Over-40s tax would raise £15bn a year for social care
January 15, 2019
Fifteen billion pounds could be raised each year from people aged over 40 if the UK adopts the German model of social care tax, according to research from Hymans Robertson.
This is one of six options likely to be put forward for tackling the crisis in social care in the Government’s long-delayed Green Paper, now expected to be published some time in 2019.
In its report A better future for adult social care, the pensions and risk consultancy calls for cross party political bravery to address the funding issue.
“The system needs more money,” said Hymans Robertson partner Jon Hatchett.
“It needs a healthy injection now and even more in the years to come. Taxation of current and future generations will be needed. It is never going to be popular. But, as importantly, funding needs to be ring-fenced and spent well. Prevention should be prioritised, both to improve the lives of individuals as well as to manage down the costs faced by society.
“The Green Paper is expected to put forward a number of different options to address the current crisis. One is rumoured to be a tax of 2.5% on income for the over-40s, split between employer and employee contributions ring-fenced for social care, similar to the system in Germany. This would raise £15bn per annum which would be a huge step forward. However all potential policies need to be assessed against adequacy, sustainability and fairness in the context of likely future demographic shifts. And however the money is raised, it needs to be spent well, focusing on prevention and people-centred health and social care provision.
“Collectively we’ll have to pay for the care we receive somehow, either through taxes, insurance, directly, or drawing on assets or homes. We support a model funded by a partnership between the individual and state, spreading risk to prevent care costs leading to financial ruin and to make sure the burden is spread fairly across generations. Funding should be invested in a way that saves money in the long run but at the same time it must visibly improve people’s lives.”
- The report A better future for adult social care, can be found at: https://www.hymans.co.uk/media/uploads/Adult_Social_Care_Whitepaper.pdf