The question is not how we will pay for the pandemic, but how government can use its currency-issuing capacity to deal with the most pressing issues of our time.

Published by Anonymous (not verified) on Sat, 02/05/2020 - 9:38pm in

Rainbow window sign with the slogan "Miss you" during the COVID-19 pandemicImage by Sara Holland

‘Care homes have been top priority for the government’ so said the health secretary in a COVID-19 briefing earlier this week. Daily the evidence grows that this is yet more political rhetoric aiming to create a purposeful narrative of a government that has acted in the best interests of citizens. However, the growing dissonance between politicians’ words and day-to-day realities for NHS and social care workers and many others across the country continues to stand out in sharp relief.

Whether it’s health workers or social care workers, still lacking adequate PPE or working in unsafe conditions risking their own lives and the lives of their patients as a result of hitherto inadequate testing capacity, we are witnessing the dire consequences of 10 years of ideologically driven austerity, cuts to public sector services, the whittling down of Public Health and local government services, unforgivable planning failures and government inaction early on, despite the World Health Organisation’s advice.

COVID-19 has revealed the extent to which our social care system has been hollowed out as a result of ideological cuts to funding for public services dressed up as financial necessity. It has highlighted, in the most tragic way, what happens when governments fail to serve the public purpose. Whether we are talking about nursing and residential care or help in the home, social care is in a state of collapse.

At a local level, social care amounts to almost 40% of council budgets and as a result of local government funding cuts, authorities (having lost 60p out of every £1 in central government funding since 2010) are likely to face a £3.6bn funding gap in adult social care by 2025. The UKHomeCare Association estimated in its 2018 report that almost one third of councils in England had seen homecare providers closing or ceasing to trade during that year. In 2018 more than 100 private care home operators collapsed, bringing the total over five years to more than 400.

The government’s promised review of social care has been on the back burner for many months but the delays in addressing the issue go back years. Jeremy Hunt, the former Conservative Secretary of State for Health admitted in a speech in early 2018 ‘In the past 20 years there have been five Green or White papers, numerous policy papers and 4 Independent Reviews into Social Care’ And yet nothing happened.  

Although the government is promising additional funds to deal with the immediate impact of COVID-19, the damage already caused by cuts to public sector spending on social care will not be quickly remedied.  The fact is that just promising more money does not necessarily translate into the capacity to provide the necessary resources immediately whether that’s PPE, which is still in short supply, or indeed, trained care workers.

Figures show that currently in the care sector there are over 120,000 unfilled vacancies with a growing reliance on agency staff to fill in the gaps (with all the health risks that that entails) which is particularly the case now as staff fall sick to COVID-19 and cannot work. Unless the government deals with the systemic problems caused by austerity and its belief in market solutions for public service provision, where profits are the driver and the focus quantitative rather than qualitative, the long term the future looks bleak for anyone who needs support as a result of sickness, disability or growing older.

The Resolution Foundation’s report ‘What happens after the clapping finishes? The pay, terms and conditions we choose for our care workers’ highlights the plight of many frontline care workers whether in public or private care environments.  It noted that around half of care workers, some 1 million people, were being paid less than the real living wage. In private care settings where the majority of care workers are employed as many as two-in-three earn below the Living Wage threshold. According to the report, many experience significant job insecurity and are four times more likely than average to be employed on a zero-hours contract. The Foundation stated that ‘Insecurity has become a structural feature of working life in social care. Zero-hour contracts have not been used sparingly, but instead have become the new normal in many settings. Blunt in its analysis it said ‘’Clapping is welcome, but care workers will value better pay and conditions even more’ and that ‘better pay in care should have long been a priority given the vital role care workers play in protecting the vulnerable’

Those hitherto labelled by politicians as ‘low-skilled’ workers are suddenly being propelled into the limelight and being lauded, quite rightly, as vital. Not just to meeting the challenges that COVID-19 is presenting, but also to the good functioning of society. And yet for decades, their contribution to the economy and to the wellbeing of society has gone unrecognised. The nation is learning this lesson the hard way as it watches the tragedy being played out daily as their friends, neighbours and family succumb to COVID-19 – people, not statistics.

Boris Johnson standing outside No 10 clapping for care workers is a clever distraction being cynically appropriated by a government whose political decisions over a decade caused the decay of vital public infrastructure, the provision of which does not depend on the healthy economy they claimed was necessary. Quite the reverse. Over 26,000 deaths already from COVID-19 can be added to the likely death toll of those who will have died at home or found themselves unable to present for worrying symptoms during the lockdown and the 120,000 which occurred as a result of harsh austerity measures which cut health services and welfare for vulnerable people. So, when the government says that their strategy in dealing with COVID-19 has been to ‘put their arms around every single worker’ we should see it for what it is. An attempt to create a caring narrative and expunge their austerity record.

But what if the country’s appreciation for its vital workers were to be rewarded in better pay and conditions? How could this be achieved?

Firstly, the care sector should be restored to publicly funded and delivered provision, rather than the profit-driven model which has dominated for decades as part of the neoliberal notion that the market delivers better outcomes.

The CHPI’s (Centre for Health and Public Interest) 2016 report noted that around £14bn is spent on adult social care annually in England, both for residential and home care delivered through local authorities. Authorities whose budgets have been cut over the past decade, leading to a decline in the numbers of older people receiving state-funded care services and who have no alternative but to fund their own care from their own financial resources.

It also noted that a significant number of care home providers are large chains which are backed by private equity – leaving them reliant on risky financial structures and exposed to collapse (as discussed earlier). It observes that over the past two decades, as a direct result of privatisation both the quality of care and the terms and conditions of the workforce have declined. Yet private providers have still managed to achieve significant rates of return on their capital investment.

The FT reported in February this year that there are growing concerns about public accountability of some of the larger private equity-owned care homes, particularly as failures increase. It quoted Nick Hood from Opus Restructuring who said ‘what has happened is that care homes have become financialised. Their owners are playing with debt and expecting returns of 12-14% and that is simply unsuitable for businesses with huge social responsibilities.

In those final few words stands the crux of the problem and at the same time the solution. Bring back health and social care as a publicly owned, publicly funded, publicly delivered and managed service.

Of course, the next pressing question is how will it be paid for? As a former Chancellor and initiator of the first round of austerity in 2010 George Osborne, clapped on by others, has warned that further severe cutbacks may be needed in the future to ‘pay for’ pandemic relief. Not content with having overseen the dismantlement of public and social infrastructure on the basis of its supposed unaffordability, he is recommending yet more pain which no doubt will be ‘paid for’ by yet more cuts or tax rises (except for the rich). Bringing yet more suffering to the most vulnerable, as the last foundational posts of a functioning society are kicked away in the belief that the rich are the wealth creators and we have to give them free rein to create it.

Despite the huge sums of public money being created to address the pandemic, the narrative that there will be a price to pay in the future continues to be pushed by those with an agenda. This extraordinary event is an opportunity to challenge the predominant descriptions of how money works in the real world. If the public genuinely comes to value those services which lie at the heart of a functioning economy, which after all is us, then it has a responsibility to get informed. An economics degree is not necessary to understand in simple terms how money works, what really constrains government spending and how we can build a better society to serve all.

In the Resolution Foundation’s report referred to above, it said ‘…we have to recognise that we can’t just wish that social care workers were paid more and leave it at that. This is a large sector heavily reliant on public funding, that has been through an era of sustained austerity and operates on extremely tight margins. […] If pay is to go up, taxpayers or those receiving care will need to meet the cost’.

In short, we need to challenge the perception that there are financial limits to government spending and that if pay is increased for essential workers then there will be a price to pay in higher taxes. We need to get with the facts. The finances of a currency-issuing nation such as the UK are nothing like a household or business and there can never be any excuse for essential public services such as health and social care not to be properly funded. Quite simply, the UK is the monopoly issuer of its own fiat currency and neither needs to tax or borrow in order to spend. Social care does indeed operate on ‘tight margins’ but it does so as a centrally decided political choice. Local authorities as users of the currency have no alternative when their central funding is reduced – they either have to cut services or increase local taxes thus imposing even more economic difficulties for working people.

The real questions are about resources. In an article entitled ‘Can coronavirus bring Economics back down to reality’ in The Week, Jeff Spross wrote: ‘The coronavirus is going to teach – or, to be more precise, reteach – some hard economic lessons. One of them is probably going to be for policymakers to focus on money a bit less and real resources more. […] the coronavirus has forced us to grapple with the most concrete, flesh-and-blood questions: Do we have the equipment we need to protect the public and care for the sick? Do we have enough food to feed everyone? And if we do, how do we actually get the equipment and the food to the people who need it?

If a lesson is to be learned this is it, not how are we going to pay for it.

 

In February, we were delighted to have Professor Bill Mitchell and Professor Steve Hall speak at our events in London and Manchester. We recorded the events and decided that the quality of the Manchester recording was the better of the two.

Slides for Professor Michell’s talk are available here

 

Join our mailing list

If you would like GIMMS to let you know about news and events, please click to sign up here

Support us

The Gower Initiative for Money Studies is run by volunteers and relies on donations to continue its work. If you would like to donate, please see our donations page here

 

Share

Tweet

Whatsapp

Messenger

Share

Email

reddit

Viber icon
Viber

The post The question is not how we will pay for the pandemic, but how government can use its currency-issuing capacity to deal with the most pressing issues of our time. appeared first on The Gower Initiative for Modern Money Studies.