Over 40s, bosses and retired should pay social care tax say MPs

Last Updated: 27 Jun 2018 @ 11:24 AM
Article By: Angeline Albert

MPs are calling for a new tax to cover the costs of social care to be paid by all except those under the age of 40.

Credit: RKlassen/Shutterstock

‘Intergenerational fairness’

A ‘Social Care Premium’ to be paid by those over 40, employers and the retired has been recommended to create ‘intergenerational fairness’ in a joint report by MPs.

Following a joint inquiry by the Housing, Communities and Local Government and Health and Social Care Committees, a cross party group of MPs have called for the premium to be introduced potentially as an additional element of National Insurance. The proposed premium would be paid into an independent, not-for-profit, audited, social insurance fund.

MPs said in the report: ‘We support the provision of social care free at the point of delivery as a long-term aspiration. Following our principle of fairness between generations, we recommend that those aged under 40 should be exempt from the Social Care Premium.

‘Some older people who stand to be the main beneficiaries of increased spending on social care may be relatively wealthy, with housing assets, savings and pensions, compared to younger generations. Young people often face higher housing costs, less stable employment and less generous pensions, and may be paying back student loans or have family commitments.'

Their report also stated ‘working age employed adults are a shrinking proportion of the total adult population' and said those over the age of 65 would also pay the levy ‘while taking into account the fact that they have contributed throughout their working lives via taxation.’

Credit: Shutterstock

'People are willing to pay more'

The Committees' report said the personal care element of social care should be delivered free to everyone who has the need for it, but that accommodation costs should continue to be paid on a means-tested basis.

It recommended it should begin by extending free personal care to those deemed to have critical needs. MPs said extra funds will need to be raised to extend care to those with moderate and critical needs.

Clive Betts MP, chair of the Housing, Communities and Local Government Committee, said: “We heard during the inquiry that people would be willing to pay more if there was an absolute guarantee that the extra money would go on social care.

"Given the huge funding gulf, the government should now take the opportunity to build both a political and public consensus around the need for a new Social Care Premium to secure a fair and sustainable system in the long-term.”

To remove the ‘catastrophic cost’ of care for some people, MPs recommend that a proportion of inheritance tax should be levied on all estates above a certain threshold and capped at a percentage of the total value.

Ahead of the government’s green paper - delayed until Autumn - the report highlights the urgent need to plug a funding gap estimated at up to £2.5 billion in the next financial year, before introducing further funding reforms at a local and national level to raise extra revenue.

'National care service'

Vic Rayner, executive director of the National Care Forum, representing care providers, said the report "recognises that the system we currently have is not adequately supporting the needs of our current population, never mind the emerging needs of future generations."

She added: “Whilst there will need to be a full debate on the solutions proffered, it is vitally important to recognise that this report has been produced through a cross party committee, giving hope that future government analysis of the health and social care systems promised for the autumn will build on the bold agenda outlined for the provision of a national care service.”

Martin Green, the chief executive of Care England, which represents independent care home providers and was among those who gave evidence to the joint inquiry, said: “The inquiry identifies a number of very helpful long term solutions, but even if enacted they will not deliver soon enough to stop crisis and closures of care homes across the country.

"We hope that the government will embrace the urgency of the present moment and press ahead with all the necessary partners to provide urgent support to a sector that is struggling”.

The report also addressed the issue of backdated pay for care workers doing overnight shifts, saying it presents an immediate risk to organisations’ financial stability and must be addressed urgently.

Rhidian Hughes, the chief executive of VODG (Voluntary Organisations Disability Group) representing voluntary disability providers, called the report a "welcome contribution" and said: "We add our voice and call on government to fund and fix social care.”

To view the Committees’ report: ‘Long term funding into adult social care', click here.