Tax rise to care cost cap

ALMOST two years after vowing to reform the crumbling social care system BORIS JOHNSON is still yet to reveal his plan.

Tory MPs, care home bosses and charities are all urging the PM to use the once-in-a-century pandemic to finally put the system on a long-term footing.

Britain's social care system is crumbling

Britain’s social care system is crumblingCredit: Getty

They want the PM to shake up the funding rules so those who need care can get it without having to sell their homes – robbing their kids and grandkids of their inheritance.

But Boris is locked in a bitter row with his Chancellor Rishi Sunak over how to pay for the changes.

Gloomy Treasury bosses have warned that income tax may have to be hiked, and the pensions triple lock torn up, to plug the funding black hole.

Both are key manifesto pledges, and the PM would face a massive backlash if he dared ditch them.

Here, we go through some of the options for reform, while policy expert Hugh Alderwick explains why so many Prime Ministers have promised – and failed – to change the system.

Boris is understood to favour a plan which would see care costs capped at £50,000 per person

Boris is understood to favour a plan which would see care costs capped at £50,000 per personCredit: AFP

BORIS is understood to favour a version of the Andrew Dilnot plan — first floated under David Cameron. This would see care costs capped at £50,000 per person so that families are not forced to sell their homes to pay for care.

But Sir Andrew has warned the PM will need to find around £10billion a year to pay for the plan — raising the spectre of eye-watering tax rises.
Some Tories say a flat financial cap on care would benefit southern Brits whose homes have rocketed in value in the past 20 years.

Instead, the fees should be capped at a third of a person’s assets — meaning a homeowner with a £150,000 house in Doncaster would pay less than someone in a £2million home in Dulwich, South East London.

FORMER PM Theresa May tried to raise funds by proposing that those receiving care in their home will have the value of their property taken into account when the care costs are calculated.

But she promised no one would have to sell their home while still alive. The amount a person could pass on would be gradually increased from the current £23,250 to £100,000.

Hailed by its backers as a once-in-a-generation reform which would transform social care, it bombed on the doorstep. Critics dubbed it the dementia tax, while Tory backbenchers said it was the main reason the party lost their majority in the 2017 election. It showed the perils of badly thought out social care policy.

THE most radical proposal would see the patchwork social care system integrated with the NHS into a combined health and social care service.

Backers of this plan say the Covid pandemic has shown the tragic consequences of having a ­fragmented system, and argue that the care of dementia sufferers should be given the same priority as those with cancer.

But most MPs and health specialists think this would be too ambitious and far-reaching to be done quickly.

Councils fund some of the costs, but their budgets are threadbare over the past decade due to successive cuts

Councils fund some of the costs, but their budgets are threadbare over the past decade due to successive cutsCredit: Getty

Families hit by crippling social care costs, often at the end of their lives, are usually left to pick up the bill themselves. So anyone with assets worth more than £23,250 — including the value of their home — has to pay.

Councils also fund some of the costs, but their budgets are threadbare over the past decade due to successive cuts.

IS Boris Johnson considering raising taxes to meet the cost of social care? Introducing a new cap of around £50,000 on the amount a person pays towards their care will leave a big black hole in the funding which will need to be filled.

Sir Andrew Dilnot estimates that around £10billion will be needed to plug it. The Treasury has warned this would mean another 2p on income tax.

The eye-watering hike would almost certainly spark mutiny among voters and Tory backbenchers, and No10 sources have ruled it out. To help pay for social care, Treasury officials are said to be considering cutting the pensions lifetime allowance from just over £1million to £800,000 — lowering the threshold for extra tax charges.

Another rumoured plan is ditching the pensions triple lock for a year — a move which could raise around £4billion over the next year. The PM’s spokesman insisted the Government is “committed to the triple lock”.

The PM could also set up a new national insurance scheme for social care with Brits paying in a part of their pay cheque every month — but this would take some time to raise the amounts needed.

BORIS has promised to reveal his big plan for social care reform by the end of the year.

The Spending Review — when all government departments have to get their funding bids in — is coming this autumn, so any plan would have to be worked up by then.

Cost ‘just one month of NHS budget’

By Hugh Alderwick

IN his first speech as Prime Minister in July 2019, Boris Johnson promised to “fix the crisis in social care once and for all”.

He’s right that there is a crisis. The English social care system that entered the pandemic was a threadbare safety net, scarred by decades of political neglect.

Government spending per person fell by 12 per cent between 2010/11 and 2018/19. Staffing gaps stand at 112,000. And many people go without the care and support they need.

Covid-19 has laid bare these political failures for all to see. The pandemic has also made the problems in social care worse. The system is unsustainable.

But will the PM really fix it? The promise to reform England’s broken care system is nothing new. Tony Blair made a similar commitment back in 1997. Since then there has been a long list of government reports and expert groups making proposals.

But MPs have continued to duck the issue, and people and their families continue to suffer. Reform gets avoided for a mix of reasons.

Most people are not aware of what social care is, let alone how it works (many think it’s “free” to all, like the NHS – which it isn’t) making it hard to sell the idea of reform as being better than what we already have.

Policy ideas are quickly politicised – labelled a “death tax”, “dementia tax” or similar. And the right fix depends on what you see as the main problems with the current system. There’s a lot of them. Are you worried about quality of services?

The lack of fairness in who gets what? The fact the Government won’t step in to protect people against high care costs? The wellbeing of millions of unpaid carers – mostly women? The changes needed are wide-reaching.

Reforming care is also sometimes labelled too expensive – particularly by the Treasury. But this argument doesn’t stand up to scrutiny. Properly reforming the system might cost about £12billion extra in 2023/24. This sounds like a lot but it only equates to about a month’s NHS funding.

Ultimately, this is about political choices. If it chooses to, the Government could afford to provide better care and support for vulnerable people. Currently it is simply choosing not to.

Boris Johnson casts fresh doubt on June 21 freedom day and says ‘we might have to wait’


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