4 Jul 2011

Treasury tussles behind the Dilnot Report

The rather low-key Commons announcement on the Dilnot Report I just watched from Andrew Lansley conceals a tussle behind the scenes in government. The Treasury wanted to keep its options more open and didn’t want the “warm welcome” to be quite so warm. It didn’t, I understand, want a commitment to a White Paper (a slippery slope to a Bill). Today we got both.

George Osborne worries as you would expect about the costs of the Dilnot proposals but I understand that he’s also been worried on other counts. One of them has been bugging him all year (not least over the NHS). He thinks that the government’s engaged in revolution on too many fronts. Privately, he’s told colleagues that he thinks the government, with a massive deficit reduction plan on its plate, should’ve restricted itself to reform of education and welfare. Along with No. 10, he’s spent a lot of this year trying to put out the fires on NHS reform. Now along comes another massive piece of reform and his strong inclination was to park it.

The Chancellor was also worried about how Labour would play all this. With identical language to the Health Secretary, Labour’s Health Spokesman John Healey in the Commons gave the Dilnot report a “warm welcome” and borrowed David Cameron’s language from the establishment of the Coalition saying Labour was making a “big offer” of cross-party talks seeking consensus on the matter. George Osborne worries that Labour will go along with some talks and then, just before the election, bolt, leaving the Tories (and the Lib Dems) holding the policy and taking the pain.

George Osborne doesn’t often lose battles in government. He could yet win this one pushing the White Paper and the Bill further off into the distance, fighting the next election on a loose commitment to do “something.” Even that, though, carries costs. Voters weren’t gasping for a change to tuition fees or full-scale reform of the NHS, but they do want this one sorted out. So supporters of the Dilnot plan in government are happy that today went as well as it did and hoping that a consensus between parties can be found.

The Treasury thinks the focus in the cross-party talks should fall on how do you pay for it and Dilnot and team have provided a ready reckoner on one way to bring down the (government) costs. It’s on p.72 of the report and it takes the form of a sliding scale of exemptions … think of it like an insurance policy excess.

If you go for Dilnot’s preferred option (£35,000 cap on what you spend on your own care)  he is arguing for a £35,000 “excess” – the amount you are liable for yourself. That preferred option costs the state £1.7b (at current prices). Slide up the “excess” to £50,000 on care and and the state costs shrink to £800m.

Dilnot supporters think it’s not worth the candle if you go for that sort of excess as you ensnare lots of people with smaller resources. But this is where some Tories think the debate should now go.

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