Anyone who has an interest in the country’s economics will know that elderly care places a huge financial burden on the UK government. And anyone who has aging relatives or is nearing pension age knows that care can end up swallowing up retirement savings in a flash.
But a major review of the health and social care system believes that there is a way to provide free elderly care namely, a new tax on the middle aged and middle classes.
The review calls for the post-war settlement, when the Attlee government established the NHS with a separate care system administered and controlled by local authorities, to undergo a radical overhaul, in effect combining the two for the first time since their creation in the 1940s.
The Commission on the Future of Health and Social Care in England has been a year in the making and concludes that free care could be provided for all elderly people with an extra budget of £5 billion a year. That would amount to roughly twice the existing elderly care budget in England but would still pale in comparison to annual spending on the NHS, which hovers around the £100 billion mark.
But where will this extra £5 billion come from?
The commission, chaired by Dame Kate Barker, former member of Bank of England’s Monetary Policy Committee, worked out that the cash could be raised by a combination of being stricter on current universal benefits for older people like the winter fuel allowance and free TV Licences and making adjustments to NHS prescription charges.
The commission had previously dismissed other ideas for raising the money, including a so-called “death tax” and proposals such as charging “hotel” fees on hospital inpatients.
But the most controversial recommendation and the one that has made headlines is the higher rates of National Insurance from middle aged and middle class people in exchange for enabling them to receive free care when they need it in the future.
Under the current system elderly people in England and Wales with assets totalling more than around £23,250 receive no financial support towards their care, no matter how frail they are. If you need advice on how to manage your money for retirement, talk to a financial advisor or an accountancy firm, like Alexander & Co, especially if you have a business.
Those critical of the current system say the lack of support for the elderly is ultimately costing taxpayers more than the proposed changes would, since poor care means elderly people are more frequently forced to attend hospital and put added strain on the NHS.
The commission recommends that those over the age of 40 pay an extra one percent in National Insurance contributions. Added to this will be another 1% levy on anyone who earns more than £42,000.
These aren’t the only recommendations, however. Those who work past retirement age might have to pay National Insurance for the first time and those currently in care homes paid for by the NHS could have to pay for their accommodation.
Caroline Abrahams, director of Age UK, has welcomed the review and the more integrated approach to elderly care, but warns that these extra levies will be a “big hit” on older people’s incomes, who won’t necessarily understand the benefit.
“We think many older people will question how good a deal it is to be asked to exchange the certainty of more money today for the possibility of better care tomorrow. For this reason we agree with the commission that a lot more work needs to be done on detail of what a transformed, properly integrated system would look like, and how we can get there in a way that the majority of older people will want to support.”