Social care as a local economic solution

Social care is in crisis but rethinking the sector could form the basis of a more inclusive local economy, says David Powell

We face a crisis in social care. People are living longer, there’s less money from central government, and the pressures this is creating is making it harder than ever to recruit or retain skilled carers. The system is splitting at the seams, with experts warning it is on the cusp of – if not already in – full blown crisis.

It is a crisis indeed, and one crying out for a bold new set of answers – starting with rethinking the very foundations of what makes for a successful care system.

More funding from central government is clearly the start. Philip Hammond’s announcement of an extra £2bn in last month’s budget was welcome, albeit still not enough to close the predicted shortfall between needs and resources.

As we at the New Economics Foundation warned at the time, simply throwing more cash into the current system is a classic example of the ‘leaky bucket’ problem.

In truth there are far deeper problems with the fundamentals of how we run and value our social care system. Note for example that £115m of that extra money will disappear into the pockets of investors or shareholders in the five biggest care providers alone.

As the Centre for Research on Socio-cultural Change (Cresc) has argued, our social care system is being ‘held to ransom’ by big, debt-laden social care companies that need to make a 10% return on investment per contract. With the aim of maximising returns, many big providers squeeze their staff and seek to optimise the number of beds — not to provide the best setting for care but to ensure staff costs and overheads can be kept to an absolute minimum.

What’s more, it leaves the system dangerously exposed: as Panorama recently found, nearly 100 contracts have been handed back to councils by care companies.

Westminster has shown little strategic determination to reform the sector other than the failing, and often inappropriate, promotion of ‘choice’. So the New Economics Foundation is working with Localise West Midlands as part of the Good City Economies project to look at what could happen beyond Whitehall.

Can local councils transform social care?

What could a pioneering local authority do, it if really wanted to overhaul the provision of social care in its area? What if we started to consider social care not as a problem but as a major contributor to inclusive economics? With the West Midlands about to elect its first mayor, we’ve begun a piece of research looking at whether it is possible for the West Midlands combined authority (WMCA) to deliver two things simultaneously:

1) A more locally-driven social care system that is a genuine answer to the current crisis of care;

2) The transformation of what is (after all) a major economic sector into one where its benefits are not ‘extracted’ from local economies but instead embedded within, and used to drive increased prosperity, within communities.

In principle, social care appears well placed to help deliver on an ‘inclusive prosperity’ agenda – one which starts from local needs and builds economic plans upwards. Social care needs and cultivates skills that many people in disadvantaged situations already have. It provides a career, with clear opportunity for skills progression. It, by definition, helps to meet a critical local need – and as the University of Birmingham has shown, potentially meet it in a more personalised way without a greater cost, given a sufficiently level playing field.

It also offers the prospect of a more resilient (eco)system of care, far less at the mercy of big chain companies. And the more that smaller, community-based social care providers are together able to provide a genuine alternative to the failing status quo, the more they can contribute to keeping jobs and wealth circulating in the local area.

Demonstrating a community-focused approach to care

At a time when the need to make every pound spent on social care work as hard as possible, it adds up to an alluring vision. But as we’ve found out through two in-depth discussions with social care and community enterprise experts in Belfast and Birmingham, there are a number of reasons why the little guys can’t get their foot in the door. Here are just are four:

1) Local authorities don’t have the right priorities – exacerbated by the huge pressures they are under due to funding cuts. Economic strategies are focused on maximizing GVA (the measure of regional economic growth) and largely don’t consider properly either the importance of the ‘foundational economy’, or the potential of social care to deliver deep and inclusive prosperity, or both. The rich ‘offer’ of a community social care provider is fundamentally different to that of a major company that can trumpet economies of scale. The broader social value that grassroots approaches can offer needs to not only be explicitly recognized but actively promoted throughout the commissioning process.

2) It’s not a level playing field. Whatever it is you’re trying to do – such as prove your broader economic benefit, or even ‘compete’ within procurement processes themselves – it’s likely to be far easier to mount a compelling case if you’ve got the IT systems and organisational capital of a major company than a not-for-profit operation. This is a recurrent theme across community economic development more broadly: if councils are serious about inspiring a greater diversity of community enterprises to play a role in providing key services, they may need to actively support them in being able to get their foot in the door in the first place.

3) Budgets and budget planning generally still happens in silos. It’s probable that a locally-driven social care system could appear more expensive at face value – there’s a reason major chain companies operating at huge, impersonal economies of scale win tenders, after all. But that superficial reading would take no account of any broader benefits on (to list just some) job creation, skills provision, local economic resilience, social inclusion, and mental health. Just as there is a powerful theoretical case for using, say, public health budgets to support cycling infrastructure or retrofitting dangerously cold homes, so there is for a far more joined up, genuinely place-based approach to funding social care. But it requires local authorities to smash through their own internal silos, and create the time and space to do so effectively – not straightforward at a time of cataclysmic budget and staffing cuts.

4) Social care is not seen as an attractive career choice. As the Panorama documentary powerfully demonstrated, pay in the sector is low, conditions are poor, and thus recruiting and retaining the ever-greater number of carers needed is a mounting challenge. Restrictions on EU migration post-Brexit are unlikely to improve matters. The major causal factor here are the cuts facing local authorities and the huge downward pressure this creates on pay and conditions. This clearly affects both major and grassroots providers. But a central argument for a more locally-driven care system is that it would create jobs ‘close to home’ – within the communities needing care, by the people in those communities. This means understanding what the skills gaps and aspirations within those communities may be, and making sure (for example) adult skills development budgets are applicable to the needs of people in those areas.

We’ve heard time and again that not enough has been done to demonstrate to decision makers the inclusive economic potential of a new approach to social care. Our research, which is explicitly designed to make the case to the West Midlands combined authority of this new approach under its first mayoralty, will we hope illuminate the potential for a social care system that not only delivers quality care to those desperately in need, but acts as a demonstrator for a new, community-focused approach to economic development in the West Midlands and beyond.

  • If you have expertise or opinions you would like to contribute to the research, please contact David Powell at the New Economics Foundation: He tweets at @powellds.
  • For more on the Good City Economy project’s work in the West Midlands click here.

David Powell is co-ordinating the Resilient Economies project at the New Economics Foundation


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