I started this blog to help myself make sense of the rather messy situation that has resulted in what will be a long global recession but concentrating on the UK as an anchor (globally would be too broad with too many local factors). In particular I wanted to focus on the reason why social care is consistently kicked into the long grass, when not addressing it will create more problems than it solves. It seems we need a modern Aneurin Bevan to strike boldly for social care as he did with the National Health Service.
The answer to solving the social care crisis in 2023 is hard because one has to look simply at our ability to pay for it. On the other hand, we are paying for it now through the consequences of not paying for it - and the knock on effect threatens to engulf the whole country by clogging up the works.
To understand where we are now, it is essential to consider the ‘how we got where we are’, which necessarily involves looking at the problem from the top down. However, as will be mentioned, the problem is that there has been too much weight on looking at the problem from the top down. A good analogy might be viewing a beautiful Rolls Royce from the top, not noticing four flat tyres and no petrol in the tank but can’t see how to make it go.
The economic state of the UK, indeed the world as we head towards a global recession in 2023, is like the Gordian knot reputedly cut through by Alexander The Great. Endless tinkering for the sake of profit and a piece of the economic pie, has focused successive governments on money and business, without which there could be no economy. But where we are now demonstrates that disregard to the mechanics that contribute to money and the economy is just as catastrophic.
The sub prime mortgage crash of 2008 resulted in a global meltdown that threatened to bring down the banks; and indeed managed one or two. This was a money crisis. It prompted the central banks to reduce interest rates to zero (to encourage borrowing) and to inject new money into system (Quantitative Easing) to keep the banks running and to lend this money to generate investment. Instead the banks and big corporations used the money to buy their own shares that artificially boosted their value. Over the years there were several rounds of QE that only resulted in big business bloating their share prices and making shareholders richer. The tax payer bailed out the banks and the banks (and corporations) helped themselves.
Then the world got sideswiped by the Coronavirus pandemic, lasting two years and shutting down much of the economy. Those people who were deemed as ‘essential workers’ carried on working while everyone else was told to stay at home. Top of the essential pile were hospital staff, followed by retail, refuse collectors, cleaners, carers and postal workers, to name but some. Every Thursday, during the height of the pandemic we emerged from our houses to clap the efforts of those who had to keep working despite the risks. These were the people who it was deemed imperative to keep the country going. Not on this list were all the things involving money and business, a stark lesson in what must be in place to allow money and business to grow.
I write this blog in November 2022, where in the aftermath of the coronavirus, there followed the Russian invasion of Ukraine, the result of which caused a sudden increase in the cost of oil products (including gas, petrol, diesel kerosene etc). This was in tandem with the clogging up of the worlds trade supply caused by countries closing borders during the virus. Shipping containers were not moving and in short supply and the price shot up fifteen-fold.
When an economy overheats, causing inflation, the banks raise interest rates to encourage people to borrow and spend less. When the economy shrinks, causing deflation, the banks reduce interest rates to encourage people to borrow and spend more. The 2022 problem was not caused by overspending but did generate inflation due to a supply shortage.
The rising cost of energy and fuel to drive cars, also caused a knock on increase in the cost of food and other consumer goods, resulting in an inflation that prompted the bank to raise interest rates, which in turn added more misery to mortgage owners (See Liz Truss) who now had to pay not only for the additional fuel and energy costs but more for the money they borrowed when borrowing was cheap.
When you look at what essential elements in the cost of living has gone up, it does not make sense for the banks to make it even more expensive. You cannot stop buying energy, fuel or food. Like the essential workers in the pandemic, they are the foundations of basic survival. However, inflation makes everything more expensive and to stop it getting out of hand, people must spend less; and this will have a dreadful knock on effect. We are likely to see many businesses fail because demand has to come down. Yes, we can reduce our energy consumption by being careful but the cost is now so high there are many who can afford little else. Mortgage increases further leech away the ability to consume non essential products. This all leads to higher unemployment and a further erosion of the Gross Domestic Product (GDP) that is essential to economic growth.
For the UK, it is fortunate that we only had reliance on around 4% of gas supply from Russia but the cost of not buying gas from Russia has increased the demand by reducing the supply. The other suppliers decided not to increase their supply in order to cream record profits off the back of higher prices. So the world is held hostage where the price for oil and gas is set internationally. Electricity is linked artificially to oil, which in my mind is not in favour of the push to buy electric cars or domestic air heating systems.
So we have a supply crisis that has caused inflation, which threatens to throw millions of households into poverty. You can also expect a rise in crime, where legitimate alternatives to earn money to make ends meet is strangled.
After the 2008 economic crisis, the UK government decided on a period of austerity measures that limited the pay increases of many public sector workers, a position that the employees have never recovered from and while they reluctantly went along with the narrative, now find themselves significantly worse off. There are stories of nurses who work full time and then have to go to a food bank to feed their children. We know we are in a cost of living crisis when people working full time and not claiming any welfare benefits, are having to go to food banks to make ends meet.
So at the time of writing this, we are in the middle of strikes over pay and conditions from nurses, Royal Mail, university lecturers, teachers, civil servants, railways, own-brand factory workers and the Amazon warehouse workers; the list is by no means exhaustive. Suffice it to say that we are not far short of a general strike in the UK.
To get to why we are where we are, instead of looking at economic growth through profit and productivity, we have to look at economic growth through facilitation. Ironically employers now find that they have a workforce supply problem; one I would argue of their own making (small and medium sized businesses I would argue are the exception and who are just as much a victim of the behaviour of large and corporate companies as we are).
This week Sir Kier Starmer told the CBI that the UK has to ‘wean itself off’ foreign workers. In other words, employers have to stop using cheap labour from abroad. Further irony appears to be that inflation has made the UK unattractive to workers from places like Poland where the exchange rate of pound sterling to the Polish zloty is no longer favourable. The globalism experiment, in my opinion, has highlighted the understandable attraction for employers to have goods manufactured by the cheapest route but leaves skill shortages and creates unemployment in the country it wants to sell to. Now that the UK has left the EU and free movement of people is curtailed, there are fewer foreign workers who will accept jobs at the low pay end. What is left is a yawning gap of unfilled jobs because they do not pay enough and the ‘living wage’ is evidently not a living wage.
There are a herd of elephants in this room that no one wants to address that are the main causes of poverty, which stems mostly from the actual cost of living for an individual. The nurse in a caring vocational profession who has to go to a food bank is dedicated to a profession that saves lives. There is no such dedication to an office cleaner or factory worker or bus driver (another list not exhaustive) who cannot see any reward to the job they do and if there is no monetary reward or compensation for actually doing the job, what is the point?
Another elephant is the extortionate cost of agency staff in hospitals. Nurses often become agency workers because it pays better. There are approximately 44,000 job vacancies for nurses in the NHS, which tells you a lot about why nurses have chosen to strike for the first time in the history of the NHS. Andy Burnham (Mayor of Greater Manchester and a former Health Secretary under Labour, noted that paying the nurses instead of agencies would pay for itself.
But the conditions for hospital nurses are equally as stressful. Hospitals are running to capacity and ambulances are held for hours outside the Accident and Emergency Department, not because there are not enough beds but because the hospital cannot discharge patients who are well but need social care intervention.
Simply put, there is not enough social care. Why? because the care staff are low paid and undervalued, the care homes are becoming more expensive to run, the social workers are stressed out and in short supply to be able to facilitate discharges and mental health is the poor relation and the first casualty in any economic cutting exercise. These are some of the flat tyres holding up the Rolls Royce.
Ambulances backing up due to bed blocking is like a canary in a coal mine. Digging a little deeper we can see that there are many people who would like to go to work and fill these jobs but many are waiting for hospital appointments that they can’t get because there are no free beds in hospital due to bed blocking due to lack of social care; you can see the domino effect.
Another layer, is mental health for whatever reason. People discharged from mental health to the community lack the necessary support to keep them mentally well. Lots of mental health crisis ties up the police, hospital and social work, all of which would be obviated with the right level of mental health support and give these essential employees the freedom to do their job rather than fire fighting.
Child Care should also be mentioned as another elephant that generates a barrier to work, along with an army of unpaid carers who have little or no support.
The UK government is currently trying to solve the problem from the top down and yet the long term need is to solve the problem from the bottom up. In every business it is obvious that you must have a firm foundation on which to build a successful enterprise. And yet some businesses are happy to cream profit from the top for their shareholders while shaving the bottom from their employees - and then wonder why they can’t fill those job vacancies?
I have long tried to establish how the Government, doesn’t matter which party, works out how the minimum wage (now laughing called the living wage) is formulated? They are clearly afraid that if we saw the formula, we would see the obvious flaws. What the formula clearly does not do is include things like the cost of housing rent, rates, energy and food; if they did there would be no need for food banks as much as there is now and people could afford to eat and heat. If the Government wants a truly productive work force, they have to make sure to pay attention to people’s health and well being before in order to facilitate economic growth.
Here’s a thought. Some time ago the budget for hospital procedures was given to GPs. Is there an argument to give the social care budget to the NHS? Whatever the case, the Government needs to find the money to finally give this elephant the attention it deserves. We need something that allows the NHS to function in the way it was meant to. Do we need a minister for Social Care to do what Aneurin Bevan did for health?
