Government told to ‘make tax popular’ to fund social care

25 Sep 18

The government must make tax more popular to properly fund social care, a prominent academic has told the Labour conference.

Tony TraversTony Travers [pictured right], director of the research group LSE London, told the Policy Exchange fringe session yesterday that “cutting out tax avoidance and evasion” would only go a “small way”.

“There has to be an argument to ensure taxes are more popular. To do that you need popular support. You cannot have France’s public services for America’s taxes.”

“The government has to decide that we are going to make tax more popular.”

France has a huge public sector that employs about 5.4 million staff, which accounts for one in five jobs in the country.

From November 2020 the corporate rate in France will be 28% for all the taxable income of companies. In the US president Donald Trump is pushing through a cut to the corporate tax rate of 35% to 20%.

Travers also told the delegates at the session that government has been too reactive in its approach to social care.

“The government has got itself into a position of responding to failures,” he said, “be it prisons or potholes - it’s not a great way of planning.”

He said the government “must act” now – whatever funding he chooses – because of the scale of underfunding in the social care sector.

The Local Government Association has predicted adult social care faces a £3.5bn funding gap by 2025.

Dominic Carver, head of policy at charity Alzheimers UK, agreed the government is in a ‘reactive cycle’ of spending.

He said: “The government will only wake up when disaster happens.”

Travers suggested that social care has been overlooked as a public spending priority because vulnerable people were less able to fight their corner with politicians.

“There’s no question that adult social care has done less well out of public spending and that’s because it is a weak lobby compared to others,” he said.

“The more vulnerable people are the less likely they are to get a public spending priority.”

The panel discussed possible solutions for funding social care, including increased taxation and national insurance, and paying into a private insurance scheme.

Barry Kushner, Liverpool City councillor and cabinet member for children, said: “I don’t think care should be funded through private insurance but from tax and national insurance.”

Kushner suggested that if the government is “serious” about social care the government “needs to ringfence funding for social care”.

He pointed out local authorities were currently responsible for setting social care funding, not the government. 

Travers warned against a hypothecated – ringfenced - social care tax, saying that while it can seem appealing as it “protects” funding, it is also susceptible to economic downturns.

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