Social care is the UK’S biggest challenge

The biggest long-term issue facing the country is not Brexit but social care. As the number of elderly people continues to grow, the costs of looking after them into great old age, often infirm and ill, will be unsustainable. It is certainly not something the state can pay for through direct taxation, as the pressure on the NHS can testify.

Successive governments have grappled with the implications of this phenomenon over the past 20 years as life expectancy has risen faster than predicted. The political difficulty is that many people expect the state to pay for their social care just as it pays for health treatment.

The notion that we have already contributed the necessary funds through a lifetime paying taxes is strong, and people resent having to pay more when they have retired, especially if they then have nothing left to hand on to their children.

At present anyone in England with assets of £23,250 or more must contribute to costs. Since people are living much longer, these can be substantial, and meeting them invariably involves selling off the most valuable possession, the family home.

Politicians have sought to devise a system that ensures enough money is available for individuals to pay for care but without losing their wealth. So far they have failed. Theresa May’s efforts to do so last June – dubbed the “dementia tax” – helped lose her majority even though it offered far greater protection for assets than currently exists.

The obvious approach is to allow people to insure against the costs of care in their old age. But for that to happen there needs to be a market that would allow premiums to be set at affordable levels. As Matt Hancock, the Health Secretary, tells this paper today, the Government is considering radical new plans including a form of autoenrolment into social insurance schemes, as now happens for pensions.

Some form of care insurance must be the sensible way forward. One idea floated recently would allow premiums to be paid directly, tax free, from a pension pot. If you can insure against a car crash or a house fire, why not against a quantifiable risk of having huge care bills? Most people will have modest costs at the end of their life but for a significant minority it will be a crippling financial burden. Any idea for reform that will alleviate it is worthy of consideration.