Over-50s face rise in national insurance to fund social care

PEOPLE over 50 may have to pay more than £300 a year extra in National Insurance to help fund “fairer” social care, under plans drawn up by a former Conservative Cabinet minister.

Damian Green says NI should be like state pensions, with everyone en- titled to basic cover but with people encouraged to “top it up” with their own savings or housing wealth.

Mr Green, who was in charge of the Government’s green paper on social care for England when in government, also set out measures aimed at filling a £2.75billion funding gap – including a potential 1 per cent National Insurance hike on the over-50s. In his Fixing the Care Crisis paper for the Centre for Policy Studies, he suggested the NI rise would be a “last resort”.

He said £350million extra could be generated by taxing the winter fuel allowance, or stopping it altogether for higher rate taxpayers. The 1 per cent levy on National Insurance, which would cost the average taxpayer aged between 50 and 64 an extra £308 a year, would raise £2.4billion.

“Taxing the winter fuel payment and taking it away from those who are higher rate taxpayers, allied to either a National Insurance top-up or wider Government savings, would inject £2.75billion into the system targeted only at residential and nursing care,” Mr Green’s report said.

On top of the £6billion already provided by the Government, this would cover the cost of “universal care entitlement” under Mr Green’s model. This could be boosted by a privatelyfunded “care supplement”, a new form of insurance to pay for “rooms, better food, more trips, additional entertainment”.

Mr Green said: “The crisis in our social care system is one of the most pressing issues our country currently faces.

“I propose a wholesale change in our approach to social care, mirroring the state pension system with the introduction of a universal care entitlement and care supplement.

“By combining this new system with an increase in funding, we will be able to tackle this most intractable of political dilemmas fairly and responsibly.”

Robert Colvile, director of the Centre for Policy Studies, said: “This has been politically toxic but we need a solution that commands consensus.”

The preoccupation of the Government with Brexit has seen the normal policy priorities sidelined, and none more so than how to deal with the rising costs of social care. This has proved to be a difficult enough issue down the years without the distraction of an unprecedented political crisis. But it remains a critical matter to be addressed and, if possible, resolved. A report from the King’s Fund last week warned that the system in England was at “crisis point”, with more people asking for social care but fewer receiving it. To a degree this is inevitable, given the growing number of elderly people and a finite budget. Local government is responsible for finding the money but many officials say they have other priorities and cannot provide it. Council spending on social care is now £700 million below what it was in 2010-11 in real terms.

But identifying that there is a problem is the easy bit; producing a solution is quite another order of difficulty. Various options have been proposed in the past 15 years, from capping overall costs to a so-called death tax, but none have been able to achieve a political consensus. A long-promised social care green paper shows no sign of emerging, two years after it was announced.

One issue concerns the immediate funding difficulties faced by councils, which can only be addressed by pumping taxpayers’ money into the system or by councils cutting other programmes and using the money for care. Some have argued that part of the bloated overseas aid budget could usefully be transferred to help the indigent elderly in this country. But this can only be a stop-gap measure. Long term solutions are desperately required if this is not to be a never-ending crisis,

A report published today by the Centre for Policy Studies and written by Damian Green, the former Cabinet Minister, offers a comprehensive approach worthy of consideration, though none of the solutions are without pain and controversy. Mr Green’s plan would fill the immediate funding gap by taxing the winter fuel allowance and imposing a one per cent National Insurance surcharge on people over 50.

In the longer term, he envisages a care system modelled on the state pension, with a state-funded new Universal Care Entitlement which people could top up with their savings or housing wealth. Mr Green’s paper is ambitiously entitled Fixing the Care Crisis. It is time someone did.