporters build up large reserves of foreign treasuries in excess of their liquidity requirements is partly associated with the 40 year bull market in bonds. As interest rates decline the market value of bonds held increases in value without foreign central banks doing anything.
    The problem with continually selling assets to pay for imports is the income from those assets – rents, business profits, dividends and interest goes overseas, exacerbating current account deficits further over time until there is a rebalancing through devaluation. You need to have exports to pay for imports and you need an industrial strategy to promote export growth.
    The idea that Chinese workers will keep working for peanuts and make all the goods and services we need in exchange for a piece of paper promising to pay the bearer another piece of paper is not an industrial strategy.
    There are around 27m households in this country, circa 40m working age adults (from a population of 68m) and a historically high 75% employment rate. Economic growth since the financial crisis has been lower than expected due to stagnant productivity growth https://www.icaew.com/insights/viewpoints-on-the-news/2020/aug-2020/solving-the-uks-productivity-puzzle. Investment is required to change that.
    The current baseline budget for adult social care is £20.4 billion with another £7 billion needed to cover demographic changes by 2023-24. That equates to a £1000 per household per year in total. For those unfortunate enough to be among the 1 in 10 that need very high levels of care in their final years they will face costs well in excess of £100,000 per household. The answers should be obvious.

  • Peter Martin 1st Apr '21 - 6:54pm

    “The Nordic and Northern European countries have higher tax levels because their societies choose to have a high level of public service provision.”

    This is the conventional and somewhat superficial view.

    But we can see from the sectoral balance equation that there is more to it than this.

    (G-T) = (S-I) + (M-X)

    The UK imports more than it exports. So M-X is positive. The bigger the trade gap the more government spending can be in excess of revenue for any given S-I. On the other hand for Denmark, which holds down its currency level, M-X is negative. Therefore for the same S-I, and G, the level of taxation has to be higher.

    Another, and non mathematical, way to look at this is that the Danes sell us bacon at a cheaper price than it would be if they allowed their currency to freely float. They are effectively subsidising the price of their bacon to UK consumers. That subsidy comes from Danes who have to pay higher taxes than they otherwise would.

    There’s always a cost to manipulating your currency downwards. There’s a general understanding of this in the UK. It wouldn’t do any party any good to advocate forcing down the pound. However, the Danes and Germans have a different mindset.

  • Joseph Bourke 1st Apr '21 - 7:52pm

    Peter Martin,

    a UK government cannot force down the pound. The macroeconomic policy trilemma (also called the impossible trinity)says a country must choose between free capital mobility, exchange-rate management and an independent monetary policy. Only two of the three are possible. A country that wishes to fix the value of its currency and also have an interest-rate policy that is free from outside influence cannot allow capital to flow freely across its borders. That is China’s trilemma. If China wants to liberalise its capital account as a stepping stone to a modern financial system, it will have to live with a volatile yuan.
    If the exchange rate is fixed but the country is open to cross-border capital flows, it cannot have an independent monetary policy. That was Britain’s trilemma in the ERM. And if a country chooses free capital mobility and wants monetary autonomy, it has to allow its currency to float. That is the two-from-three combination that most modern economies choose.
    The following is from Wynne Godley on sectoral balances http://www.levyinstitute.org/pubs/sa_nov_07.pdf:

    “Although the three balances must always sum to exactly zero, no single balance is more a residual than either of the other two. Each balance has a life of its own, and it is the level of real output that, with minor qualifications, brings about their equivalence. Underlying the main conclusions of our reports is an econometric model in which exports, imports, taxes, and private expenditure are determined as functions of such things as world trade, relative prices, tax rates, and flows of net lending to the private sector. However, neither the knowledge that this is the case nor the perusal of any list of econometric equations will, on its own, impart any intuition as to why output moved as it did over any set period.”
    As for Denmark, they are likely happy with the price of their bacon, as they top the rankings as the country with the best quality of life in the world https://www.lonelyplanet.com/articles/denmark-country-best-quality-life-world

  • Joseph Bourke 1st Apr '21 - 8:51pm

    This is from a 2017 Guardian article on adult social care in the Nordic countries
    “It has been a fundamental right in Nordic countries for decades: older people facing their twilight years in Denmark, Finland, Iceland, Norway and Sweden know that both their health and social care will be completely financed by the state.”
    “…the pressing issue today, because of increasing demand for services is “whether to provide existing formal services to those with more severe needs, instead of providing more limited help to the many”.

    Caroline Abrahams, charity director of Age UK, says the UK experience of rising thresholds for care highlight the importance of helping those who provide informal support… there’s a strong tradition of informal care in the Nordic states, even when statutory care is available.

    “In the UK, families play a huge part in care. It is important that once they start helping they don’t get taken for granted and get the right support.”

  • Peter Martin 1st Apr '21 - 9:44pm

    Joe,

    So you’re saying that the UK could be like Denmark economically, leaving aside the question of EU? If they can hold down their krone to 80% of its free market value, there is no reason why we can’t the same with the pound. Then, we could somehow afford to fund social care in the same way as they do?

    This sounds like a great idea for everyone! We all should have a currency which is artificially depressed. We all export more than we import. We all keep the neoliberals happy because the external surplus inevitably will translate, according to the arithmetic of the sectoral balances, into at least a much reduced govt deficit and possibly a real surplus there too!

    Yes, you’re right about the capital flows. We’d all have to ensure that we’re shipping out unwanted capital faster than it is coming to stop our currencies appreciating! We’d all have to do that so we can all run an export surplus!

    And some people think it’s us MMTers who are the crazies!

    There is actually no reason why we can’t afford the same things Denmark does. In fact it should be easier for us because we don’t have their hang ups about subsidising our exports which would be a real additional and unnecessary cost. But whereas the Danes have hang ups about having to run an export surplus we have a hang up on the question of budget deficits. We’re trying to achieve the impossible of a balanced govt budget, a high pound and a deficit in our external account.

    The Danish approach does have the advantage, even though it’s far from optimal, that what they are trying to achieve isn’t impossible for one single country. It’s just not possible for everyone.

  • Peter Martin,

    the Danish Krone is pegged to the Euro and as such operates as if they were a member of the EMU. As a consequence, the central bank does not control monetary policy but must always adjust its interest rates to ensure a stable exchange rate, just as the UK did in the ERM. Consequently they cannot at the same time conduct monetary policy to stabilize e.g. domestic inflation or unemployment rates. While unemployment is typically low, prices in Copenhagen are among the highest in the world. So pegging to the Euro does not lower the cost of Danish goods. This is fundamentally different from the situation in Denmark’s neighbouring countries like Norway, Sweden or the UK in which the central banks have a central stabilizing role. Denmark is presently the only OECD member country maintaining an independent currency with a fixed exchange rate.
    Denmark is a highly productive economy and self-sufficient in energy producing oil, natural gas, wind and bio energy. In 2017, the largest trade surpluses were recorded with the US, the UK, Norway, France and Russia, while the biggest trade deficits were recorded with Germany, the Netherlands, China and Sweden. Denmark’s high net investment position means income from investment abroad contributes as much as the trade in goods to the current account surplus.
    Government net debt was close to zero at the end of 2017, amounting to 1.3% of GDP, the government sector having a fair amount of financial assets as well as liabilities, government gross debt amounted to 36.1% of GDP at the same date.
    The Danish tax-to-GDP-ratio of 46% is the second-highest among all OECD countries. The OECD average was 34.2%. In 2017, total government expenditure amounted to 50.9% of GDP. The state employs around 30% of the workforce compared with about 19% in the UK. It is the 50% of GDP spending (compared to 40% in the UK) that allows Denmark to provide the level of public services it does. It has little to do with cyclical budget deficits or surpluses
    It is typical of Nordic tradition that the federal government assumes responsibility for the welfare of the elderly. Current policy is aimed at providing conditions that allow elderly to stay in their homes for as long as possible. The trend is bringing the care to the patient instead of expecting the patient to seek out care. When assistance or specialized care is needed, a network of nurses and physicians employed by the municipality visits the elderly in their homes or senior living units. If an elderly person reaches a point at which they cannot remain at home, they are offered one of several residential options in senior care.

  • Peter Martin 2nd Apr '21 - 6:12am

    “prices in Copenhagen are among the highest in the world”

    Yes. It doesn’t help that they have an unnecessarily high VAT rate of 25%.

    “So pegging to the Euro does not lower the cost of Danish goods”

    At the artificially low level their currency is currently at, it makes them more expensive for Danes and less expensive when they export. It makes their bacon more competitive in UK markets.

    If they allowed their currency to float they would benefit from cheaper imports which would lower prices in krone terms.

    Brits know this well enough. We measure our economic performance by the strength of the pound. If it rises we say we are doing well. If it falls then we look for some reason . Like Brexit! If we don’t agree with leaving the EU we say “Look, I told you so, the pound is now worth a lot less than before Brexit”. It is incomprehensible to Brits that we should have an artificially low pound. But we go wrong in not recognising that a floating pound almost certainly will mean we have to run a significant capital account surplus, and an equal current account deficit. That deficit will translate into a significant budget deficit too.

  • John Marriott 2nd Apr '21 - 9:10am

    Reading the latest Bourke/Martin economic joist I am reminded of the old Africa proverb, which goes something like; “When elephants fight it’s the grass that suffers”. You chaps really love displaying your knowledge. However, while you are arguing the toss about how good – or bad – the Danish tax system is, for which I suppose I am partly to blame with my favourite “Scandinavian levels of public services” quote, we still haven’t got any nearer coming up with a way of sorting out social care.

    The two learned gentlemen know my view, namely that we should ALL put our hands in our pockets, given that some pockets are bigger than others. Perhaps that’s too simplistic, and, in any case, I can’t produce any links, or even survey data, to justify my position. Perhaps I’m being too honest with people and that might have been where I went wrong in my limited political career. However, despite my being one of those blades of grass being trampled on, I still reckon I’m right, mad fool that I am!

  • Joseph Bourke 2nd Apr '21 - 12:01pm

    Peter Martin,

    Denmark is a modern high wage high value economy. Their comparative advantage is based on quality not price. They are among the top ten countries for GDP per capita. Danish prices are relatively high for Danes and for exports alike, but so too are wages. What you are claiming is factually wrong. It is the kind of made-up claim you might see in the Daily express or the Sun Newspaper. Denmark’s main trading partners are in the Eurozone. That is why the peg their currency to the Euro.
    Denmark is very dependent on its foreign trade. In 2017, the value of total exports of goods and services made up 55% of GDP, whereas the value of total imports amounted to 47% of GDP. Trade in goods made up slightly more than 60% of both exports and imports, and trade in services the remaining close to 40%. Machinery, chemicals and related products like medicine and agricultural products were the largest groups of export goods in 2017. Service exports were dominated by freight sea transport services from the Danish merchant navy.
    Most of Denmark’s most important trading partners are neighbouring countries. In 2017, the largest trade surpluses were recorded with the US, the UK, Norway, France and Russia, while the biggest trade deficits were recorded with Germany, the Netherlands, China and Sweden.
    Denmark, like many of their neighbours in Northern Europe have a much higher tax to GDP ratio than the UK. That is why they have higher levels of public services. It is as simple as that and no mystery that if you spend proportionally more on public services you need to collect more in taxes to sustain that spending.

  • Joseph Bourke 2nd Apr '21 - 12:31pm

    John Marriott,

    Liberals and Social Democrats have a strong legacy in the area of economic policy with the heritage of Keynes and Beveridge, former Chancellors from Lloyd George to Roy Jenkins and high profile economists like Vince Cable.
    Liberal Democratic economic philosophy is grounded in this heritage – Free trade and social justice. This is what the Nordic countries put into practice. Counties like Denmark advocate a liberal trade policy and maintain a highly successful system of public welfare provision. Income distribution is relatively equal.
    Anyone looking to solve a problem like adult social care will look at International comparisons. The counties that do it well are the Nordic counties, Germany and Japan. They provide the model for how to deliver an efficient and workable system. And yes. it means all put their hands in their pockets, and those with bigger pockets than others (or houses in this case) pull out more.
    The issue is building a political consensus. The Nuffield report concluded “The Government can learn important lessons from the Japanese social care system in achieving public buy-in, an easy to navigate system and a strong focus on prevention of loneliness and ill health.” The report authors argue that some features of the Japanese system offer important lessons for England:
    – Its key success, where England has repeatedly failed, has been to garner public support through a commitment to transparency, fairness and consistency. National criteria for eligibility mean that access to care is the same regardless of where a person lives.
    – Service users find the Japanese system easy to navigate. This is because a crucial part of the LTCI service includes having a ‘care manager’, responsible for supporting the individual to make a care plan, identifying suitable providers, coordinating between carers, the individual and the family, and overseeing the care plan in the long term.
    – At the heart of the Japanese system is a strong commitment to long-term prevention of loneliness and ill health, a stark contrast to England’s short-term approach, driven by budget constraints, which is focused increasingly only on those with highest needs.

  • John Marriott 2nd Apr '21 - 12:43pm

    I’d have a lot more time for the Japanese, if its perversely named Liberal Democrat government apologised for its guilt in WW2. As far as I know, no Japanese government since 1945 has come anywhere close to the kind of mea culpa that Germany has expressed.

  • Joseph Bourke 2nd Apr '21 - 5:12pm

    John Marriott,

    In 1853, Japan agreed to open up to foreign trade after a fleet of United States warships under Commodore Matthew Perry arrived in Kanagawa and trained their cannon on Edo castle. The Emperor of Japan led a resistance to the western incursions. In 1863, the British sent a naval squadron of 7 warships to Kagoshima to quell the resistance.
    Having been defeated in the Shimonoseki Straits and Kagoshima, the Emperor decided to make peace with Britain, and the British sent military advisors to train the Emperors Army, which began to use modern rifles and drill doctrines. In 1864, the Emperor’s factions and the Shogunate’s factions went to war with each other and with the Meiji restoration in 1868, the transformation of Japan from an isolated series of islands into a modernized global superpower began.
    Japan defeated the Chinese Empire in 1895 and the Russian Empire in 1905 colonising Taiwan and Korea and establishing treaty ports in China in the process. Japan’s ongoing industrialization and militarization ensured their growing dependence on oil and metal imports from the US. The US occupied the Philippines around the same time.
    After WW1, Japan was awarded Germany’s possessions in the Western pacific and joined the club of imperial powers vying for influence in Asia. In 1931, Japan invaded Manchuria and established the puppet state of ManChuko.
    In the summer of 1941, the West placed an oil and ore embargo on Japan in response to their occupation of airfields in French Indo-China. The Japanese decided to seize the oil fields in Indonesia—the Dutch East Indies. Since the Dutch colonial forces were relatively small and cut off from home and the British were preoccupied with the war in Europe and North Africa, the major obstacle was the U.S. Admiral Yamamoto gambled that after a strike on Pearl Harbor, the Americans would accept a peace on Japanese terms—essentially to give Japan a free hand in Asia. Instead it led to the destruction of Tokyo and many other cities including the atomic bombing of Hiroshima and Nagasaki and American domination of the Pacific to this day with HMS Queen Elizabeth heading out to the South China Sea as we speak.
    So when you say Japan has not apologised enough is that on the basis of ‘Victors Justice’ or could it be that Japan fell into the Thucydides trap i.e the apparent tendency towards war when an emerging power threatens to displace an existing great power as the international hegemon.

  • John Marriott 2nd Apr '21 - 6:14pm

    @Jo Bourke
    I really don’t need or want to receive a history lesson when I have Wikipedia. Lord Mountbatten of Burma also refused to deal with the Japanese post war for precisely the reason I have cited.

    As I wrote earlier, I would respect Japan far more if it fessed up, especially to the way it treated POWs, some of whose families will have nothing to do with them even to this day. I know that, in their eyes, soldiers do not surrender; but we have a higher, more honourable view of warfare.

  • Joseph Bourke 2nd Apr '21 - 6:41pm

    John Marriott,

    since you mention wikipedia this is a list of war apology statements issued by Japan from 1945 to date https://en.wikipedia.org/wiki/List_of_war_apology_statements_issued_by_Japan
    As you note the treatment of POW’s was a stain on Japan’s conduct of the war. Worse still was the rape of Nanking. But let’s not kid ourselves that we have a higher, more honourable view of warfare. Civilians were massacred on mass in WW2, the Korean War and again in Vietnam by all sides. That is the unavoidable misery of modern warfare. Japanese POW’s were pressed into colonial military service after the end of the war https://www.amazon.co.uk/Mountbattens-Samurai-Imperial-Southeast-1945-1948/dp/0957630573. Teenage German soldiers were used to clear mines after the war also http://www.revisionist.net/war-crimes.html
    Russia joined the Nazis to invade Poland in 1939 and only changed sides after they were themselves invaded. Italy’s actions in Yugoslavia and Greece were similarly brutal as were the campaigns in Ethiopia and the Spanish Civil War before Mussolini joined up with Hitler.
    President Obama visited the Hiroshima peace park. The first American president to do so. He didn’t apologise for the atomic bombing. No American president could or should. Both He and the Japanese premier visited the USS Arizona war memorial in Pearl Harbor in 2016. These are the kind of actions that build peace and reconciliation.
    As JFK once said “Mankind must put an end to war — or war will put an end to mankind.”
    This is what the post-war Japanese constitution endeavours to do. It’s not a bad example for others to follow.

  • John Marriott 2nd Apr '21 - 7:32pm

    @Jo Bourke
    What do I need that list for? Has Japan ever apologised for any of the atrocities its troops committed starting with Nanking in the 1930s? At a conservative estimate the two atomic bombs probably saved around a million military lives that a full scale invasion of the Japanese mainland might have caused.

    In 2019 the German President apologised to the Polish people for the 1939 invasion and all the grief it caused. I’ve never heard anything similar from any Japanese Head of State towards the families of those who suffered at Japanese hands, not any acknowledgement that Japan in all cases was the aggressor.

  • Joseph Bourke 2nd Apr '21 - 8:56pm

    John Marriott,

    the simple answer is yes. Generally, there is an apology every decade on the anniversary of the wars end.
    On the 50th anniversary in 1995, prime minister Tomiichi Murayama issued this statement:
    “During a certain period in the not too distant past, Japan, following a mistaken national policy, advanced along the road to war, only to ensnare the Japanese people in a fateful crisis, and, through its colonial rule and aggression, caused tremendous damage and suffering to the people of many countries, particularly to those of Asian nations. In the hope that no such mistake be made in the future, I regard, in a spirit of humility, these irrefutable facts of history, and express here once again my feelings of deep remorse and state my heartfelt apology. Allow me also to express my feelings of profound mourning for all victims, both at home and abroad, of that history.”
    On the 60th anniversary, Junichiro Koizumi said:
    “In the past, Japan, through its colonial rule and aggression, caused tremendous damage and suffering to the people of many countries, particularly to those of Asian nations. Sincerely facing these facts of history, I once again express my feelings of deep remorse and heartfelt apology, and also express the feelings of mourning for all victims, both at home and abroad, in the war. I am determined not to allow the lessons of that horrible war to erode, and to contribute to the peace and prosperity of the world without ever again waging a war.”
    This is a report of Shinzo Abe’s address to a joint session of Congress in 2015 where he stands by stands by apologies for Japan’s WWII abuses https://eu.usatoday.com/story/news/world/2015/04/29/japan-shinzo-abe-joint-session-of-congress-speech/26566135/
    When I was in Tokyo, I had a student who served in the Japanese Imperial Army. He had been a University student when he was conscripted in 1941 and sent to the border between China and Russia where temperatures regularly fell to -40 degrees and Russian troops were stationed in trenches. He was transferred back to Kyushu in the summer of 1945 to prepare for the American invasion and trained to dive under tanks with explosives strapped to his chest. So, yes, there would have been a high level of casualties, if there has been a full scale invasion of the Japanese mainland.

  • Peter Martin 3rd Apr '21 - 12:41am

    @ Joe,

    I think we all agree that we would like to see a more social economy. I would say more socialist economy. But how to get there and how to provide the money to do that? Trying to copy the Nordic countries is a non starter. Nowhere near enough voters are going to want to copy their mercantilism. They care much more about what their pounds will buy on their Spanish holiday than the price of British exports.

    And they are right to think like that. It clearly makes no sense to subsidise British exports through a lower than market rate pound and higher than necessary taxes. The social spending of the Nordic countries is in spite of their mercantilism and not because of it.

    So we should be aiming to abolish both mercantilism and neoliberalism. The Lib Dems don’t suffer from the former but they haven’t shaken off the latter with their “put a penny on income tax” and every new policy “has to be fully costed” mentality.

    Oh yes I forgot about the LDV! How could I possibly do that? The first problem there is that one we get beyond the obvious ie that it is a tax on land, no-one understands how it is going to work in detail and how it is supposed to provide the necessary funding. You’d be better with an overt soak-the-rich style socialist policy. The problem there, and I suspect with your LDV policy too, is that you can only take their money away once! It’s not a sustainable source of “revenue”.

    Not that we actually need revenue! If the Govt is getting too much, its likely a sign of an overheating economy. This is a reason for spending less rather than more! This is a tricky policy to explain to the voters too. But its worth giving it a go. If I can understand it, it can’t be too hard!

  • Peter Martin 3rd Apr '21 - 12:44am

    Sorry, it’s getting well past my bed time and I’m confusing my LDVs and LVTs! I do mean LVT which is, of course, Land Value Tax.

  • Joseph Bourke 3rd Apr '21 - 1:34am

    Peter Martin,

    Up to 1971 the UK had a fixed exchange rate against other currencies. A balance of payments deficit leads to an excess supply of £’s. To prevent the pound falling against other currencies when there was a run on the £, the UK authorities purchased the excess supply of £’s using gold and dollar reserves. This, of course could only last for a ‘short time’.The pounds being sold led to a reduction in the UK’s money supply {no sterilization } and a rise in interest rates. This helped to reduce aggregate demand and fall in imports. With a fixed exchange rate there is no control over the supply of money. Fiscal policy is effective in changing income/output.
    When floating rates were introduced monetary policy was effective in changing income/output. Any ‘strains’ within the economy were reflected in the value of the £. Changes in fiscal policy would be largely be offset by ‘opposite’ changes in consumption, investment and net exports. Fiscal policy is less effective when exchange rates are floating.
    The UK does not have the ability to lower the market rate of a freely floating pound while it maintains free capital mobility, and a monetary policy managed by an independent central bank that has a mandated inflation target.
    During lockdown quarters, the UK has actually started to run a trade surplus as demand for aviation and motor fuel, imported cars, overseas holidays etc has fallen off a cliff. While this is not a good or long-term situation, it does point the way to how the current account can be brought closer to a more balanced position – domestically produced renewable energy and energy efficiency programs, particularly home insulation and electric vehicles https://www.ons.gov.uk/economy/environmentalaccounts/articles/ukenergyhowmuchwhattypeandwherefrom/2016-08-15

  • Peter Martin 3rd Apr '21 - 7:59am

    “The UK does not have the ability to lower the market rate of a freely floating pound while it maintains free capital mobility,”

    Obviously, the Govt intervenes in the Forex then it’s not a freely floating pound. Norway, for example, doesn’t have free capital mobility. The purpose of its Sovereign Wealth Fund is to export its surplus oil money.

  • John Marriott 3rd Apr '21 - 8:06am

    @Jo Bourke
    Well, you win some and you lose some. But why do so many people still not believe that the Japanese have ever properly apologised? Perhaps the word “sorry” has no real equivalent in Japanese. That’s a rhetorical question, by the way, to save your having to give me another history lesson!

  • Peter Martin 3rd Apr '21 - 8:09am

    cont/

    The UK could do this too. If it wanted too. And this is what those who think we should be more like the mercantalists are advocating. I’m saying we shouldn’t not that we can’t. But neither should we expect the Govt’s budget to be balanced or even close to it. Neither should we make up silly fiscal rules and try to stick to them.

    This damages our economy. Particularly our public sector. We end up spending less on social programs than we should because we think we can’t afford it.

  • John Marriott 3rd Apr '21 - 8:10am

    PS I meant to add, after all the verbiage and digressions, for which I apologise, are we any nearer a solution as to HOW we are going to pay for adult social care?

  • Joseph Bourke 3rd Apr '21 - 12:35pm

    John Marriott,

    most of us will have recently received a council tax bill for 2020-21. I and my family live in a Band E terraced home in the London Borough of Hounslow. The Breakdown of the bill is as follows:
    LB Hounslow £1,476.91
    LB Hounslow Adult Social Care £159.12
    Greater London Authority £444.47
    Total £2080.50 (payable in 10 monthly instalments of £208.

    The adult social care precept could be segregated as a hypothecated fund together with any other element of the council tax billing that pertain to adult social (a significant proportion). This adult social care element would be billed separately to homeowners and landlords i.e. property owners not tenants.
    Two additional higher rate bands could be added for council tax to make the current system a little more progressive. This was actually proposed by George Osborne (supported by LibDems) but quashed by David Cameron who felt it looked too much like Vince Cable’s mansion tax.
    We have had 3 Conservative Prime Ministers now that have stifled progress with dealing with adult social care. Cameron, Teresa May in dropping the legislation agreed during the coalition and Boris Johnson with his oven ready plan that he has now admitted does not exist.
    As LibDems, we have already agreed proposals during the coalition for capping of care costs. Let’s take that legislation together with hypothecation of council tax funding for social care (to be billed to property owners in future) and put forward a proposed green paper for cross-party consultation.
    Local authorities can determine the charges they levy (and reliefs) but lifetime care costs would be subject to the caps agreed under the coalition.
    PS: I read a lot of Japanese history when I was in Japan having got fed up with incessant game shows on Japanese TV.

  • Peter Martin,

    World War II’s devastation scared Allied nations into desiring global cooperation. They created the World Bank, the United Nations, and the World Trade Organization. They saw mercantilism as dangerous and globalization as its salvation.
    The Soviet Union and China continued to promote a form of mercantilism. Most of their businesses were state-owned. Over time, they sold many state-owned companies to private owners. This shift made those countries even more mercantilist with the creation of state sponsored monopolies and oligopolies.
    Neomercantilism fits in well with communist governments. They relied on a centrally planned command economy. It allowed them to regulate foreign trade. They also controlled their balance of payments and foreign reserves. Their leaders selected which industries to promote. They engaged in currency wars to give their exports lower pricing power https://www.newsweek.com/samuelson-chinas-wrong-turn-trade-101673.
    The Great Recession aggravated a tendency toward mercantilism in the United States Trump advocated expansionary fiscal policies, such as tax cuts, to help large businesses. He argued for bilateral trade agreements between two countries, rather than multilateral agreements between many countries. These are all signs of economic nationalism and mercantilism https://www.weforum.org/agenda/2019/01/confronting-neo-mercantilism-regulation-critical-global-trade-tariff/
    Mercantilism opposes immigration on the basis it takes jobs away from domestic workers.Trump’s immigration policies followed this mindset.
    In 2018, Trump’s mercantilist mindset contributed to the launch of a trade war against China. Trump imposed tariffs on Chinese imports, and China responded with its own policies that hurt U.S. exports. Despite announcing a “Phase 1” deal to end the trade war in 2020, Trump left office without ending the trade war.In fact, with roughly a week left as president, the Trump administration imposed a new round of trade restrictions covering tomato and cotton products from China, citing concerns over slave labor in China.
    The European social democracies, being advocates of free trade and democracy, are the complete opposite of the neo-mercantilist policies of authoritarian states.
    The UK should remain an open economy and invest in renewable energy, research and vocational skills development to develop its comparative advantage and trade in world markets.

  • Joseph Bourke 3rd Apr '21 - 3:01pm

    John Marriott,

    your digression into the The Pacific theater of WW2 is not wholly irrelevant to current affairs. Looking at the events that led up to the Japanese attack on Pearl Harbor may well contain some useful lessons on what not to do in confronting growing Chinese power in Asia for both the US and the UK.
    World War II really began when the Japanese army seized Manchuria in 1931. But that was not the starting point of Japanese aggression. Japan started in business as a land-grabbing power in a small way. Moving cautiously, while its modern navy and army were still in the infant stage. Japan took over several strategically placed groups of small islands not far from its homeland without having to fight for them.
    After WW1, America set out to control Japan. First by limiting them in the Treaty of Versailles and; secondly by ending Japan’s relations with Britain since the US had been suspicious of this alliance all along.
    Following Japan’s invasion of China, tensions escalated between the US and Japan. In 1941, Cordell Hull had to make a decision between increasing military support to China or creating more sanctions on Japan. Hull chose to create sanctions that threatened Japan’s oil supply and would force the Japanese military (who controlled the government) to retreat. While this does not absolve Japan in any way for responsibility for a war of aggression, it does emphasise the need to maintain global cooperation with rising powers like China and not rely too much on sanctions or threats as a means of containment.
    Westphalian sovereignty is enshrined in the United States charter and is often cited by Russia and China as the fundamental basis of international law. However, a former Nato secretary general has argued that “humanity and democracy [were] two principles essentially irrelevant to the original Westphalian order” and levied a criticism that “the Westphalian system had its limits. For one, the principle of sovereignty it relied on also produced the basis for rivalry, not community of states; exclusion, not integration.

  • Peter Martin 3rd Apr '21 - 4:14pm

    @ Joe,

    It’s not just the Communist or ex Communist countries which are mercantilist. The Northern European countries are largely of this mindset too.

    You want to condemn the mercantilists but at the same time you are advocating we should be more like them! Make up your mind!

    There is plenty on the net about this topic. Such as:

    https://www.scoop.co.nz/stories/HL2004/S00061/northern-european-mercantilism-and-the-covid19-emergency.htm

    I’d add countries like Singapore and Switzerland too. Any large net exporter can only maintain this position if it exports capital, and the central bank actively intervenes in the market to lower its exchange rate.

    This is from the website of the Riksbank: “The gold and foreign currency reserve makes up more than half of the Riksbank’s total assets. This allows the Riksbank to offer emergency liquidity assistance in foreign currency and to influence the krona exchange rate by buying and selling currency ” My emphasis.

    There looks to be an awful lot of FX on the Riksbank’s balance sheet. They are more into buying FX than selling it. This looks to be inconsistent with having a supposed free floating exchange rate.

    https://www.riksbank.se/en-gb/statistics/riksbanks-balance-sheet/

  • John Marriott 3rd Apr '21 - 4:58pm

    @Jo Bourke
    “Westphalian Sovereignty”? Wow, are we going back to the Thirty Years’ War now? As for my “digression into the Pacific Theatre of WW2” I assume that you must be referring to my remark of yesterday, which started off this tangential mini debate. But back to what this thread is SUPPOSED to be about.

    I asked you a question and, in fairness, you did provide an answer at 12.35pm. First of all, given where you live and judging by your online CV, I reckon that you and your family get a pretty good deal out of what you pay in Council Tax. Given your qualifications and earning potential, I would think that a little over two grand a year would be like a flea bite to you, and many other ‘professionals’ up and down the country. Mind you, you could argue that you don’t get much for your money from local government. Perhaps it’s a case of chicken and egg. That’s where for me Local Income Tax might provide some of the answer.

    However, my main argument with your proposal regarding a charge for adult social care on your Council Tax bill is that it should not be based on households but on individuals. It should be a contract between the state and each of its citizens and it should kick in when someone reaches a certain age and be based on an ability to pay. This is something that the Council Tax is not, nor is your favourite Land Value Tax. In fairness to you and your family, just because you live in a property in London, which, judging from its Band Level, is probably worth a great deal more than most properties where I live in Lincolnshire, that clearly, unless you bought it recently, doesn’t make you a millionaire.

  • Joseph Bourke 3rd Apr '21 - 5:36pm

    Peter Martin,

    I advocate that we should look to the Nordic model of public service provision to address issues such as adult social care, childcare and welfare provision. To emulate the Nordic level of public services requires a significantly higher level of taxation of national income than current levels in the UK – going from around 35% to perhaps 40%.
    You are insisting that Scandinavian countries need higher levels of tax than they would otherwise need because they have a mercantilistic outlook. However, it is France that has the highest level of tax to GDP among the OECD countries and they, like the UK, consistently run a current account deficit.
    A central bank, like the Riksbank, can intervene in foreign exchange markets to prevent short-term currency appreciation by selling its own currency in exchange for foreign currency-denominated assets and building up its foreign reserves.Because the central bank releases more of its currency into circulation, the money supply expands.
    Money spent buying foreign assets initially goes to other countries, but it soon finds its way back into the domestic economy as payment for exports. The expansion of the money supply can cause inflation, which can erode a nation’s export competitiveness just as much as currency appreciation would unless the central bank reverses policy.

    There is always going to be a mix of counties with current account surpluses and deficits. A healthy position is where individual counties go in and out of surplus overtime and where developed counties export their surplus capital to less developed countries to enable investment and development of the capital stock in those counties.
    The UK’s persistent trade deficit is structural not cyclical and has to be financed by selling property and financial assets There is a persistent productivity gap measured by output per hour or output per person employed between the UK and many of our major trade competitors. The causes have been attributed to:
    – Low levels of research and development (below 2 percent of GDP in the UK)
    – Low level of capital investment spending which limits the growth of a country’s productive capacity
    – Relatively weak productivity – which leads to higher unit costs and therefore a decline in relative cost competitiveness
    – Emergence of scaled competition from producers in other countries – for example the shift of manufacturing in industries such as textiles and steel to lower-cost countries and regions.

  • John Marriott,

    local income tax is more of an argument for changing or augmenting the basis of local authority funding from council tax, business rates and government grants.
    The problem with this for adult social care is, it shifts the burden of paying for the services from those receiving it to the working population, many of whom have little or no housing wealth in their younger years and will struggle to get any with increasing tax burdens. If it is going to paid by those earning incomes, you might as well just increase income tax or national insurance (if you exclude pension income) rather than introducing a new local income tax.
    In Germany, the federal government takes responsibility for funding social care by imposing a relatively small tax on all workers (currently 2.5% of salary up to a salary ceiling), with employers meeting half of the cost on behalf of their staff and retired people still having to pay the full amount. Germany does not have the kind of housing price problem the UK does.
    As it is based on collective social insurance, a key principle underpinning the German system is that there is no means-testing, with access to funds being determined almost exclusively on the basis of assessed medical needs. People who are allowed to draw on the system can either claim cash benefits up to a certain level which are used to reimburse informal carers (who mainly tend to be family members), or they can receive in-kind assistance from paid professional carers who are commissioned by the social insurance fund itself. The funding is directly hypothecated; all of the money raised by the insurance levy gets transferred into legally distinct insurance funds, which can’t be raided by the government for anything else.
    These funds are only intended to cover basic needs; poorer people are expected to rely on other social benefits to top up the money which it provides, while wealthier ones have to either rely on their own funds or take out private insurance (the private insurance market having expanded to offer social care products because the social insurance system makes the risks of doing so easily assessable). It is also expected the that rising cost pressures will see the levy rise from its current level of 2.5% of salary to 4.5%–6.5% over the coming decades http://www.if.org.uk/2018/03/27/englands-social-care-crisis-germany-answer/

  • Peter Martin 3rd Apr '21 - 7:53pm

    “However, it is France that has the highest level of tax to GDP among the OECD countries…”

    OK but it is only 0.2% higher than Denmark (46.2% and 46%) and yet the French spend 3% more on social welfare than the Danes. I don’t suppose many people know that!

    https://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_to_GDP_ratio

    https://en.wikipedia.org/wiki/List_of_countries_by_social_welfare_spending

    There are other factors too. Such as that French military spending is far higher which needs to be taken into account. But it all comes back to the question of what mercantilism actually means. I don’t know where you get the idea that it involves a hostility to immigration. That has nothing to do with it. It is running a persistent and large trade surplus just for the sake of it. Economics 101 tells us that exports are a real cost to any economy. They consume resources which could be used for something else. The reason to export is to be able to import. Period. As the Americans would say.

    So if any country is exporting more than they importing, year in year out, they aren’t doing themselves any favours.

  • Joseph Bourke 3rd Apr '21 - 9:58pm

    Oil producers like Norway will generally run a trade surplus and invest that surplus to build their net International investment position.
    A high skill productive developed economy trading with a lower cost developing labour economy would expect to trade high value goods and services for high volumes of commodities and low cost manufactures. In years when they run a surplus they will build their net international investment position. When they run deficits the net investment position will decline overtime subject to any gains/losses arising on overseas investments or net foreign liabilities.
    Trade deficits have their roots in the balance between a nation’s savings and investment rates. Economies need to beware of wealth extraction when running a persistent large trade deficit. This happens, in particular, if an economy allows trade deficits to create a zero-sum game in labor.
    In a positive relationship, as companies find more products overseas, the domestic labor market will replace those jobs with high-skill, high-paying positions. Previously unemployed workers overseas will get jobs while domestic workers move into better ones than they had before. If this positive-sum relationship breaks down, however, the domestic labor market can struggle to replace lost jobs. If that happens, the domestic labor market will compete with the low-cost labor market overseas to bring those jobs back.
    Wages and job quality will fall. Domestic workers will find themselves in a race to the bottom with workers in developing nations. At its worst, this can create a negative-sum relationship. Companies can now shop among economies that seek advantage by undercutting each other and reducing wages and consumer purchasing power.
    This is not an inevitable result, but it is a danger, and one that economies must watch out for.
    International trade when done right, can let trading partners specialize in their strengths and create wealth for all consumers. Gone wrong, they can harm labor markets and create problems of savings and investment.
    When you look at the UK labour market, it is hard not to conclude that the hollowing out of the manufacturing base has resulted in the replacement of high-skill, high-paying positions with lower value service jobs.

  • Peter Martin 4th Apr '21 - 7:34am

    “When you look at the UK labour market, it is hard not to conclude that the hollowing out of the manufacturing base has resulted in the replacement of high-skill, high-paying positions with lower value service jobs.”

    Well, yes.The change has resulted in the need for more social spending rather than less. Then there is the question of Brexit. Those neoliberals who created the economic and social conditions which led to the 2008 GFC and the following period of austerity have had to sit back and watch as the political right rode a wave of popular discontent to achieve their otherwise unattainable aims.

    Brexit is the unintended creation of the economic mainstream which LibDems have bought into. It’s your own fault. Not that there was anything wrong with a decision to float the pound or even run continued trade deficits. Where you went wrong was failing to see that those external deficits would inevitably translate into government budget deficits. Then you compounded the error by trying to rectify what you thought was a problem with the application of economic austerity, which is a counter inflation policy. Not a debt reduction policy. All you did was transfer the debt to the private sector by slashing interest rates.

    “Oil producers like Norway will generally run a trade surplus…..”

    We can live with this providing we manage it together and properly. This doesn’t mean we let them spend it on anything they like. Like billions on our Premier League football clubs for starters!

    But it’s not just the oil producers. The country with the biggest trade surplus is Germany. Something now in excess of $300 billion pa.

    https://www.handelsblatt.com/english/finance/promoting-trade-germany-first-the-return-of-mercantilism/23570190.html

  • John Marriott 4th Apr '21 - 10:09am

    So the latest Bourke/Martin blockbuster continues. As I wrote earlier; “When elephants fight, it’s the grass that suffers”. Well, having tried to join in on a couple of occasions, where I thought I might have had something to offer and been largely overwhelmed by an avalanche of statistics and sorted historical facts, I now feel a bit like a tiny bit tick bird pecking at their hide! What a whirlwind whistle-stop tour of accumulated knowledge it has been. Denmark, Japan, Norway, China, France, Germany and the list goes on.. and all apparently to prove some point!

    I would love to dip my toe into the water again; but I hesitate because, when it comes to a mastery of Wikipedia or working experience of foreign lands, my limited experience of working in Canada and what was then West Germany makes me clearly not worthy.

    However, before retreating to lick my wounds, I would just like to make a couple of FINAL comments:

    1 I’m not surprised that Norway is in a healthy financial state, considering its small population and its ownership of all those oil reserves.
    2 I’m not surprised that Germany is such a massive exporter, given that it has managed to retain much of its manufacturing base, thanks initially to US aid after WW2 and an influx of skilled labour and professionals from the east and Mediterranean. You can add to that a recognition of the importance of vocational and technical education.

    Oh, by the way, how ARE we going to pay for adult social care other than hiking up tge Council Tax?

  • Peter Martin 4th Apr '21 - 12:26pm

    @ JM

    I’ve already suggested end of life taxes aka death duties but the first step is to spend without any extra taxes. Then, if and when we need to, we apply the taxes to curb the inflation problem.

    It’s like driving your car. You press the accerator first and dont put on the brakes until it is necessary. Joe wants to keep the handbrake on all the time. Just in case.

    This is the difference between our two approaches. You choose.

  • Joseph Bourke 4th Apr '21 - 1:22pm

    John Marriott,

    how ARE we going to pay for adult social care other than hiking up the Council Tax? National insurance (like Germany) or deferred charges against housing equity are the only other realistic options. The government of the day will have to decide based on the electoral politics.

    Peter Martin,
    “to spend without any extra taxes. ” We already do. It is called borrowing for investment and typically equates to nominal GDP growth.

  • Joseph Bourke 4th Apr '21 - 3:00pm

    Peter Martin,

    the trade surpluses generated by Germany are of a magnitude to be a concern for the balance of International trade. As per your link to the article discussing Germany, economic managers put forward the argument that:
    “In present-day Germany, current-account surpluses are justified by demographic developments, rather than a lack of money. With an aging population, as in Germany, trade surpluses and current account surpluses, and the associated buildup of foreign assets, are economically rational and necessary. Stocking up reserves will allow Germany to “consume” these foreign assets at a later date, when the labor force shrinks.”
    That is German politicians expect the surpluses to fade away and trade deficits ensue as the population ages, At that point they will be maintaining standards of living by coupon clipping from their overseas investments and drawing down savings.
    That is not an unreasonable strategy from the German perspective and something Japan has been begun doing as its population ages.
    Germany maintains its trade surplus through lower unit wage costs as a consequence of high levels of automation and collective bargaining with unions to maintain high levels of employment . Without this the increasing use of automation would displace many more manufacturing jobs.
    There is an argument that the surpluses Germany generates can be detrimental to other countries manufacturing base and Skidelsky puts forward an argument for compensated free trade on the basis that “the nation-state, democracy, and globalisation are mutually irreconcilable: we can have any two, but not all three simultaneously” https://think.ing.com/opinions/robert-skidelsky-the-case-for-compensated-free-trade
    “A current-account deficit means that a country is importing more than it is exporting. And those excess imports can lead to a net loss of “good” jobs. Six million manufacturing jobs disappeared in the first decades of the 2000s. The Rust Belt made Trump president. “It’s time to rebuild Michigan, and we are not letting them take your jobs out of Michigan any more,” he told cheering crowds in Detroit in 2016.”

  • Peter Hirst 4th Apr '21 - 3:13pm

    What we need is a clear, comprehensive interlocking needs related system that deals with all out of hospital care and support. Insurance, caps on private expenditure and some means testing should all be used. As a society we can then consider our view on what is fair, that savings for care are incentivised and allowing everyone to live in dignity.

  • John Marriott 4th Apr '21 - 3:26pm

    @Jo Bourke @Peter Martin
    All that debate and all those statistics and all we get at the end is “put it on the Council Tax” or “pay more death duties”. Is that really all you can come up with, before you get back to a dissection of the German economy? I call that pretty pathetic.

    The Council Tax idea is a cop out, while the death duty route assumes your estate has money to spare. Now, what if you take out a ‘policy’, underwritten by HM Government, to which you make monthly payments and which kicks in when you need serious care. After all, many of us contribute to pension schemes besides the state one. Yes, it would cost us and the state money; but it would hopefully be geared to an individual’s ability to pay. I think that’s what people call “means tested”. Now why don’t you use some of the knowledge you like to display towards coming up with something like what I have proposed? Is it really that impossible?

  • Peter Hirst,

    this is the local government association Green Paper from 2018 https://www.local.gov.uk/about/news/lga-launches-own-green-paper-adult-social-care-reaches-breaking-point
    As I indicate above, I believe the pressures on the NHS, Education, Welfare and other areas of public spending will absorb general tax increases and that the funding of adult social care should be focused on housing wealth.
    Under the LVT proposal for a hypothcated social care precept the care is delivered free of charge at the point of use. To protect against the loss of homes the cost of providing adult social care is shared across all residential landowners, avoiding the situation where approx 10% of the population face care costs in excess of £100,000 and forcing the sale of homes.
    An individual in a large high value family home, would at no point face the loss of the home. A homeowners tax free allowance would be available to the remaining spouse/dependent as long as the property remains owner-occupied and is based on the size of the property. The tax is assessed on the land rental value to the extent that value exceeds the homeowners allowance.
    Over 55’s and homeowners on benefits may choose to defer payments until the property is sold or bequeathed and inheritors may avail themselves of a 10 year installment payment of any accrued taxes on bequeathed property.
    The key point is that the fear of facing catastrophic care costs in the last years of life is removed for all. A sustainable and affordable source of segregated funding is set aside for local authorites to meet their statutory duty to provie care for the elderly without the need for means tests. As a hypothecated local tax it is also removed from the political vagaries of central government funding and subject to democratic oversight via the elecion of local councils officials i.e. responsibility and accountabiity are brought together.

  • John Marriott,

    According to the LGA, adult social care accounts for about 40% of council spending. Council tax and business rates account for approximately 45% Council Revenues.
    Simple arithmetic tells us that, in broad terms, virtually all of the council tax and business rates need to be allocated to the provision of social care and public health services. Other local authority services need to be financed from other revenue sources i.e. government grants, rents, interest and other income.
    The Levying of business rates and council tax needs to be done on a fair and proportionate basis. For business rates i.e. the Commercial Landowner levy https://www.libdems.org.uk/taxingland-notinvestment for council tax that is the proportional property tax https://fairershare.org.uk/
    The applicable rate of levy would be calculated in the same way council tax is calculated now . A budget for social is agreed by the local authority and then allocated across the tax base.
    To increase the funding for adult social care may require increasing the council tax levy, but this would not be on the current banding basis. The increased costs would fall primarily on higher value properties in Band E and above with the change to proportional assessment.
    If there were simple answers, the issues would have been resolved long ago instead of being kicked into the long grass for 20+ year. They issues haven’t been resolved, because folks keep looking for simple answers where there are none.

  • Peter Martin 4th Apr '21 - 6:56pm

    @ John Marriott,

    “Now why don’t you use some of the knowledge you like to display towards coming up with something like what I have proposed? Is it really that impossible?”

    I’d say it was too late. If you want to look at it as a store of contributions it would have had to have been started 50 years ago! But there are problems with this approach. A govt can’t simply save up its own IOUs and put them in the bank for when it needs them.

    However you look at it, the older generation have to be supported by the younger generation. They are the ones who will have to provide the real goods and services that support the elderly. You can make them all pay by increasing their rates of income tax or you can reduce the inheritances of those who will be lucky enough to get them from the passing of their elderly relatives.

  • John Marriott 4th Apr '21 - 7:14pm

    @Joe Bourke
    Have you ever been a councillor at County/Unitary level? I have and I know how much is spent on adult social care, in my authority’s case, since austerity kicked in around ten years ago, through the commissioning rather than the provision of such services. I could go on but it’s clear you are still wedded, for this argument at least, to the dreaded Council Tax.

    Yes, if there were a simple solution to this particular problem, it would have undoubtedly been implemented long ago. But, like JFK, I want to “do the other thing”, not because it’s easy but because it’s hard. Actually, it IS quite simple. We all pay for it by signing up to an agreement with the state. It won’t be popular; but it would be fair.

    My wife’s cousin, a childless divorcee in her mid eighties, suffering from Alzheimer’s, over whom my wife shares POA with another cousin, has recently gone into a Care Home and will probably remain there, hopefully for many years. She is pretty well provided for, with a considerable bank balance and a valuable property (by local standards). Given that Care Home fees for her as a self funder are nearly £4k per month, it won’t take long for her various savings accounts to be drained and the need to sell her property to arise to keep her in dignified comfort. I’m sure that this situation is replicated up and down the country. Fortunately she has the wherewithal to make this possible, and probably to help to contribute towards the funding of a few of her less fortunate fellow residents. Many of our citizens clearly do not.

    And all you can do is quote statistics and fall back on a totally discredited system of local government finance, apparently cobbled together on the back of a fag packet as a hasty replacement for the Poll Tax to provide the answers! Come on, Joe, as a liberal, you are surely better than this!

  • Peter Martin 4th Apr '21 - 7:33pm

    @ Joe,

    “Actually, it IS quite simple. We all pay for it by signing up to an agreement with the state. It won’t be popular; but it would be fair.”

    No it wouldn’t. Because the elderly who’ll need the care in the next 20 -30 years will already have retired and won’t have paid into the system.

  • Peter Martin 4th Apr '21 - 7:34pm

    sorry that last comment was meant for John.

  • Joseph Bourke 4th Apr '21 - 7:57pm

    John Marriott,

    A report from the Chartered Insurance Institute (CII) in 2016 showed that the average man, aged over 65 will need to spend around £37,000 on later life care, while that rises to £70,000 for the average woman of the same age. At the moment there is no mainstream long-term care insurance product. In the past, you could buy a pre-funded care plan that would cover the cost of your long-term care home needs, but these are no longer available from UK insurers.
    There are some options. One is an immediate needs annuity, a plan which provides regular income in exchange for a one-off lump sum payment which guarantees income for life to meet the cost of your care fees. These can be set to pay a level benefit, or it’s possible to index-link them so that they rise with inflation or costs.
    If you have a pre-existing health issue, the monthly payment can be higher than they would for a generally well person of the same age. After that, shouldering the cost of care becomes trickier and some people have to release equity from their home to cover the cost or sell up entirely.
    As it stands most people don’t qualify for help from the government until they have used up the bulk of their assets, meaning they have just £23,250 left, or until their needs are considered to be “substantial”.
    The Tories floated proposals for a state backed insurance scheme early in the coalition https://www.independent.co.uk/news/business/news/tory-plans-for-care-home-scheme-unrealistic-says-pensioners-group-1797891.html However, the National Pensioners Convention said the proposals would not put a stop to the “scandal” of older people having to sell their homes to pay for residential care. Some 45,000 elderly people a year currently find themselves forced to sell up because of mean-tested care benefits and fees.
    I have tried to emphasise John that council tax needs to be changed to a proportional property tax based on updated values. There has been extensive work done on how this would work and it was the recommendation of the Mirrlees committee on tax reform. Property tax forms part of the tax base in most OECD counties including Europe, the USA, Canada, Australia, New Zealand etc. Using annual property tax levies there will be no need to sell properties to fund long-term care for the reasons stated earlier.

  • John Marriott 4th Apr '21 - 8:27pm

    @Peter Martin
    When the first old age pensions were introduced in the 1908 Act presumably none of the first recipients had paid any contributions. You’ve got to start somewhere. They did then. The occupational pension I currently receive is being financed largely from those in my former profession currently at work, just as my contributions when working paid for tge pensions of those, who went before. But what do I know?

    @Joe Bourke
    As Reagan said to Carter; “There you go again”.

    Thankless chaps, I’m REALLY disappointed with your responses.

  • As usual I happen to agree with John Marriott. I too speak as a former Councillor – and as a Convenor (i.e. Chair) of Social Care.

    Why don’t you guys cut the twice round the gasworks cackle and take a look at what goes on in Scotland. First, courtesy of the Lab/Lib Executive in 2002 and second, pursued by the SNP Scottish Government since 2007. I must add the 2010-15 UK Coalition Government did a lot not to help – and there’s a rumour (correct me if I am wrong) that the Liberal Democrats had some sort of an involvement in all that.

    Admittedly all is not perfect in Scotland, but here’s a starter below :

    Free personal and nursing care: questions and answers – gov …https://www.gov.scot › publications › free-personal-nursing care …
    28 Mar 2019 — The Scottish Government has legislated to ensure that by 1 April 2019 adults of any age, no matter their condition, capital or income, who are assessed by their local authority as needing this service, are entitled to receive this without charge.

  • Joseph Bourke 4th Apr '21 - 9:32pm

    John Marriott,

    everyone is entitled to an opinion. You have my view. If you feel strongly about this area of policy, I expect your local party will be happy, based on your experience, to sponsor a motion to LibDem conference, should you care to prepare one.

    David Raw writes “Admittedly all is not perfect in Scotland.”. This is what Inclusion Scotland the Disabled People’s organisation had to say in September 2020 https://inclusionscotland.org/urgent-radical-action-needed-to-transform-scotlands-social-care-support-system/
    “Urgent radical action needed to transform Scotland’s social care system”.
    Unfair Care Tax
    – To receive the support needed to achieve their human rights, equal and independent living people are charged for it by their local authorities. We consider this to be an unfair tax that should be stopped.
    – According to a Freedom of Information request from the Scotland Against the Care Tax campaign to local councils when free personal care was introduced in 2018, it’s estimated that up to 7500 people are still charged for their home based support, even after free personal care was brought in. However, due to some integration authorities not responding, we think this is a very low estimation of the numbers of people charged.
    – Whilst care charges contribute 3% (or approx. £42.6m) to the cost of social care support in Scotland, this 3% can be as much as 100% of disabled people’s income after basic housing costs. It can cost up to 40% of the money raised to collect these charges and only about half of the money collected goes back into social care.

    This is the issue with selective rather than universal free services. Local authorities have to prioritise and often that means only the most urgent needs are met based on strict medical criteria. Scotland has similar capital requirements to England for residential care. That is you must use your home equity to pay for residential care until your assets fall below a threshold of £28,500 https://careinfoscotland.scot/topics/care-homes/paying-care-home-fees/capital-limits/

  • Peter Martin 4th Apr '21 - 10:19pm

    @ John,

    I can understand why you think your proposed system is fair. You’ll get all of the benefits without having had to have made any of the contributions!

    Joe gets it partially right when writes:

    “That translates to an income tax hike of 15p in the basic rate by 2040, the burden of which will overwhelmingly fall on the generations following baby boomers.
    Is that kind of tax rise really the legacy we – a generation that owns half the nation’s wealth £13tn of wealth – want to bequeath to our children and grandchildren?”

    This will be distributed under your system quite randomly. Some will get nothing. Others, the lucky ones, will end up with a fortune. Why not even things up for them?

  • John Marriott 4th Apr '21 - 10:31pm

    @Joe Bourke
    Not being a party member any more, getting a motion to any conference would be pretty difficult. I’ve just reread all my contributions to this thread, especially those relating to the question posed by Gillian Douglass nearly a week ago. She must be wondering what she has started by opening this particular Pandora’s Box.

    I really do NOT have anything more to add, except to repeat again my severe disappointment at the apparent indifference of certain clearly knowledgeable contributors towards the injustice of the present arrangements for adult social care. I can only assume that they feel that, given the provisions they have already made, they are satisfied that they are well catered for.

  • Peter Martin 4th Apr '21 - 11:06pm

    @ John,

    You’re mistaking an unwillingness to excessively burden some of the younger generation with the costs for social care of the elderly for indifference. Our personal circumstances have nothing to do with it.

    I’m not sure if you followed what I was saying about it being inevitable that the young were the ones who were going to have to provide the real resources needed. The £6,5 tn of wealth that Joe mentions isn’t going to provide any of them. But if it is passed on to the next generation largely untaxed it will create a very uneven requirement. Those who get nothing will suffer two fold. They’ll have to pay extra tax and social welfare contributions to cover the substantial costs of looking after the elderly.

    They’ll also have the problem that those who do inherit large sums of money will almost certainly have a much greater inclination to spend than those they inherited from. It will be the extra spending that will create an inflation problem. And the cure for that will be yet more higher taxes for all.

    This is why it shouldn’t be passed down at random and largely untaxed.

  • John Marriott,

    the committee on Long term funding of adult social care is currently accepting evidence https://committees.parliament.uk/work/1080/long-term-funding-of-adult-social-care/ You can submit evidence until Thursday 15 April 2021. I hope Gillian Douglass (with her experience of working in a home care agency) and Tunbridge Wells Liberal Democrats will be submitting their thoughts.
    The Government’s proposed Green Paper to consult on the future of social care funding is not the first attempt to address this topic in recent years:
    • 1999 – Government-appointed Royal Commission publishes its proposals – including a more generous means-test and free personal and nursing care – which were only accepted in part in England by the then Labour Government;
    • 2009 – Labour Government’s Green Paper proposes a National Care Service, and a subsequent White Paper proposes the introduction of a two-year cap on social care charges initially, followed by free social care after 2015;
    • 2011 – Dilnot Commission on the Funding of Care and Support, proposes a cap on lifetime social care charges and a more generous means-test;
    • 2014 – Coalition Government legislates to implement the Commission’s recommendations with cross-party support, but the 2015 Conservative Government postpones their introduction.The latest position, stated in September 2019, is that a Green Paper will be published “in due course.
    The original rationale for a Green Paper was to explore the issue of how social care is funded by recipients, and a number of policy ideas have reportedly been under consideration for inclusion in the possible Green Paper including: a more generous means-test; a cap on lifetime social care charges; an insurance and contribution model; a Care ISA; and, tax-free withdrawals from pension pots.
    There is a “consensus growing” among bodies like the LGA and Age Concern towards free personal care. At its September 2019 conference, the Labour Party announced it would introduce free personal care for older people if it came to power.

  • John Marriott 5th Apr '21 - 8:25am

    @Peter Martin
    Of course I know there will inevitably be winners and losers out of any system. Those with money and property, some of which they may well have inherited; but, equally, some they may have acquired through their own efforts, will undoubtedly benefit in that they will be able to keep more of their ‘assets’ and be able to pass them on or spend more of them while they are capable of doing so, while those who, for whatever reason, do not have them will also be treated with dignity, possibly because some may have spent their ‘assets’ already!

    You have got to start somewhere and, unfortunately, you can’t turn back the clock. As far as yours and Joe Bourke’s economic debate is concerned, I lost you both about last Friday. However, I am grateful that you have both belatedly turned your attention to the question that started this thread a week ago, even though your conclusions, yours based on the concept of personal greed firing an inflationary spending spree and Joe’s suggestion of even more research and Green Papers, not forgetting motions to conferences, makes me think that, yet again, we are staying in the realms of ‘jam tomorrow’. The trouble, as the song goes, ‘Tomorrow never comes!

  • @ Peter, “I’m not sure if you followed what I was saying about it being inevitable that the young were the ones who were going to have to provide the real resources needed”.

    There’s nowt new about that. It was the case in the days of Lloyd George’s ninepence for fourpence…. and if you give it time, the youngster (hopefully) will get olderand become recipients if they need it in their turn.

    It’s part of a thing called society.

  • Peter Martin 5th Apr '21 - 11:00am

    @ John,

    I wish you wouldn’t put words into my mouth. ie Make things up.

    I didn’t say that “greed” was the reason the young would have a greater tendency to spend than those from whom they inherited the money. It’s just normal human behaviour. If you have a growing family, the house is too small, and you spend your weekends working on your old car so you can get to work on the Monday morning what are you going to do if your old Aunt Ethel leaves you a tidy sum in her will?

    In my case, I did have the aforesaid problems but , sadly, not the benefit of a deceased Aunt Ethel!

  • Peter Martin 5th Apr '21 - 11:16am

    @ David Raw, @ John

    There’s something called democracy which is also ” part of a thing called society”. Joe has calculated that it will take an extra 14p on the basic rate of income tax to fund social care for the elderly. I don’t necessarily agree that it will be that much if we apply the correct economics to the task at hand, but as the Lib Dems are heavily into Joe’s brand of economics that’s very likely something like the figure you’d have to put to the electorate.

    Those who are asked to pay the extra amount, even if it is camouflaged to be something other than a tax, might point out that the older generation already own £6,5 trillion of assets. Again this is Joe’s figure. They may have certain reservations about paying an extra tax to support a generation which have done very nicely for themselves.

    Anyway if this is what you want to do, then go for it! Good Luck with that!

  • Joseph Bourke 5th Apr '21 - 12:36pm

    Peter Martin,

    the tax forecast figures you reference are from the Resolution foundation Inter-generational Centre. For anyone interested in getting to grips with the issues, David Willetts provides an explanation here https://www.resolutionfoundation.org/comment/britain-is-set-to-replace-the-era-of-austerity-with-a-new-era-of-tax-rises/. It is not adult social care that will require a further 63 billion per year by 2040. It is the cost of maintaining the state pension, and the health and care provision we’ve already got.
    “Back in 1947, Britain saw the first peak of the baby boom as one million babies were born. The post-war baby boom, of which I am one, helped to deliver a thirty-year run in which Britain had lots of workers with not so many pensioners ahead of them. This created a huge dividend for the Treasury, and plenty of room for tax cuts.
    But now we baby boomers are getting older – the babies of 1947 turned 70 last year.
    We are now entering a period when just maintaining the public services we already expect is going to cost more. By the end of the this decade the cost of the state pension, and the health and care provision we’ve already got, will rise by £24bn a year. By 2040 it will rise by £63bn.”
    John Marriott speaks of ability to pay. That is what means testing and financial criteria assess. My 91 year old mother has been paying for care for ten years. Initially, care at home and subsequently residential care. The family home my father worked in a factory most of his life to pay for was sold and at £1k per week for residential care the house equity represented about five years of care. This is the lottery. Some people will not need care. Others will use all of their assets for care costs in later years.
    I would like to see a system of collective social insurance for adult social care that uses an annual proportional property tax on housing wealth as the basis for assessing ability to pay. This system would provide both home care and residential care free at the point of use based on need as with the NHS. That will be the basis of my submission to the committee on Long term funding of adult social care. Whether it will have any influence on the committee’s recommendations, I cannot say. But at the very least it will be a contribution to the debate.

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