‘Income tax rise could fund OAP social care’
RAISING income tax could help alleviate the growing financial pressures of providing social care for the elderly, a top economist has concluded.
Professor Gerald Holtham, a visiting professor at Cardiff Metropolitan University, claims a “reasonably moderate” and “fair” tax on incomes would ensure the elderly were not subjected to substandard levels of care in future.
He also argues that a social care fund could be created from the levy which would ensure money was set aside specifically for these services.
In April 2019 the Welsh Government will have powers to vary Welsh rates of income tax by up to 10p within each band. But it has already vowed not to increase tax rates during the current Assembly term, ending in spring 2021.
Prof Holtham, who was commissioned to write a report on the subject by the Welsh Government, states: “Wales faces a problem in providing social care for the elderly in coming years. Social care spending per head of the population aged over 65 has been declining. This may reflect austerity on local authority budgets and could indicate unmet demand for care.
“An increase in spending per head may be necessary to ensure care is of an adequate standard and to enable workers in the care sector to be paid a living wage without jeopardising the viability of care homes.”
Local authorities in Wales currently pay more than £550m each year for social care of the elderly.
But Prof Holtham believes this sum is “inadequate” to meet current demand and retain a good quality of service.
According to the report, spending on social care has fallen from £581m in 2007-08 to £551.7m in 2016-17 (based on 2016-17 prices).
Prof Holtham added: “The decrease in real spending has gone along with a reduction in capacity in the care home sector.
“The number of adult care homes in Wales fell by over 8% between 2011 and 2017 and the number of places available in care homes went down by 4.8%.
“The pressures are not specific to Wales.
“While care home places have grown overall, the Competition and Markets Authority reported in 2016 that ‘short-term funding pressures and uncertainty mean that the sector is not attracting investment’, and Channel 5 News reported in 2017 that 59% of councils reported closures the previous year.”
Prof Holtham said it was “certain” that the population aged over 65 – and especially people over 70 – will increase in absolute terms and as a proportion of the population over the next two decades.
Latest projections show that the number of people over 70 is anticipated to increase by 55% by 2040, rising from some 437,000 to 679,000.