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MPs call for earmarked levy to pay for social care in England

Commons committees warn the current system is unsustainable without billions more in cash.

Ministers are being urged to introduce a new “social care premium” for England, paid by individuals and employers, to meet the spiralling costs of looking after the country’s ageing population.

A cross-party group of MPs has warned the current system of adult social care is “unsustainable” without a major reform, with “many billions of pounds” needed in additional funding over the next decade.

In a joint report, the Housing, Communities and Local Government and Health and Social Care Committees called on the Government to consider moving to a “social insurance system” with the additional funds raised to be specifically “earmarked” for social care.

It said the social care premium could either operate as an additional element of national insurance or through a separate mechanism, as happens in Germany.

It said the money raised should be held in an “appropriately named” dedicated and audited fund to reassure the public that it would be used solely for social care.

In order to ensure fairness between generations, payments into the fund would start at the age of 40 and would be extended to those over 65.

“We heard strong support for the principle of earmarking contributions – it was felt that establishing a visible fund that is clearly, transparently and accountably linked to spending on social care is key to gaining public acceptance for this measure,” the report said.

The MPs said consideration should be given to setting a minimum earnings threshold, to protect those on low incomes, and to the inclusion of unearned income, such as pensions and investments, when it came to calculating an individual’s contribution level.

The aim of the system would be to ensure the personal element of social care – such as washing, dressing and eating – is eventually available free at the point of delivery to everyone who needs it, although accommodation costs would continue to be means-tested.

With an estimated funding gap of up to £2.5 billion in the next financial year alone, the report acknowledged that is unlikely to be affordable immediately, and said the first priority should be to extend free care to those whose needs are deemed to be “critical”.

In a further measure it called for an additional inheritance tax charge on estates valued above a certain threshold, as a way of “pooling of risk” to prevent those requiring long term care being faced with “catastrophic” costs.

After Theresa May’s attempt to bring forward plans to reform social care funding at last year’s general election – branded the “dementia tax” by opponents and blamed for a disastrous loss of support for the Conservatives – the report emphasised the need for cross-party support for change.

With the Government due to bring forward fresh proposals in a green paper, now expected to be due out in the autumn, it recommended the establishment of a parliamentary commission as “the best way to make desperately needed progress” on the issue.

Clive Betts, the chair of the Housing, Communities and Local Government Committee, said: “The social care system is in a critical condition and there is an urgent need for more funding both now and in the future to ensure people are properly looked after.

“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.

Sarah Wollaston, the chair of the Health and Social Care Committee, said: “We can no longer delay finding a fair and sustainable settlement for social care. Doing nothing cannot be an option.”

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