A modest proposal for funding adult social care
By Caring Times editor GEOFF HODGSON
What I find difficult to understand about government’s reluctance to commit to an ongoing funding strategy for adult social care is the plethora of options available to it. Many of these options have been offered by much-respected organisations such as the King’s Fund and merit serious consideration.
The various options all have their upsides and downsides but here is one I have been gestating which, as far as I can see, would be neither electorally toxic nor a major no-no for the treasury. I’m no economist but Google was born in a garage so why not a social care funding solution?
Let’s have a “care tax” payable out of a deceased person’s estate only by those who are aged 70 or above when die, making social care and associated costs such as “hotel costs” free at the point of need. This should not be a significant vote loser; the older population is asset rich and it seems a little unfair to inflict on younger people, who find it hard enough to make their financial way in the world, an impost to fund the care of a tranche of the population who are collectively well able to foot the bill themselves. And their time will come.
Then let’s put a lower threshold on the value of a person’s estate of, say, £200,000 (these numbers are arbitrary; I leave it to those who own calculators to come up with the proper figures) meaning that a person of modest means, with an estate valued at say £150,000, doesn’t pay the tax no matter what age they are when they die.
The mechanism for people whose estates were valued at £200,000 or more could be that: if they die at age 70, £50,000 is to be paid as care tax out of their estate. At age 71, £60,000 is to be paid and so on at increments of £10,000 a year until, at the age of 76 and above the care tax payable is capped at £100,000.
That’s the bare bones of it. Of course the issue of married couples and those in other legally recognised partnerships needs to be addressed. So it could be that, where one spouse dies at say, age 71 and the other continues to say 74, then tax payable could be based on the mean age of demise, in this case, age 72, so care tax payable would be £70,000, the tax only becoming payable upon the death of the surviving partner. I believe there are already safeguards in place to minimise tax avoidance by means of transferring one’s estate to other family members, but such safeguards may need to be made more punitive.
Another objection is that a person of modest means, with an estate valued at say £220,00, would be liable to pay almost half (£100,000) of that as care tax upon their death at age 76 or above, but that’s still better than the present situation for those people of modest means who require social care services. Personally, I do not see it as being part of the role of government, of whatever political colour, to be protecting legacies.
I don’t know if this model of hypothecated care tax would raise sufficient revenue to publically fund adult social care for everybody, but given that there are about half-a-million deaths each year in the UK within the age range of 70 and above, total revenue should be in the order of £5bn per annum. I imagine there would be a need for interim funding for a little while until the tax funding stream was established.
The significant plus of such a scheme is that, once the scheme was established, younger people would not have to shoulder any part of the fiscal burden of funding adult social care, it being spread instead equitably among those older people who may have to use social care services – a pooled risk. The scheme could also allow for an active “opt-out” for people who could show that they had the means or appropriate insurance products to fund their own social care. Far fewer people would have to sell their homes to pay for care; inheriting children could take out a modest mortgage, in many cases retaining the major portion of equity in the inherited asset.
Difficult to administer? No more so than any of the other schemes that are being mooted. People may identify a number of detractions that I have missed but so do the many other models that have already been put forward.
At present there is no hand on the tiller of social care. As already noted, government does not lack options, it just lacks will and that is deplorable in a nation which is wealthy enough to provide proper care for those who need it.
- The CT Blog is written in a personal capacity – comments and opinions expressed are not necessarily endorsed or supported by Caring Times.