Embracing the contributory principle for public services is how Labour’s offer can be big, bold and affordable

by Jonathan Todd

In early January, Uncut reported on Andy Burnham’s “defining vision for health … pooling central government health budgets with local authority social care budgets to offer a joined-up approach to looking after our elderly. It makes eminent sense but carries with it a big uncosted price tag”.

Given that Ed Balls is responsible for making Labour’s sums add up, we speculated that this tag would prevent him from supporting this vision; a view subsequently affirmed by those who speak for the shadow chancellor and Labour leader.

There is a growing clamour for Labour to be big and bold. These calls, though, lack specifics. As was the case when leading thinkers wrote to the Guardian recently. Integrating health and social care, as in Burnham’s vision, is a specific example of bigness and boldness.

Balls’ nervousness about its’ price tag, however, is typical of the concerns of those who wish to “shrink Labour’s offer”. It’s thought that advocates of this strategy wish to minimise the risks that may attach to voting Labour, anticipating that if voting Labour becomes as riskless as possible, the unpopularity of the Tory-led government will secure Labour general election victory. An important source of political risk for Labour being the extent to which Labour creates opportunities for Tories to have justification in saying things like, “Labour policies are an uncosted risk to the government’s long term economic plan.”

This might seem to suggest that those who wish to “shrink the offer” are those who are keenest for Labour to be fiscally credible. But this belies the fact that those who signed the letter to the Guardian included those – such as Patrick Diamond of Policy Network and Rob Philpot of Progress – who have consistently stressed the importance of Labour being fiscally credible.

Presumably, these signatories think that Labour must be big, bold and fiscally credible. In this sense, they agree with the core argument of the book published by Uncut at conference last year.

Another way to fiscally credible bigness and boldness is suggested by Frank Field. He wrote to the Times in January to argue (with Uncut‘s brackets added):

“Welfare and health bills will increase (due to the ageing of society). Taxpayers are rightly wary of government taking even more of their earnings and spending the results as it wishes. Hence the need for a new tax contract… establishing a NHS mutual. The mutual would … introduce what is       clearly lacking at the moment, namely, a clear link between services provided       and level of contributions required … A mutualisation of welfare would allow a transition to take place from the old command economy, which we have at present, to a new welfare state where the contributors are very much in charge. It would also signal a movement from a something for nothing welfare state, which is increasingly opposed by voters, to one whose entitlement is based on past contributions.”

Could Field facilitate a grand bargain between Balls and Burnham? Could Burnham have his health and social care integration if Balls’ demand for affordability is secured by Field’s NHS mutualisation?

Such a grand bargain on this policy specific is illustrative of that which might be made more generally. It achieves the bigness and boldness of health and social care integration, while retaining the fiscal credibility prized by those who wish to “shrink the offer”.

It would also extend to health and social care the contributory principle that many – including Field and the chapter by Duncan O’Leary and Claudia Wood of Demos in the Uncut book – insist must be revived in the welfare state if it is to have sufficient popular legitimacy to endure.

Welfare continues to be a challenging issue for Labour. Advocating a welfare state more firmly grounded on this principle would help overcome these difficulties. Extending this principle to health and social care would revivify the founding motivation of the NHS.

Both the NHS and the welfare state were intended to be systems of collective insurance. The risks of ill health and unemployment would be managed collectively but incentives would be built into these systems to encourage behaviour that minimised the likelihood of these outcomes. Those who had worked and paid into the system, for example, would receive larger payments when unemployed than those who had not.

Ultimately, fiscal credibility – which rightly obsesses Balls – depends on the incentives confronting the citizenry aligning with this end. The NHS will be affordable if citizens act to live healthy lives and reduce their demands on the NHS. The welfare state will be affordable if citizens work when they can do and save responsibly for their retirements, so reducing their demands on the welfare state.

These virtuous behaviours – healthy living, hard work, sensible saving – should be incentivised, which would be the effect of more firmly embedding the contributory principle into both the welfare state and an integrated health and social care system. The bigness and the boldness of this integration, therefore, really depends not on Balls and Burnham but on all of our behaviour. There exists a grand bargain for us to strike with ourselves if we want to.

Jonathan Todd is Deputy Editor of Labour Uncut 

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2 Responses to “Embracing the contributory principle for public services is how Labour’s offer can be big, bold and affordable”

  1. BenM says:

    “A mutualisation of welfare would allow a transition to take place from the old command economy, which we have at present, to a new welfare state where the contributors are very much in charge. ”

    This is just gibberish isn’t it?

    What is democracy itself if the “contributors” aren’t in charge? And if there is a deficit in that regard, no amount of tinkering to disenfrachise the very poor will change it.

    Thanks Heavens no one listens to Frank Field any more.

  2. Ex Labour says:

    @ Jonathan Todd

    Who would run this NHS Mutual ? If you’re suggesting that local authorities have anything to do with it, then its a failure from day 1. My Labour local authority is a basket case and my local Labour councillors are well meaning, but could not get a GCSE between them.

    Also if you link contributions to level of service are you not creating the dreaded “two tier” NHS that Labour constantly allude to ? If I choose to pay in more, do I go to the front of the queue ? Do I get better consultants and specialists, or does my extended contribution go to pay for everybody else ?

    The reason Balls and co are not keen is because they know what will happen if some of the wider left get their grips on it.

    By the way, in virtually every article you write you mention “upopular Tory government”. Have you seen the polls and more importantly the poll trend ? Crashing 8-10 points in a year suggests the Tory government is not quite as unpopular as you seem to think. Or maybe its Zed Miliband’s fault ?

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