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15 February 2018
A fascinating question has been posed by a Parliamentary inquiry into the long-term funding of adult social care – and it isn’t the obvious one!
It is no less important – what is “the mechanism for reaching political and public consensus on a [sustainable care funding] solution”?
Why is an inquiry by Members of Parliament not automatically advocating Parliament?
The answer may be that there is a recognition that complex issues which require a long-term view, lasting beyond a single parliament may be deferred endlessly to future Parliaments. This is particularly the case for potentially contentious issues such as social care funding which require decisions about asset allocations between generations. However, this cannot be deferred any longer.
Also, is Parliament best placed to manage public consensus about issues of intergenerational fairness and proposals for the evolution of new social care funding structures? Only last year the Government’s call for an end to the pensions’ triple lock, certain universal benefits and a cap on care costs was resisted in the absence of a properly informed public debate and consensus. When will another be brave enough to lead such a debate with the clear risk an unpopular decision might result in poor electoral performance?
One way to address competing intergenerational needs is to outsource them to independent experts. New Zealand’s Commission for Financial Capability reviews the Government’s retirement income policies every three years as well as being a powerful consumer advocate. These reviews aim to identify ways in which retirement income can remain economically, socially and politically sustainable for decades to come. This provides public and political consensus.
The UK Government already has independent guidance in the Office for Budget Responsibility (OBR) which assesses the long-term sustainability of the public finances, and judges progress towards the Government’s fiscal targets.
So why not an independent OBR for health and social care ‘setting out what is needed to deliver health and care services over a given period’? An independent commission recommended this only last week. Is it a short step for such a body to make recommendations about funding decisions too or to consider other interconnected long-term policies including pensions and retirement decisions?
The case for non-partisan guidance on long-term issues of this sort has found support among significant organisations. The Turner Commission, called for a standing Pensions Commission setting out pensions facts and choices. The International Longevity Centre-UK too concluded a new ‘Pensions Commission’ to rebuild consensus through broad consultation and tackle the challenge of income inadequacy in retirement. Also, the Association of British Insurers (ABI) proposed an Office for Intergenerational Responsibility or Retirement Commission. This body would have a policy development role, producing advice and recommendations. It could produce the evidence and rational debate for key issues, such as setting Pensions Tax Relief.
Bodies of this type may also have huge value in providing the evidence basis for sustainable funding of social care as well as the long-term sustainability of state support. They are well placed to guide on setting Automatic Enrolment levels or benchmark levels we should put aside to fund care.
A trusted body can also provide younger generations with certainty and confidence over the viability of long term funding mechanisms such as NICs or State Pension that short term political change might erode.
Importantly a respected body can manage critical public debates about intergenerational fairness and proposals for the evolution of new funding structures, such as Reform’s pre-funded care proposal.
However it is important to note that no one has advocated that an independent body of this sort should be a replacement for Parliament. It’s remit would be set by Parliament and it’s principal role would be to offer expert guidance and advice, which Parliament correctly has the authority to accept or reject. But, it is not a decision to be taken lightly, not least an independent body or commission risks creating additional bureaucracy and potentially even stifling swift decision making.
The question posed by the Parliamentary Inquiry is indeed far sighted and perhaps its time has come?
Jim Boyd, Deputy Director and Head of Research, Reform