Over-40s could be made to pay more tax to fund social care

Ministers examining Japanese and German care funding systems

Jon Stone
Policy Correspondent
Monday 27 July 2020 07:45 BST
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A pensioner holds his walking stick on September 8, 2014 in Walsall
A pensioner holds his walking stick on September 8, 2014 in Walsall (Getty)

Over-40s could be asked to pay more tax to fund the cost of elderly social care under plans reportedly under consideration by ministers.

The idea is among a series of proposals being examined by Boris Johnson, with people either compelled to take out insurance, pay more national insurance, or income tax once they hit the age ceiling.

The Guardian reports that the prime minister's new health and social care taskforce is drawing inspiration from Japan and Germany as it studies models for covering the expected £7 billion soaring cost of care.

The cash raised from the payroll contributions over a person's later working life could then be used to pay for a stay in a care home, or fund home visits for elderly people who need help at home with washing, dressing and other activities.

The issue of how to fund social care has become a vexed political questions over the last decade. In 2010 the Labour government was accused by the Tories of planning a "death tax" with proposals for a levy at the time of death to fund a universal national care service.

In turn, Theresa May's Conservatives were met with hostility after the party's 2017 election manifesto included proposals for more people to pay for social care by selling their homes. The policy was branded a "dementia tax" by the opposition because they would have mean people who needed care end up paying significantly more than those lucky enough to not need it.

Under the current system in the UK some people qualify for free at-home social care from councils if they have less than £23,250 in capital, excluding their primary residence. People who do not own their own home can get residential social care. Others have to sell their home to pay for care or make their own arrangements.

The Japanese system now being studied by ministers has people paying additional tax to fund social care from the age of 40, while in Germany workers pay 1.5 per cent of their salary into a ring-fenced fund from when they start work, with employers also matching their contributions.

While the plans are gaining traction in different parts of government there are understood to be major differences between different departments on the way forward, with the Treasury reported to be strongly opposed.

The plan comes as local councils, charities, and healthcare administrators call for a major overhaul of the system in light of the coronavirus crisis.

Over 30 organisations including the Local Government Association, Alzheimer’s Society, and NHS Confederation say the government must publish a timetable for reforming social care before parliament returns from the summer so that the issue is not kicked into the political long grass yet again.

James Jamieson, chairman of the Local Government Association said: "For too long we have been promised a plan to fix the social care crisis but people who use and work in these vital services are still waiting. The Covid-19 crisis has proved we need a complete reset, not a restart, when it comes to the future of social care."

Downing Street on Monday denied the policy was being looked at. The PM’s official spokesman said: “It is not true that we are considering this policy.”

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