The government is considering a new tax for the over-40s to help tackle the social care funding crisis, according to a report in The Sunday Telegraph.
Health and Social Care Secretary Matt Hancock says he is “attracted to” the idea of a cross-party plan for a compulsory premium deducted from the earnings of those aged 40 to 65 to help plug the funding gap.
The system would be similar to the one used in Germany where workers over 40 pay 2.5% of their wages into a ring-fenced pot for social care.
The plan also includes offering cash payouts to those receiving care to enable them to pay carers, including family members.
Mr Hancock told The Sunday Telegraph: “I am impressed by the work of the select committees who have come up with a model that is adapted from what was introduced about 20 years ago in Germany, and it appears to be working there.
“One of the reasons I’m attracted to the proposal is that it’s cross party. This is a problem which can only be solved by people coming together behind a solution, because as soon as it’s turned into a political football it makes it extremely difficult to make any progress at all.
“I’m prepared to have a range of options and see if we can build a consensus around one of them rather than be dogmatic about it.”
Earlier this year, a joint Commons committee proposed a new payment be added to National Insurance contributions of those aged between 40 to 65 as part of an inquiry into funding the cost of adult social care.
Dr Sarah Wollaston, chair of the Health and Social Care Committee which helped propose the plan, says it would avoid placing an “unfair” burden on “working-age young employed adults”.
The Local Government Association (LGA) estimates that adult social care services face a £3.5 billion funding gap by 2025, just to maintain existing standards of care.
Meanwhile, figures show that councils in England receive 1.8 million new requests for adult social care a year – the equivalent of over 5,000 a day.
Last month’s Budget provided an extra £240 million per year for two years for adult social care, plus £410 million in 2019-20 for adults and children’s social care.
Councils will also be given £55 million this year for the Disabled Facilities Grant to provide home aids and adaptations for disabled children and adults on low incomes, plus £84 million over five years for children’s services. Moneywise
A new tax for the over-40s in England should be introduced to help pay for elderly care for all, MPs say.
Retired people should also be made to pay it if they have lucrative pensions or investments, two influential House of Commons’ committees said.
The contribution – dubbed a social care premium by MPs – could then be used to ensure everyone who needs support in their old age gets it.
It comes as ministers are considering how to reform social care.
Currently only the poorest get help towards the cost of care, whether it is provided in people’s homes or in a care home.
Other people have to pay for it themselves, with one in 10 facing lifetime costs of more than £100,000.
However, increasingly people are relying on family and friends or go without care, which includes everything from help with washing and dressing to support in taking medications.
Polling carried out by Ipsos Mori as part of the work done by the four leading health think-tanks for the BBC to mark the 70th birthday of the NHS showed only 15% of people thought the current system was fair.
Although appetite for a new tax was mixed and only one in four people were in favour of using wealth tied up in people’s houses.
The MPs on the Housing, Communities and Local Government and Health and Social Care committees said changes were long overdue.
A combination of the ageing population and a squeeze on council budgets has left the system at breaking point.
The cross-party groups believe only a radical solution can tackle the problem.
Their report said employers should also contribute to the social care premium and argues it could be topped up by an extra levy on inheritance tax on the wealthiest estates.
The MPs believe it could lead to everyone getting care paid for – although those in care homes would still have to contribute towards their accommodation costs.
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The committees do not say how much should be levied, acknowledging there would need to be a full review on how much money the system needs.
But they said a degree of “intergenerational fairness” was needed, given the under-40s as a whole were more likely to be struggling with housing, employment and the cost of living than older generations.
They also suggested the money raised could be used to support the care system for younger adults with disabilities, which forms part of the wider social care system.
This article is a very interesting proposal that would have big implications for many clients and indeed their extended families. It is therefore more important than ever to seek professional independent advice when planning for care/ill health needs to ensure you fully understand how these proposals could impact on your future planning.
John Merrifield Dip PFS Cert CII(MP)