Tories to privatise social services

By Andrew Grice and Michael Prescott, The Times, 19 January 1997

A CONTROVERSIAL plan to privatise the social services, including care of the elderly and children, will be included in the Tory general election manifesto.

Local authorities will be forced to allow the private sector, charities and voluntary groups to bid for almost the entire z8 billion-a-year of care provided by social services departments.

The move is bound to provoke fierce opposition since the services include residential homes for old people, meals-on-wheels and home visits for the elderly, and also adoption. Although social workers will retain control over child abuse cases, ministers want children's homes to be run by the private and voluntary sector.

Labour is expected to present the proposals as an attempt to tear up one of the main planks of the welfare state. To force councils to go to the private sector, no matter what is best for the individual citizen, smacks of clapped-out ideology rather than sensible provision for the most vulnerable in our society, Chris Smith, the shadow health secretary, said last night. But one senior Tory said: We are convinced this will be radical and popular. People have seen the benefits of privatisation and do not believe local authorities should have a monopoly.

The social services budget is rising at 10% a year above inflation, and has increased from z670m in 1970 to z8 billion at today's prices. Ministers believe the shake-up will bring substantial savings, particularly by forcing authorities to use private homes for the elderly instead of council-run homes.

Even if social services departments retain some contracts, they will be forced to become more efficient. A total of 234,000 people are employed by the departments, thousands of whom could lose their jobs under the changes.

The extension of compulsory competitive tendering to the social services will be announced by Stephen Dorrell, the health secretary, in a white paper before the election.

John Major has already earmarked the shake-up as one of the keynote measures for the Tory manifesto. A draft of the Tory programme for a fifth term was completed last week by Norman Blackwell, head of the Downing Street policy unit, and will be discussed by the cabinet at a pre-election summit at Chequers next week.

In an attempt to show that the Tories have not lost their reforming zeal, privatisation will be a core manifesto theme. It will promise to inject more competition into the water industry, with the long-term aim of allowing people to shop round between water companies. The London Underground system would be sold off and the Chequers summit may decide to revive plans to privatise the Post Office, which were shelved in 1994 after a public outcry. The sale of Channel 4 is not in the draft manifesto.

The working theme for the manifesto is opportunity for all. The Tories' drive to ensure greater choice in education will continue. One proposal is to devolve more power to individual schools by cutting the share of Whitehall cash retained by local education authorities from 15% to 5%.

There are also plans to extend the school day from 9.30am to 5.30pm in secondary schools, seen as a way to boost educational standards and a vote-winner among working parents and teachers keen for the chance to earn extra money.

The manifesto will pledge that the Tories will reward the hard-working classes who make provision for themselves rather than rely on the state. There will be higher national insurance rebates for people who take out private pensions, and further moves towards an American-style workfare system under which the jobless have to earn their benefits.

The Tories will promise to make the welfare budget, which will soon pass the z100 billion mark, more affordable by targeting help on the most needy and eliminating fraud.

This will enable them to reach their goal of a 20p basic rate of income tax, which the manifesto will restate. It will also pledge to abolish inheritance tax and capital gains tax. However, plans to reform the tax system in favour of families have been rejected.

Other manifesto proposals include:

• Early intervention to stop young children sliding into a life of crime. But the age of criminality, now 10, will not be cut to allow the prosecution of children at an earlier age.
• A voluntary system of identity cards, with photographs included on driving licences.
• Curbing 24-hour strikes by allowing unions to be sued when action would cause disproportionate damage.
• New cottage hospitals run by GP fundholders.
• Improved care for the mentally ill following concern over those left to roam the streets under the government's care in the community policy. Mental health authorities may be set up to plug gaps between hospitals and local authorities.

On Europe, the manifesto will spell out a modern vision which is not anti-European Union but rejects a federal community.

The move occurs as Malcolm Rifkind, the foreign secretary, prepares to make a series of speeches in which he will appeal over the heads of the political classes to the people of Europe. He will challenge leaders of Germany and France to spell out the precise limits of their plans for further integration.

The manifesto is expected to reaffirm the government's wait and see approach on a single currency. Kenneth Clarke, the chancellor, has circulated a paper to cabinet colleagues saying it will not be possible to judge until next year whether other EU countries are fiddling the figures to qualify for monetary union. Although some ministers will press Clarke to state that Britain is unlikely to join a single currency at its launch in 1999, he is refusing to budge.

While some Tories may be disappointed at the absence of many big, new ideas in the draft programme, Major is keen to contrast the stability and security under a re-elected Tory government with the risk involved in voting Labour.

Yesterday, Major told a London rally to mark the 50th anniversary of independence for India and Pakistan: My aim is to make Britain the best place in the world to live. He said: We're enjoying growing prosperity and we can expect hard work to be rewarded with higher living standards.