John Oxley: There is no fixing the public finances without grasping the nettle on social care

John Oxley is a consultant, writer, and broadcaster. His SubStack is Joxley Writes.

There is still nearly a month to go until the Budget, but we are starting to see the pitch rolled for Rachel Reeves’ announcements. We should brace for tax rises, with plans to increase public spending through this parliament.

It will be a typical Labour budget, and perhaps what we should have anticipated a year ago; the Government hopes that improving public services will be their route to electoral success. One issue, however, is set to undermine all of this unless it is properly settled – the continuing demands of adult social care.

Social care remains the elephant in the room for the Treasury. It is one of the big three areas of public spending – and has a significant knock-on effect on the Health Service, too.

Funding for social care, however, remains a poorly addressed problem. The costs largely remain the responsibility of local government, and as a result, are a huge drain on their finances. The demands of child and adult social care amount to more than half of the average council’s Budget.

Naturally, this impinges on what local authorities can do elsewhere. Money for things like road repair, street cleaning, graffiti removal and libraries is sucked into the need to cover care costs. For the average voter, this means the services they use and see the most are declining because of the needs of one they rarely interact with. Meanwhile, many are rankling at the costs of council tax, which appears to be doubly unpopular because it is so visible in the way it is paid.

The combination is a toxic one for both local authorities and governments. Ordinary voters may not understand the intricacies of council funding and responsibilities, but they see their taxes rising and their local areas worsening. It is hardly a surprise that they have become increasingly disillusioned with the status quo and the political system. Indeed, analysis shows that support for Reform and other non-traditional parties is strongest in areas where high streets and towns are most dilapidated.

The impact of social care remains one of the undervalued reasons for the Conservatives’ own defeat last year. Through 14 years of government, we presided over the critical growth of this problem. We failed to address the rising demands of social care, especially after the scarring experience of the 2017 manifesto, while restricting both the central funding available to councils and local authorities’ own ability to raise money.

The resulting dilapidation of local services was a clear factor in pushing voters away from us – a pattern repeated in this year’s local elections.

Attempts to deal with the broader fiscal situation should not ignore this. If Labour are looking to fund public services and deliver better outcomes on voters’ doorsteps, social care is a major limiting factor. The things you observe every day are generally things for which councils, rather than central government, are responsible. If they continue to stagnate, it will undermine any success the government has on NHS waiting lists or other national issues. Quite simply, it is hard to convince the public you are governing well if the area outside their front door looks tatty and neglected.

So far, it is a nettle Labour have failed to grasp. This year, they launched the Casey Commission into adult social care. It is set to report its first stage next year, and the second in 2028. At best, its recommendations may form the basis for Labour’s 2029 manifesto – leaving councils in this predicament for at least the next parliament. It is the third such commission in as many decades, a sign that the problem lies in a lack of action, not of analysis.

After all, the core question for social care is quite simple: where does the money come from? One option is full state funding, but this would be hugely expensive and, effectively, a large subsidy to the long-lived rich. An entirely private system would impose crippling costs on those unlucky enough to have a long period of infirmity, and would be wholly inadequate for adults who need lifelong support.

The answer lies somewhere in the middle – partially funded, partially contributory. Finding the balance is a political problem, not an expertise one, and politicians should be bolder about finding an answer. Repeated commissions have just perpetuated the problem. In the meantime, vast numbers of losers are created – those who see their savings eroded by care costs, councils left to foot the bill, and carers squeezed by the incentives to keep costs down. Meanwhile, political resentment at the aftereffects of this grows.

Now, undoubtedly, a new system would mean pain for some people, and would be politically difficult for that reason, but there is no good argument that this is more important than the continued issue of doing nothing.

The social care question cannot be put off forever. We have an ageing population, often living for longer with higher levels of infirmity. A large cohort of people born in the Fifties and Sixties is set to swell the ranks of recipients in the next decade or two. And already, many councils have been pushed to the brink of bankruptcy as costs consume larger and larger shares of their budgets. It is a matter of when, not if, the system will break entirely.

For chancellors pulling together their budgets, the approach to care funding has been a useful way to keep costs away from central government. But neither reality nor politics works that way. People see the stress of the current settlement where they notice it most – in the potholes in their streets, the graffiti in their towns, and the closed services around them. Even if they don’t see the link, they feel the anger, as high council taxes deliver poorer services each year.

Until social care is addressed, budgets will be dancing around the issue that one of Britain’s biggest spending demands has been loaded up onto struggling local authorities, and the chancellor will be dealing with an incomplete picture and will be unable to deliver either spending plans or tax cuts that people really feel. Getting this right is essential to the UK’s future fiscal balance and to our politics.

This is also why it should be something the Conservatives are seriously grappling with. It is tempting to hope that some other party will be in government to deal with the big scary challenge.

We have already seen, however, how Labour have booted it off into the long grass. By the next election, social care will still be a live issue – impacting not just on those who need it, but everyone with an interest in how it is funded. If the party wants to look competent and capable, and have a solution for those people who are angry at how their councils have been run down, a viable answer for social care is at the heart of it.

Ultimately, no government can claim to have fixed Britain’s public finances or rebuilt its public services without addressing the question of care. It sits at the junction of fairness, fiscal prudence and political credibility. Both main parties have skirted around it for too long, preferring commissions and consultations to choices.

But the reckoning is coming: the demographic clock is ticking, local authorities are at breaking point, and voters’ patience is wearing thin.

Whoever faces up to social care first – and honestly – will own the mantle of responsibility that has eluded Westminster for a generation; any chancellor who tries to sort out the public finances without a proper settlement on care is just deluding themselves, and exposing themselves to continued anger as councils struggle under the weight of it.