Make middle-aged pay £33 a year to fund care

Annual premium for the over-40s could raise £1bn to meet spiralling cost of looking after the elderly

OVER-40S could be asked to pay a £33 annual premium to help meet the spiralling costs of social care under plans put forward by town hall bosses.

The yearly payment would raise £1billion, although that would be only a fraction of the extra money needed in years to come, local government officials warn. Other methods of raising money for social care being suggested include a 1p rise on the basic rate of income tax or national insurance, and means-testing pensioner benefits such as the winter fuel allowance and free TV licences.

Theresa May has made social care one of her top domestic priorities but her attempt to address the subject in last year’s general election manifesto backfired when a new tax on care in the home was branded a “dementia tax”.

Ministers are currently discussing methods of paying the escalating costs of social care and the Government is due to publish a green paper on the subject in the autumn.

The Local Government Association, which represents councils across the country, has launched its own green paper intended to start the debate early, with a range of options set out for how extra money could be raised.

The LGA claims another £3.5billion per year will have to be raised by 2025 just to maintain existing standards of care, and wants both the public and ministers to give serious consideration to a long-term funding solution.

Increasing the basic rate of income tax from 20p to 21p for taxpayers of all ages would raise £4.4billion, the LGA says, though such a move would be politically difficult as young people are already struggling because of issues including the housing crisis, student loans and low pay.

A 1p rise in national insurance would raise £10.4 billion because employers would also contribute, but it would be similarly risky as a policy.

Instead, ministers are drawn to solutions that involve pensioners and the middle-aged bearing the cost of social care. The Government is still considering options that include a tax on assets, including savings and property, for those who need care in their own homes.

The LGA favours spreading the burden more widely, and estimates that if everyone over the age of 40 was able to pay the same amount, raising £1billion would cost £33.40 per person. Raising the whole of the £3.5bn shortfall would cost £116.90 per year.

Alternatively, means-testing universal pensioner benefits, such as the winter fuel allowance and free TV licences for over-75s, could be used to raise another £1.9billion.

Increasing council tax by 1 per cent would raise another £285 million. Councillor Izzi Seccombe, chairman of the LGA’S Community Wellbeing Board, said: “Work to find a long-term funding solution for adult social care and support has been kicked into the long grass by successive governments for the past two decades and has brought these services to breaking point.

“We cannot duck this issue as a society any longer.”

Adult social care accounts for nearly 40 per cent of total council budgets, and half of all councils overspent their social care budget last year.