By Lucy Phillips
16 March 2010
Experts in social care for elderly people have set out their blueprints for reform of the funding system ahead of the government’s white paper, which is expected to be published before the end of the month.
The King’s Fund today called for half of all care costs to be guaranteed by the state and the other half to be means-tested through the benefits or pensions credit systems. The government would match every £2 of contributions made by individuals with another £1 to encourage those that can afford it to top up their funds. The approach is a revised version of the ‘partnership model’ put forward by Sir Derek Wanless in his 2006 review for the King’s Fund.
Richard Humphries, senior fellow at the King’s Fund and the report’s lead author, said the blueprint would result in a ‘fair and more generous’ system that would help 50% more people than under current arrangements. ‘If a long-term view is taken, these proposals are affordable and achievable,’ he added.
On March 12, the Joseph Rowntree Foundation proposed that social care be funded through a two-track taxing system according to age. Younger people should pay additional National Insurance to fund their future care needs while older people should fund theirs through an inheritance tax on their assets, the charity said. The respective contributions would increase and decrease over time, eventually eliminating the need for inheritance tax altogether.
Report author Donald Hirsch told Public Finance that there was ‘no painless way of paying for something’ but ‘sharing the burden’ between generations would be ‘more acceptable to the public because it seems like a fair way’.
The main parties have failed to reach a consensus on a funding model ahead of the election. Labour’s preferred option of some form of basic state funding and a compulsory levy on assets after death is likely to be included in the forthcoming white paper. But the Conservatives still favour a voluntary insurance scheme and have branded proposals for a posthumous levy as a ‘death tax’.
Hirsch said there was ‘nothing intrinsically worse’ about taking payments from people after they had died than from their incomes while they were alive. He warned that a voluntary insurance system would probably require ‘quite a degree of public subsidy’ to ensure insurance companies covered certain risks. ‘If private care insurance would work without government intervention, it would already be there and working, but it’s not,’ he said.
Earlier in the month, an all-party group, including former Labour health minister Lord Warner, Labour peer Lord Lipsey and Tory MP and former health secretary Stephen Dorrell, attempted to break the political deadlock by listing shared principles on which any approach should be based. These included establishing a funding partnership between state and individual and giving people the right not to have to sell their home during their lifetime to pay for care.
The controversial Personal Care at Home Bill reaches report stage in the House of Lords this week.
16 March 2010
Experts in social care for elderly people have set out their blueprints for reform of the funding system ahead of the government’s white paper, which is expected to be published before the end of the month.
The King’s Fund today called for half of all care costs to be guaranteed by the state and the other half to be means-tested through the benefits or pensions credit systems. The government would match every £2 of contributions made by individuals with another £1 to encourage those that can afford it to top up their funds. The approach is a revised version of the ‘partnership model’ put forward by Sir Derek Wanless in his 2006 review for the King’s Fund.
Richard Humphries, senior fellow at the King’s Fund and the report’s lead author, said the blueprint would result in a ‘fair and more generous’ system that would help 50% more people than under current arrangements. ‘If a long-term view is taken, these proposals are affordable and achievable,’ he added.
On March 12, the Joseph Rowntree Foundation proposed that social care be funded through a two-track taxing system according to age. Younger people should pay additional National Insurance to fund their future care needs while older people should fund theirs through an inheritance tax on their assets, the charity said. The respective contributions would increase and decrease over time, eventually eliminating the need for inheritance tax altogether.
Report author Donald Hirsch told Public Finance that there was ‘no painless way of paying for something’ but ‘sharing the burden’ between generations would be ‘more acceptable to the public because it seems like a fair way’.
The main parties have failed to reach a consensus on a funding model ahead of the election. Labour’s preferred option of some form of basic state funding and a compulsory levy on assets after death is likely to be included in the forthcoming white paper. But the Conservatives still favour a voluntary insurance scheme and have branded proposals for a posthumous levy as a ‘death tax’.
Hirsch said there was ‘nothing intrinsically worse’ about taking payments from people after they had died than from their incomes while they were alive. He warned that a voluntary insurance system would probably require ‘quite a degree of public subsidy’ to ensure insurance companies covered certain risks. ‘If private care insurance would work without government intervention, it would already be there and working, but it’s not,’ he said.
Earlier in the month, an all-party group, including former Labour health minister Lord Warner, Labour peer Lord Lipsey and Tory MP and former health secretary Stephen Dorrell, attempted to break the political deadlock by listing shared principles on which any approach should be based. These included establishing a funding partnership between state and individual and giving people the right not to have to sell their home during their lifetime to pay for care.
The controversial Personal Care at Home Bill reaches report stage in the House of Lords this week.
