Two pieces of apparently unrelated news yesterday.
Firstly, the Government announces that if you need long-term care in your dotage, you'll have to pay. After your death. And no, contrary to the Dilnot proposals a year or so ago, there won't be a cap on it.
I did my best to savage Dilnot a year ago (Fudging the Dilnot report - 5th July 2011), which of course hasn't stopped the Government adopting pretty much all of the proposals. The cap was Dilnot's redeeming feature, and it has been abandoned.
Broadly, my objection to Dilnot was that it is unfair for some people to pay and others not. Much fairer for everyone to pay a little via taxation. We're all happy to fork out for the NHS even though we know we may never get cancer, and in the same way I think we would all fork out for long term care even though we knew we may never need it. We could pay for care in the same way we do for the NHS: each according to his means.
Under Dilnot, whether you pay at all is a lottery: some will need long term care, some won't. That's unfair. If you've squandered your money down the pub, you won't have to pay anything: if you've lived carefully, you'll pay down to your last penny if necessary. That's unfair as well. Dilnot is unfair twice over, and HMG refusing to put a cap on individual contributions just makes things worse.
The second item concerns Spain, where the Government is having to put in place more cuts to satisfy its Eurozone paymasters. Unlike the UK, Spain cannot devalue and cannot print money. Its only way out of the debt crisis is to cut spending and raise taxes, a.k.a. internal devaluation. That's fine (unless you happen to be Spanish), but the problem is that this internal devaluation will also cut demand. And if you cut demand the economy is less likely to grow and less likely to produce tax revenues which alone will reduce the deficit and enable Spain to finance its sovereign debt. Bond rates, remember, are rising to the 7% danger level. In this respect Mr Rajoy's VAT increase of 3% is particularly egregious. He has pretty much applied the economic handbrake.
The obvious inference from this is that once again the Eurozone is adept at sticking plaster solutions (Spain's banks are insolvent; Spain needs more money; the Eurozone will give them more money, but only if they apply austerity measures) without seeing that those solutions will end up making things worse. Spain will languish in or around recession for the forseeable future, with 25% unemployed and rising. The EZ elite either can't see that or don't care. Either way they are blinded by their devotion to The Project.
The connection between these two pieces of news is that they are both responses to the fact that both countries are skint. Andrew Lansley was quite frank about it yesterday. We know that numbers of very elderly people are going to rise enormously, he said, and we can't undertake to backstop the financial demands of their long-term care. In a way Lansley is to be applauded: it would have been much easier politically for him to do the right thing (commit the state to paying) than the wrong; but the state can't afford it. That is realism. Having waved goodbye to a fairly large sum of money last year, eaten up by a relative's care costs, I am in a position to know how galling realism can be, but when welfare budgets are being cut left right and centre there is an element of justice in the legacies of the middle-class and affluent being used up like this.
All over Europe societies are being re-shaped as expenditure is dragged slowly, kicking and screaming, in the direction of income.
