Item 5 on the agenda this afternoon is a statement by the Minister for Health and Social Services—an update on the work of the inter-ministerial group on paying for social care. I call on the Minister for Health and Social Services, Vaughan Gething.

Thank you, Deputy Presiding Officer, for the opportunity to update Members on the work of the inter-ministerial group on paying for social care. Since my last update, our work to explore the implications for social care services of increasing population need, and the development of practical options to address this, has continued. Inevitably, the pandemic has had an impact on our plans. Unfortunately, the national conversation that I announced in my previous statement could not take place, for reasons that I’m sure Members will understand. The pandemic has shown both the importance and the fragility of the sector. The long-term challenges remain, and, once we come through the pandemic, they will still need to be addressed.

The demand for care and support in the population means that already stretched services will not meet future needs unless action is taken. The Health Foundation has used work by the London School of Economics to project the cost of publicly funded adult social care in Wales. This shows that costs could increase by 80 per cent in real terms between 2015 and 2030, and these estimates complement shorter term analysis by Wales Public Services 2025. Whilst ageing is a positive trend, and something to be celebrated, grappling with paying for care is something that many Governments are striving to address. We believe that a UK-wide answer to social care funding is preferable, as it could take account properly of the important interlinking with the tax and benefits system. However, given that a UK-wide answer is unlikely for some time to come, we need to develop sustainable long-term solutions for Wales, which will require some cross-party consensus.

The inter-ministerial group is keen to share the knowledge acquired on these challenging issues. To underpin our work we commissioned, prior to the pandemic, analysis about cost pressures within the sector, and I have made this report available to Members today. Analysis of recently published data has shown net current expenditure on social services rising in line with the high-cost scenario described by the analysis. Should this trend continue, net current expenditure on social services could be up to £400 million higher in 2022-23 than it was in 2019-20, and this implies that growing cost pressures lie ahead for maintaining the existing level of provision alone. We also commissioned LE Wales to provide detailed analysis and costing of some options for a social care promise. I have also shared this report today. Potential revisions to the current charging mechanism were considered, and the three options considered in more detail were: providing fully funded personal care, both at home and in residential care; fully funded non-residential care; and a contribution towards residential costs.

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.

Thank you, Minister, for your statement. Anybody would think there was an election brewing, because this statement very, very clearly puts your ideas of having a social care tax into the long grass, and I'm not surprised at all that you've kicked it there. However, looking back at the inter-ministerial group report, it has most certainly laid the foundations for a Labour social care tax through their workings, and I'm here to say that the Welsh Conservatives will not tax the elderly to provide for social care.

We believe it is the right of elderly people to be provided with the care that they need and deserve, and we know there is money in the system, but it's just not the clear-sighted planning and drive to solve this issue. So, I cannot agree with your other comment that you've buried in that statement about introducing a levy in the longer term. However, I do agree that the social care sector is fragile, and swift action must be taken, and I do agree that we are facing a demographic challenge. It's a welcome challenge—a long life is to be celebrated—but it is a challenge nonetheless.

I have read the LE report, and it's really interesting, and I think that there's an awful lot there that we should take away from it and use to build on a potential solution. But what I would like to know and understand is, over the past workings of the inter-ministerial group, how much time have they looked at the 'how' and the potential cost of directing us all to healthier lifestyles. We've talked a lot about the fact that poverty, obesity, substance dependency, smoking, alcohol, lack of exercise, during our lives, from child to older adult, will actually be the influences that influence the quality of our later years, and those are where we need to spend time and tackle, rather than just saying, when you get there and you're not in great shape, 'You're going to have to pay for your care.' So, I'd be really interested to know what they've looked at in those terms.

Do you also, I'd like to know, agree with the principle that paying for social care should be a shared risk across our nation in the same way that we pay for our NHS, because if we're only going to say, 'We're just going to make you when you get older to pay for social care', I just believe that fairness is going out of the window?

You also speak of the need to improve care staff terms of pay. I totally agree, and the Welsh Conservatives have an aggressive plan to recruit and empower care staff, to pay them an absolute minimum of £10 an hour, and more with training and responsibilities. So, how will you in the short term look to recruit and empower care staff, because you say that this is a short-term problem as well as a long-term plan?

When looking at the proposals put together by Gerry Holtham, they effectively meant that you could end up paying more tax just as you were retiring and your income drops. Did the ministerial group look at the issues that would affect Holtham's calculations, such as unemployment, because I think that's actually a really key plank, and I'd be really interested to know if LE also reviewed that?

You mention a need for cross-party involvement in order to be able to bring this forward over the longer term, and I don't necessarily disagree with that, but please could you also outline how older people and a broad range of their representatives will be able to be involved in true co-production of any new policy?

Finally, in my view, until budgets are totally pooled within social care and healthcare, you are having an uphill battle for the true integration of health and social care, and, in my view, at some point somebody has absolutely got to bite that bullet and make that happen, because that is what will drive it, because money is king in public services and that's what will drive that integration and make this kind of decision making and decision planning much, much easier and far more cohesive. Thank you, Minister.

Thank you for the comments and the series of questions. Curiously, there are some that I would agree with—some of the comments made—and others that I simply don't agree with as well. I shall miss Angela when she's no longer in the Chamber, although, that's her choice, and I'm down to the whim of the voters at the forthcoming election.

But I do think there's a real challenge for the Welsh Conservatives and their attitude to the future. I think it's a welcome step for a Welsh Conservative Party to be talking about raising pay for people in the social care sector—that's, I think, good news. But I think there's a real challenge about how that's achieved, because that will require prioritisation in budgetary terms. And in terms of the challenge for where we are, I just don't think it's going to be possible to lever in the sort of money to increase what we're able to do within social care without thinking about more significant financial support for that. And I just don't think the clear-sighted planning to release money is going to get you there—that sort of magic-hat approach to make things more efficient and you'll squeeze, magically, huge sums of money out. If we were speaking with local government of every political shade and background, including Conservative-run or coalition authorities, I don't think they'd say that there are huge untapped resources within the system just waiting to be found and put into the pockets of workers. I think it will take more than that. And as I said in my statement, the current trend shows that we could need to spend up to £400 million by 2022-23, and that's just to deliver what we have, not to deliver better care but to deliver the same care; not to raise the wages of staff, but on the same rates of pay and the same sort of care. And that shows the level of challenge that we face.

So, there is, of course, a challenge, and at this point in the economic cycle—it's classic Keynes—this is not a time to raise taxes. So, it isn't about putting something into the long grass; it's being honest about where we are. And the context changed during the course of the work of the inter-ministerial group, of course, because we were at the point of wanting to start a national conversation, to talk about what all this meant and how we could lever in significant amounts of extra resource into the social care sector. The pandemic has fundamentally changed not just our ability to have the conversation, but the context in which we're operating.

So, yes, we are considering a range of other areas. I've already mentioned the housing options. And the challenge we have I don't think is going to be resolved by lifestyle change. We do know that we have a broader public health challenge and that's work that Eluned Morgan is now leading on. Our ‘Healthy Weight: Healthy Wales’ programme is important for people of all ages to make sure that we live well. But actually, when you think about our challenges on housing, we've estimated that we're going to need a significant increase in extra care units. Well, we've only delivered about 500 extra care units across the whole of Wales in the last five years. So, actually, there needs to be a real step-up in what we're doing to be able to meet the challenge, in addition to wanting to improve the public health outcomes for the whole population.

On your point about paying for social care with a shared risk, like the NHS, well, that will require some consensus to do so. And part of the challenge in doing that is the way that we're currently structured and the lack of a UK-wide answer is part of what inhibits us, because there's going to be a limit to what we can do before we potentially start intervening and having unintended consequences around the wider tax and benefits system. In fact, the cross-party select committee in the House of Commons, before the last election, produced a report in which they advocated raising tax revenues to be able to deliver much more significantly, and that would then have been something that we shared across the whole of the UK, with significant sums of money that would've come to each devolved national Government. They also advocated an age-related form of taxation much like what takes place in Japan. So, there is still an open debate that is not concluded about what the future might bring. This is the current position: the ability to make a difference in taking forward the work on integration that the Member refers to on improving the rates of pay and the quality of care that is delivered and how we have a motivated workforce in a system that, with the reforms that are set out in the White Paper for consultation on 6 April, could significantly change social care, but we recognise that there will still be more to do for the next Government. But I do believe, as I've said in the statement, that this provides a strong foundation for any future Government to take that work forward. 

In the spirit of positivity, I will say at the outset that I sympathise with the Minister, to the extent that the pandemic, of course, has had a very great impact on the broader context and on all of our capacity to look at health and care in the longer term. And that pressure on capacity, of course, is very real. We see it in the fatigue of our staff, in the financial pressures, the unprecedented pressures on public coffers in this acute period of responding to the pandemic. But, for me, that gives us even more reason to act. That’s what the experience of the last year has done: we have seen more plainly than ever the lack of status, attention and investment that there’s been in social care. We have seen the lack of respect to care staff. We’ve had clear evidence that our health services are unsustainable and are overly reliant on the goodwill of staff. They’re far too often in crisis management mode and facing staffing problems that should have been resolved years ago. So, whilst a Plaid Cymru Government would want to put an urgent action plan in place to restore services post COVID, we wouldn’t want to come back to the situation we were in, but to transform services for the longer term, and that in the current climate is a huge challenge.

Now, at the heart of our plans is the creation of new health and care services, providing clear frameworks as to how health boards and local authorities deliver health and care in a seamless way with integrated budgeting, and that means treating health and care staff at the same level, the same conditions and wage grades, whether they are care or health workers.

And the other key part of this, of course, is what we have before us today, namely the future of social care and how we pay for it. Quite simply, we must now move to providing free care where it’s required, just as healthcare is provided. How does it still make sense that someone with dementia has to pay, but somebody with another illness, such as cancer, doesn't? And I'm not for one minute saying this is going to be easy, or it would have been done many years ago, I'm sure. Indeed, the Minister himself has outlined some of the challenges that we face, including, of course, the expected increases in the cost of care in years to come. But do bear in mind that that's an increase at that rate if we keep things as they are today. And we do have to include, as part of the equation on costs, what we should be aiming to save through revolutionising the way we think about the preventative agenda, keeping people fitter, living more independently for longer.

I'm very grateful to Age Cymru for summarising very well what their vision is in a statement that appeared in my inbox today. It's a mirror of what I want to see. This is a question of fairness at a fundamental level. We need fairness as to who pays and how we pay, and they note, among their core principles, that the risk must be shared across society. Of course, there's more than one way of sharing that risk. I am still convinced that this could be included in the general taxation system if we look at it as part of a health and care landscape that is transformed, and that's how I want to deliver this. But, of course, we will consider all options in Government. My question simply is: does the Minister agree with me that the time has now come at last to take action in this area, and that there are challenges to overcome, not to ignore?

Well, I think in my statement I've indicated that there is action that we propose to take. There is action to take, but there are challenges that you can't avoid or ignore. If we're not going to have a UK-wide answer, we need to think about the resources we have available, how we use them, and how we set out what are achievable objectives to take matters forward. Now, we've indicated the cost for the real living wage. We've indicated that we would want, as a further immediate priority, to see progress made on housing. And it's worth pointing out that I think, in the conclusion that we reached, we thought we'd need at least an extra 1,500 care facilities in Wales by 2025, against a backdrop where we delivered 500 across Wales in the last five years. So, it would be a significant scaling up to deliver improved housing options that would deliver better care, and again allow people to stay within their own homes. That would help us on the broader preventative and well-being agenda, and actually this is not something that is instead of making progress on the preventative agenda, it's not something instead of the transformation in the way that we deliver health and care. This is not something instead of moving to a genuinely sustainable healthcare system that works alongside as a proper integrated partner with social care.

And I just turn my mind back to the meeting that I had with Welsh Local Government Association social care cabinet members, and the briefing that I gave them, with WLGA officials, literally just before we then had to start to take extraordinary measures in last spring, because we were just on the cusp of publishing the national conversation documents, and I was telling them when that was likely to happen and what they could expect to see within them. And then all of that had to be paused and stopped. So, the work has been stopped. This isn't a deliberate choice of leaving this right up until the cusp of an election; it's the reality of where we are. But I was keen, as indeed were ministerial colleagues, to make sure we published and made available this information, so it's available before people make their final choices, and helps, I think, to guide whoever the next Government is, although I don't share the Member's view that that will be a Plaid Cymru Government—I think that's one of the less likely options—but let us see what the voters decide.

When it comes to the potential challenges, though, we do know that, the things that we'd like to do, there's a cost attached to each of those. So, we know that—and this comes from the work that's been done by civil servants and external advice as well—free care and support in the style of the NHS would cost about £700 million a year. Moving to all the same terms and conditions as 'Agenda for Change' will be likely to cost about £135 million in addition to that £700 million as well. So, there are big price tags to improve conditions in this area, and those conditions don't then deal with some of those other challenges we have as well. So, that's why, I think, the cross-party consensus we'll need will need to be pragmatic and honest about what's achievable, how we stage each of those improvements, and how we continue to move the dial further forward.

So, I look forward to a conversation with the public, and, indeed, however the next Senedd is made up, I look forward to being part of a conversation, and, hopefully, decision making, about how we do exactly what I think all of us would say we want to do, which is to improve the quality of care, about outcomes for people and, indeed, the way in which our staff are rewarded and recognised.

Thank you very much, Minister.