Workforce options on improvements to pay, terms and conditions were also considered. These include paying the real living wage and fully implementing the equivalent NHS Agenda for Change pay and terms and conditions, amongst others. In addition to these options, we recognise the important role of housing in accelerating the shift to new models of care. The 'housing with care' option, considered outside of the LE Wales report, looks to build on the existing integrated care fund capital programme. It provides a number of options for capital investment to strengthen the housing and social care infrastructure.

It is evident from the analysis that the potential costs associated with each of the options, as we expected, are very high. This leads to our considerations around how the social care promise could be funded. We explored some tax design principles, building on a number of concepts set out in Professor Holtham’s report, and these included identifying how much funding would need to be raised annually and on a recurring basis to fund a social care promise; the importance of hypothecation compared with budgetary flexibility; whether the benefit may only be available based on a contribution; and opportunities to address intergenerational fairness. In addition, we considered the collection and administration of any tax option, as well as the appetite of the UK Government for further tax devolution.

The pandemic and the actions to contain it have led to a sharp increase in UK Government borrowing and debt. In this challenging fiscal environment, the outlook for economic activity and public sector finances in Wales remains highly uncertain. Any decision about whether, how and when to use tax policy levers in Wales would need to consider the possibility of the UK Government implementing other fiscal measures that would impact in Wales, and the need to support economic recovery in Wales to generate the tax revenues to pay for Welsh public services.

Taking account of the impact of the pandemic and the challenging economic and fiscal climate, our conclusion is that a tax solution for raising funds for social care is now more of a longer term potential solution and not a likely solution in the near future. The implication of not increasing taxes is that we cannot raise or redirect resources to improve social care in the way we would have liked to have done through the social care promise. I want to stress that we are not avoiding addressing these issues, but we have taken what I believe is an honest and pragmatic approach given the fiscal environment we find ourselves in. 

This brings me to measures we have identified through our work that could, subject to budget prioritisation by an incoming government, be implemented more quickly and therefore be a bridge to other more wide-ranging reform in the medium to long term. These measures, which could be started in the shorter term, and implemented as quickly as is affordable, include working towards introducing a real living wage for the workforce. LE Wales estimated this to be an extra £19 million above the projected national minimum wage uplift for year 1, and some capital investment to enable better housing solutions, estimated at £70 million to £80 million a year over a five-year programme.

Support for the real living wage would be consistent with our fair work agenda. We are working, as part of the social care fair work forum, to consider what else can be done to help make social care a more attractive place to work. This would also be enhanced through proposals in our recent 'Rebalancing care and support' White Paper, which advocates a national commissioning framework through which any additional workforce investment could be guided. Fundamentally, the demographic challenge facing Wales means matters explored by the group cannot be left unaddressed. The next Government will need to retain this as a key area of focus. We have developed a whole body of evidence, providing a strong foundation for future work. And finally, Deputy Presiding Officer, I'd like to thank all of the Welsh Government officials and external groups who are supporting the work of the inter-ministerial group, and thank my fellow Ministers and, in particular, the former chair, Huw Irranca-Davies, for the work he did in leading off on this work initially.