A contributory insurance scheme will solve our social care crisis

Last month, it was reported in several major newspapers that the Government was considering the introduction of an age-based “tax” in order to solve the social care problem that has stained this country’s policy books for decades.

There did appear to be stark contrasts in support throughout Whitehall. Health Secretary, Matthew Hancock, is said to be fervently in favour of the proposal, whereas those in Her Majesty’s Treasury are far more sceptical. 

Caroline Abrahams, the charity of director of Age UK, joined Matthew Hancock in supporting the measures. She claimed that despite some “askance” from older people initially this deal offers “a level of provision and reassurance that we can only dream of”.

However, afterwards The Sun reported that the Prime Minister had ruled out higher taxes for the over-40s. Such measures, as all the major newspapers have stated, are emulated across Europe. In Germany, 1.5 percent of every individuals’ salary and an additional 1.5 percent of employer or pension funds are ring-fenced to fund social care.

Of course, social policy is one of the great “poisoned chalices” of public policy. Theresa May fell foul of this with her attempt to introduce the so-called “dementia tax”. These measures would cause those who received home treatment to pay for the service at times through their property. The then Prime Minister u-turned because of the collapse in polling as a consequence. 

Nonetheless, the ongoing pandemic has further increased concerns over the problems within the social care sector. If the government, a government so keen on polling figures is serious about solving the crisis then it should consider evolving and rebranding the proposal for it is the best way to solve the crisis.

There is no easy way to put this but the care home crisis is not getting any smaller. In fact, the Office for National Statistics project that by 2050 around one in four Britons will be aged over sixty-five. Currently, the figure is 20 percent of the British population is over the retirement age. The Mail on Sunday have estimated that the cost of social care is set to grow by an extra £7 billion in the next year.

When National Insurance contributions were introduced in the winter of 1911 they were initially ring-fenced to provide care when one’s health deteriorated or in a time of unemployment. Instead of being considered as a “tax” these measures should be considered a new “contribution” fund. Similar to a pension scheme.

This would remove many of the concerns from politicians, advisers, civil servants and journalists over the sale of the reformed measures to social care. In 2017, 54 percent respondents to a YouGov poll stated that they opposed measures to increase council tax to fund social care policies.

However, the issue is that these taxes are not “fair” and the current political climate is one that, as the top American pollster Frank Luntz has stated on the other side of the Pond, is far more inclined to support increasing contributions for a “just” system. A slightly modified social care system to the one flouted in The Observer is exactly that system.

According to Statista over 12.5 percent of the British population is aged between 50-years old and the retirement age of 65. These periods are a time of optimal disposable income because while the age of marriage and child births are slowing it still remains an event in the average Britons mid to late thirties. In fact, vocational progression may even have peaked once a British worker reaches their 50th birthday.

It would not be fair to levy the cost of funding a new contributory system on your standard university graduate or for that matter somebody in their early thirties settling down. How can it be fair for these two groups of people to pay for a system that they are so far away from using? It is not. That said, a vast majority of these individuals, if they maintain good health, will eventually contribute to their own fund once they enter the contributory age.

But how will this work practically? In 2018/19 the King’s Fund found that the total expenditure on social care by council exceeded £22 billion. Of which, almost two-thirds of the funds were spent on long-term care evenly split between working-age adults and old age pensioners.

This proposal, or the slightly reformed one that would delay the contributory age, is extremely similar to the successful Japanese system, the Kaigo Hoken, that reduced the serious problems that the nation experienced in its ageing population of the late 1990s. This was something that the Nuffield Trust suggested England emulated in 2018.

Therefore, the government will need to produce radical plans to solve the decade old crises in social care. The funding will need to come from somewhere and it not only appears fair for it to be introduced as an age-based insurance contribution fund but it also will protect the homes of the millions of ageing Britons that were put at risk by Theresa May’s measures. 

In order to introduce these measures the government must sell the fund as what it really is. Insurance. It is not a tax. It will not be used for any alternative method of government spending. It will be used to support older Britons if their health unfortunately deteriorates in their later years. 

By J Walters

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