Modern economies have become dependent on economic growth in order to deliver social welfare. Recent work has highlighted the need to identify such ‘growth dependencies’ explicitly and to analyse strategies for mitigating them. In the light of the ‘secular stagnation’ witnessed in advanced economies and the potential threats to economic growth from climate change, biodiversity loss and ongoing uncertainties in relation to the post-pandemic recovery, such strategies would be fully consistent with economic prudence.
The UK’s adult social care sector represents a microcosm of the growth dependencies observed in the wider economy. Growing demand, resulting from an ageing population, can create a dependency on ever-increasing production of health and social care services. Rising costs, resulting from the time-intensive nature of social care, require increasing revenues in order for care companies to stay afloat. The use of predatory and rent-seeking financial practices by investment firms places unmanageable financial and human costs on large parts of the sector.
These growth dependencies can be attenuated or aggravated by physical, financial, legislative, and social factors. The privatised structure of adult social care, combined with an absence of effective financial legislation, creates the conditions that expose care companies to overleveraging, falling standards and even collapse. Addressing the underlying structures would not only reduce the growth dependency of the adult social care sector but would also generate social and environmental co-benefits, such as reducing inequality and improving quality of care.
Drawing on the above analysis, this paper provides a framework for tackling the growth dependency of the welfare state. Applying this framework systematically would improve the resilience of the welfare system and enhance the wellbeing of UK citizens. Specifically, this briefing paper calls on HM Government:
- to establish a formal inquiry into growth dependencies across the welfare state and to develop a precautionary strategy for mitigating the risks that arise from them.
In relation to the adult social care sector, the paper recommends that HM Government should:
- accelerate proposed reforms to adult social care and expand their remit urgently to address the pressures created by rising demand, rising costs and rent-seeking behaviours;
- enact legislation to protect the wages of care sector workers and the quality of social care against predatory financial practices;
- develop and support innovative ownership models that break the link between property speculation and the financial stability of the adult care system.
This briefing paper summarises the findings of CUSP Working paper No 28: Tackling growth dependency—the case of adult social care. Available at www.cusp.ac.uk/wp28.