Labour ‘must take fiscally responsible route to solve care crisis’

Shadow social care minister Liz Kendall says transforming care and support for older people is top priority for Labour

Labour will be seen as a fiscally responsible party championing Britain’s middle classes if it takes the lead in improving care for elderly people, the shadow social care minister, Liz Kendall, will declare on Thursday.

Major savings would be made in the long term as the NHS, which is spending £500,000 a day on delayed discharges of elderly people from hospitals, faced a reduced burden.

Kendall’s claim that Labour must anchor a crucial area of public policy in a fiscally responsible framework is reinforced by the former Labour health secretary Alan Milburn, who warns of a new era of austerity.

Milburn tells the New Statesman that falling tax revenues and the ageing baby boomer generation means that every government will face a major fiscal challenge even if the structural budget deficit is eliminated.

“The truth is this: the era of big public spending is over,” Milburn says. “Austerity is the new normal. It is not a temporary phenomenon. It will become permanent. Fiscal conservatism is the order of the day.”

Milburn’s warnings are echoed by Kendall, who accuses the government of adopting a fiscally irresponsible approach by failing to acknowledge the looming impact of an ageing population. In a speech to the Institute for Public Policy Research she will say:

• More than £1bn has been cut from local council budgets for older people’s social care since the formation of the coalition government. Social care is the largest area of local government spending that is discretionary. This means that eight of 10 councils are providing care only for those with substantial or critical needs.

• The NHS is spending £500,000 every day on delayed discharges from hospitals as elderly people are forced to seek care on the NHS.

Kendall will argue that the government has failed to take account of the warning by the Office for Budget Responsibility, in its Fiscal Sustainability Report, that the public finances will face growing pressure from an ageing population unless social care provision is improved.

“This growing care crisis is a huge but all-too-often hidden problem for families on middle as well as low incomes,” Kendall will say. “Transforming care and support for older people is a top priority for Labour – part of our determination to show Labour is the party that supports families, and is the party of fiscal responsibility too.”

Kendall will say that Labour remains committed to cross-party talks on the recommendations by the economist Andrew Dilnot on reforming long-term care.

Dilnot proposed a cap in which nobody would have to pay more than 30% of their savings and assets towards meeting their needs. He also proposed raising the limit on assets a person is allowed to hold while qualifying for state help from £23,250 to £100,000.

The shadow social care minister will say that a debate will have to be held on how to pay for the estimated £1.7bn annual cost of the Dilnot proposals and the growing “baseline” costs of existing provision. Kendall indicated that people of all ages may need to be prepared to pay. “Millions of families face a squeeze in their incomes – a squeeze that was happening before the financial crash, but is even more acute now because of this government’s failing economic policy.

“Youth unemployment is over a million. Young people who have jobs will have to work longer and save more for their retirement. They also face having to pay back more student debt, and getting on the housing ladder later than ever before.

“So as the Dilnot Commission rightly argues, we need to make sure any new system for funding care and support must be fair across the generations, as well as across different income groups.”