Homeowners urged to fund social care costs
Author: Mark Gould
Wealthier homeowners should be asked to make a voluntary payment of up to £30,000 for their care needs in old age, a new report argues.
With the number of over-75s set to double from the current level of 5.3 million in the next 40 years, the Centre for Policy Studies (CPS) says the need to address this problem is moving from urgent to critical.
The government has yet to publish its long-awaited green paper on social care. The Local Government Association (LGA) welcomed the CPS report as a valuable addition to the debate on how to address the estimated £7 billion social care cost shortfall. The LGA calls on the government to "deliver concrete ideas”.
The CPS report, Fixing the Care Crisis, which was written by former Conservative work and pensions secretary Damian Green, proposes a system in which everyone receives a state-funded weekly care payment. The report argues that the current system is financially and politically unsustainable, opaque, unfair, and actively discourages local councils from investing in social care and housing for older people.
A state-funded weekly care payment would, it argues, create a sustainable system likely to be supported both in Westminster and beyond – not least because it protects councils from the soaring costs of care. It also fixes the warped incentives introduced by the reforms of the 1990s, which by handing councils responsibility for care costs led to new care home provision stagnating.
It also suggests a range of methods to fill the funding gap. These include, in decreasing order of preference:
- Taxing the winter fuel allowance
- Diverting savings from the Spending Review
- Potentially imposing a 1% National Insurance surcharge on those over 50.
The paper sets out that any reform of social care needs to provide sufficient funding to plug the gap created by an ageing population. But it also says there is a need to be fair across generations and between individuals, ensuring that no one is forced to sell their own home and ending the "dementia lottery".
The paper calls for an increase in the supply of care beds and the provision of retirement housing and for any new social care policy to secure public and cross-party consensus.
It argues that the care system should adopt the model of the state pension – with the government providing enough support for a decent standard of care via a new Universal Care Entitlement, while encouraging and incentivising people to top up this provision from their savings or housing wealth via a Care Supplement.
Those able to downsize or release equity from their homes would also be encouraged to contribute more to plug the current funding gap.
But critics say it would not be enough to address the £7 billion shortfall. Labour shadow chancellor John McDonnell called on the government to reject the plan, which he said would "punish older people with a tax on getting old".
Councillor Ian Hudspeth, the chair of the LGA's community wellbeing board, said: “It is now incumbent upon national politicians of all colours to cooperate and be part of a wider movement for change in the national interest.
“Social care and wider council services provide vital support every day to support people in the lives they want to live. But with people living longer and more people with disabilities needing support, increases in costs and decreases in funding, the current system of adult social care is at breaking point, and faces a £3.5 billion funding gap by 2025 just to maintain existing levels of provision.
“It is absolutely vital the government uses the social care green paper and forthcoming Spending Review to set out how it plans to tackle this crisis and ensure that there is a sustainable funding solution that can deliver the prevention, care and support that people need.”