Budget Memo to George

A mañana budget is the only way to describe it.

The pre-budget hype, radical moves on pensions for example, is simply not matched by the way you seek to gently tinker with a failing system. Many of the changes in personal taxation are delayed until 2013, although the economy could do with a genuinely redistributive boost now, and an automatic future extension of the pension age means that people will eventually be completely stuffed by the system.

Funding state pensions from current day receipts is simply not sustainable. At the moment it is a struggle and already people have to work for around 50 years to enjoy perhaps 30 on a pension that is a tiny fraction of what they earn, or even contributed. In 15 years time, according to my rough calculations, around 22% more people will be drawing pensions than today, relative to those in work. Extending the age at which you can draw a pension to match increases in life expectancy will simply not plug that hole and unless you plug the hole now it is likely to be unpluggable.

The Unofficial Green Paper contains suggestions on ways to deal with this, but the budget is just another missed opportunity. Yet again a government seems to be slowly releasing cash to engender a feel good factor just around election time rather than genuinely planning for the long term.

There are three things that you should urgently do:

• Fully review the future of all pensions
• Fully review the future of health and social care funding (not delivery as in the current NHS Bill)
• Fully review the status of social enterprise and its capacity to support the above two categories of expenditure.

Once you have done this you should be open with people about exactly what they will get for their contributions for the whole of their lives. The Green Paper carries the full list of suggestions. This is urgent and matters hugely to the '99%' many of whom do not yet realise how much. Please do not leave it much longer.

Memo to Andrew Lansley - How to save the Health Bill without changing it

The response to mounting opposition to the NHS Bill is not yet meeting the required standard. The concerns are far deeper than either political manoeuvring or self-preservation by empire-builders, although there are obviously elements of both. Before doing anything further if you stop and analyse the resistance you will find a common thread. It is that no-one understands how the reforms will actually get the NHS to a better place, and it is therefore causing fear rather than excitement. In effect it appears to be the fiddling while Rome burns. I have spoken to several GPs involved in new clinical commissioning groups who can see the logic in some of the arrangements but fear the funding will not support the needs of their patients and alongside that existing NHS commissioners are saying that the changes will do nothing to re-position the service to cope in 10 or more years time, that will need hard cash.

The Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) has a full chapter on the NHS because of it's importance to us and your reforms may well drive efficiency but they have two glaring omissions. Firstly, they do not show how they are compatible with the future financial strains which demographics alone will place on healthcare and the funding of it. This leads GPs especially to be wary of being the gatekeepers of insufficient funding and as a result being the ones to tell patients that they will be left to die. Secondly, the reforms fail to demonstrate how they will protect the NHS against lowest common denominator services which will result from a totally free any willing provider system.

What is needed therefore is a sub-bill which enshrines the role of community-led social enterprise in the NHS and does so within a framework which ensures open competition whilst supporting the funding model through reinvestment of profit. Secondly, you need to address the whole system that funds health, pensions and social care from current day taxation. This system frightens the life out of me and will break at some point, leaving us like Greece. No amount of reform or doing more for less can save a system in which twice as many people need help as those paying for it and that is where we are headed.

The Green Paper talks at length about this issue but in a nutshell you can save the bill by two relatively simple actions, which it will be easy and beneficial for the coalition to support:

1. Commit to a system of competition in which all outputs are measured, not just the financial, and in which the state seeks a return of profit from providers. This will ensure that social enterprise becomes the main delivery vehicle for our healthcare and avoid the danger of back door privatisation.

2. Commit to a new system of funding, on a whole of life basis, which will guarantee that a standard set of treatments and social/pension benefits are available nationally to all those eligible. 

This will not only help financially, it will help voters to believe in your full support for the NHS and also help those inside it to believe that the reforms will not simply be used to squeeze the NHS to save cash. These are not nice to have bolt ons, they will save your Bill. They will underpin the modernisation of the NHS as well as transform the financial position of the country.

Memo to Dave

The Health and Social Care Bill is gathering more opponents as people get closer to its full implications, but should you be worried? Is it the case that most of the opposition is selfish, people protecting self and empire? Well, it possibly is, although that is not to disrespect the genuine care that most of them hold for the NHS. The public understand that care for their vocation and that is why you need to look carefully at strategy in the face of this mounting opposition. Whatever its cause the opposition will be spun in the name of protecting the service and you will be cast as the villain.

There are some very good things in the Bill, notwithstanding the disappointment that it is not part of a truly radical and ambitious solution like that suggested in the Unofficial Green Paper (www.bigsocietygreenpaper.org). However, there are also some weak points, and allowing, or forcing, the NHS to break into hundreds of social enterprise providers is one thing that seems to have little opposition and yet I see it as one of the most dangerous. Whereas much of the opposition to the bill is around the introduction of competition, my caution is that the social enterprise providers will not be equipped to deal with that competition, being stuck with tupe obligations and inherited services.

I need to be clear that tupe is not a bad thing and reducing terms and conditions to a lowest common denominator with the private sector should be avoided. These social enterprises however look to me to be risking death by a thousand cuts as they lose profitable services to commercial competition and are stuck with the rest, effectively relying on charity to survive. This is a return to the Victorian era and unlike most of the opposition I see that as the  'system' danger within your reforms.

To avoid this you have a golden opportunity to think big in a low risk way. A complete overhaul of all pensions and healthcare systems, including the way that they are funded, would create greater fairness, reduce the burden on the state of all pensions over the medium term and level the playing field in terms of competition in the short term. There is much more detail on this in the Green Paper but a return to a system where many depend on charitable providers for their care must be avoided at all costs. Equality has underpinned the NHS since inception and must continue. Giving the juiciest parts of it to private providers will simply unpick the rest. As demographic pressures and the necessity of funding from current day tax receipts combine to render it unaffordable, so the social enterprise providers will be the ones without funding to care for their patients in their marginalised and expensive rump of services.

I do accept that competition is needed but you must consider how to balance best value with the long term future of the service and those working in it. Creating a level playing field for competition, and creating a nationally-underwritten framework for health and pensions funding, would do two hugely important things. It would ensure that when competition is introduced, the existing providers have a fair chance; and it would also reassure those nervous about the new commissioning arrangements that sufficient funding will be in place for the foreseeable future. It is therefore possible to save the NHS Bill without touching it at all. It is largely not the Bill that is wrong and if you analyse the opposition you can see that. It is the supporting structure, the methods of encouraging competition and the move away from decent pensions and pay that are causing the obstruction, and these can and should be dealt with outside the Bill.

Gareth

Memo to Treasury

Steve Richards' excellent R4  David Cameron documentary - on iPlayer at http://www.bbc.co.uk/iplayer/episode/b01946pr/David_Camerons_Big_Idea_Episode_1/ - began to explore the internal blocks in government to the development of the Big Society. It struck me just how little the Treasury had put into the concept, both in terms of support and ideas. On reflection this is partly due to the lack of formal policy behind the concept, but it also suggests that the Treasury could be more pro-active in devising ways to support one of the PM's flagship pledges.

In the Unofficial Big Society Green Paper (www.bigsocietygreenpaper.org) I have tried to be as inventive as possible in examining the potential for a truly big Big Society to take on a life of its own. I struggle to see the point of thousands of independent social enterprises, especially in the NHS, where it seems to be more of a backward step to a network of charitable foundations. I do however see the point of social enterprise and can also see that it has the power to energise and engage the wider population, something the Big Society is missing.

I would strongly suggest therefore that you look at ways of using social enterprise to build solid foundations for the Big Society. The Green Paper suggests a complete overhaul of taxation, pensions, health & social care and Government, resulting in an immediate return to a small government accompanied by a much fairer system which will over time support a gentle redistribution of wealth. In the process the Green Paper demonstrates that there are ways of shoring up the banks without Quantitative Easing, and ways of delivering QE which do not alienate your voters by appearing to favour the bankers. Finally, the Green Paper shows that with enhanced and more modern accounting, the budget deficit can be eradicated over the life of this parliament and it suggests better methods for measuring national wealth to evidence the success of these changes.

All in all, it is an excellent time for the Treasury to do some high level scoping of the ways that dramatic change can be used to strengthen our position and in the process build that elusive and truly big Big Society. Mr Cameron will be very grateful, and so will we. You might even get to do another term of government if you get this right.

Memo to Dave

The rise in social care fees is a tax, say Labour http://bbc.in/sTDdNU

Aren't politicians lovely. Labour dump a huge financial mess on all of us and then pick on pieces as if the current government are to blame. In a sense of course they are, but that is for failing to come up with a real plan to deal with the mess, they are not to blame for the mess and certainly not for increases in social care charges. Such increases are inevitable in a system funded from current day tax receipts when receipts fall or life lengthens. At the moment we have the perfect storm of both of those occuring simultaneously, alongside a huge bulge in the number of people turning 65.

The success of the NHS and better standards of living in keeping people alive longer is the problem. Longer lives mean more social care, more NHS care and more pensions. This triple whammy means that my fag packet jottings tell me that for every additional person living from 85 to 95 we need to find an extra £300,000 just for those 10 years of life. At some point in the next few years there will be a further 1 million of them, meaning an additional £300bn in tax or charges needs to come from somewhere on top of the current deficit.

In sense, then Labour are right. The charges for social care are a tax, and they arise from the doomed attempt to fund our health, pensions and social care from current day taxation. This simply must stop, it is barely affordable today and as I have just shown it will get worse at speed.

The Unofficial Big Society Green Paper argues for an entirely new system with a clean break from the past. It suggests complete honesty and transparency with all of us about what we put in and what we will get out. If you are worried that we are leaving our children an impossible situation, you are right. It is time for bold and decisive action, not another pile of debris pushed quietly under the carpet. That bulge in the carpet is already quite large and without real strategic action at some point in the next 10 years Britannia is going to trip over the carpet and find that she has sustained injuries from which there will be no recovery.

Please act now.

Gareth