Hancock ponders a ‘tax on age’ to pay for social care
A NEW levy targeted at the over-40s is being considered by ministers to help solve the social care funding crisis.
Matt Hancock, the Health and Social Care Secretary, told The Sunday Telegraph he was “attracted to” a crossparty plan for a compulsory premium deducted from the earnings of the middle-aged and over-65s to fund the cost of their care in later life.
The proposals, set out by two Commons committees, are based on the system in Germany under which all workers over 40 pay 2.5 per cent of their wages into a pot formally earmarked for social care.
The plan also includes offering cash payouts to young and elderly adults receiving care, to enable them to pay carers, including family members. It is more radical than an idea Mr Hancock previously disclosed he was considering, of an “opt-out” proposal similar to the auto-enrolment system of pensions. The premiums would be compulsory and only levied on older workers, leaving ministers open to accusations of a tax on age.
Dr Sarah Wollaston, the Tory chairman of the Commons health committee, one of the two panels that proposed the scheme, said it was intended to avoid putting an “unfair” burden on “working-age young employed adults”.
Mr Hancock said: “I am impressed by the work of the select committees who have come up with a model that is adapted from what was introduced about 20 years ago in Germany and it appears to be working there.”
He added: “One of the reasons I’m
attracted to the proposal is that it’s cross party. This is a problem which can only be solved by people coming together behind a solution, because as soon as it’s turned into a political football it makes it extremely difficult to make any progress at all.
“I’m prepared to have a range of options and see if we can build a consensus around one of them rather than be dogmatic about it.”
Mr Hancock’s comments suggest the plan will form one of the Government’s formal proposals in a social care Green Paper due to be published by Christmas.
The scheme was proposed in June following a joint committee inquiry set up to find ways to tackle the “catastrophic” costs of social care. The premium would supplement funds raised by local councils.
Mr Hancock has said that major changes were required to cope with the rising number of elderly people needing care, and to address injustices in the current system. Dr Wollaston added: “It has to be compulsory otherwise it wouldn’t be done.”
Under the committees’ proposals for a “social care premium” employees and employers would split contributions, with tax levied through a new mechanism or added to the existing National Insurance scheme.
In Germany, an adult earning a £27,000 salary pays about £675 a year, while those on £50,000 pay up to £1,250.