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Caring Times Christmas Lunch 2021

09 Dec 2021

The Dorchester Hotel, Park Lane, London

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.

5 Replies to “A modest proposal for funding adult social care”

  1. Re “Google was born in a garage so why not a social care funding solution?”, Google egan as a virus that grabbed ones’ Home Page and one couldn’t get rid of it in the usual way of File>Options and there re-setting one’s Home Page choice; the only solution way was to find out about System Restore and then ‘restore’ the PC to a pre Google-hacked date. Arrange a virus rather than a vote?

  2. Geoff, you are right in that there has to be a model of funding that we all finally agree on, understanding that whatever is finally settled upon is bound to disadvantage someone. We can depend upon the press to find that person and make much of it I’m sure! As a society though we simply need to find the best worst option rather than keep seeking the ‘unicorn’s horn’ that is the solution that disadvantages no-one. One thing that I personally have never understood however is this idea that the younger population shouldn’t have to shoulder the burden. Surely the entire problem can be summed up by saying that today’s older generations are in this predicament because they didn’t put enough into the system whilst they were working. If we are to learn anything then surely it’s that we need everyone to start contributing as soon as possible otherwise aren’t we just perpetuating the problem?

  3. I think the key thing for any social care proposal at the moment is lack of will, plus inability to admit lack of funding to do anything properly about the issue – noting that this is also about a political choice as to where the available money goes. One other thing to note, though, about your proposals – the Treasury hates hypothecated taxes and they can end up bringing in less funding rather than more . . .

  4. Like health, care itself should, of course, be free at the point of use and need. Living costs should, of course, be met by all of us whether our income is from pension, employment or benefits. Good care with care workers being properly trained and paid costs what it costs. We should support the smaller local providers and reintroduce local authority homes both of which we can be proud of and value as we do any other local service.
    The real, hidden and avoided problem is that care costs a lot more than it should because the biggest providers are ripping us off. They have found ways of taking huge profit out of the system, paying very little tax, splitting their organisations into many incestuous companies that all pay each other and stash the cash in tax havens. Meanwhile they pretend that the homes they run in the UK are destitute, that they can’t pay a decent wage, and they accept all the freebies that are supplied to train and support their operations, and campaign for more government funds. It’s dishonest.
    But the big providers are not the only problem. Closely allied to the big-business rip off, are all the hangers on who have built their businesses on the back of care: the consultants, regulators, quality people, IT companies and so on. There’s a lot of money to be made out of care. There are jobs and organisations – and advertising – that are totally dependent on this supposedly bankrupt “public good”. Compliance with the irrelevant blanket demands of regulators is also very costly.
    So, please, don’t let us simply get more money to feed into a rotten system.

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