The whole picture: How to fund integrated health and social care

The NHS Act, passed in 1946, “lifted the shadow of fear from the homes of millions”, according to Nye Bevan, the creator of the modern health service. That shadow has fallen again, and this time round the lives most darkened are those of the elderly denied the basic care they need. Social care, covered by the National Assistance Act, has always been a Cinderella service.

At the same time, the NHS is on an unsustainable course, with demand rising and budgets falling in the light of the 4 per cent productivity savings required every year by government. The undisputed solution advanced by Andy Burnham and Liz Kendall is ‘whole person care’, or a fully integrated service that would cater for physical, mental and social needs and save money by helping people live at home rather than being warehoused in hospital.

How should an amalgamated service with a fully merged budget work, and how should it be paid for? The guiding principle should be that the individual, not the institution, should be at the heart of care. Each elderly person (as Labour recognises) should have a single advocate who is responsible for overseeing and co-ordinating all their care, so ending the current bureaucratic nightmare. Better preventative care, home adaptations, increased use of new technology, a minimum of 30 minutes for domestic visits and better pay and conditions for carers would be a start.

But even such modest changes would have big funding implications. How to weld a tax-funded health service, free at the point of use, with a skeletal operation in which an individual bears a large part of the cost (few will live long enough to reach the government spending cap of £72,000) is the greater challenge facing Labour.

An estate tax has (regrettably) been deemed a non-starter, and Ed Balls has ruled out an earmarked NHS tax. Very probably, Labour will have to reconsider that veto when (not if) the service reaches crisis point. But the more immediate problem is how to fund social care. Balls has also (and with Burnham’s certain blessing) ruled out an across-the-board 1p rise in National Insurance, arguing that the costs would fall on a working age population who have suffered worst in the recession.

That leaves Labour two courses. Either it can compel elderly people to take out social insurance (rather than the failed voluntary version recommended by Andrew Dilnot). Or it can follow the recommendations of the Barker Commission for the King’s Fund and do some or all of the following: widen charges for prescriptions (saving up to £1bn), limit free TV licences and winter fuel payments for older people to those on pension credit (£1.4bn); end pensioners’ exemption from National Insurance, charging 6 per cent rather than the standard 12 per cent.

Labour could go further – and it should. As the Fabians have calculated, levying full NI on older people’s total taxable incomes could raise £8bn, even if you protected those on low incomes. Any bid to recoup money from the wealthier elderly will raise protests (not least from the grey vote), but there is no fairer option. The relief of fear, misery and suffering should drive any self-respecting Labour government.