Proposal for new tax on over-40s among options outlined by town hall leaders after ministers push back publication of their own plans
Tuesday 31 July 2018
Local council leaders have proposed a new tax on over-40s to help tackle the social care crisis after losing patience with the government’s failure to publish its own plans for plugging the funding gap.
The proposal is among several being consulted on by town halls struggling to meet the growing cost of social care services. Other ideas include income tax or national insurance hikes and the removal of some benefits, such as free TV licenses, from wealthier pensioners.
The Local Government Association (LGA) decided to act after the government delayed its own long-awaited consultation on social care fu, due to have been published this summer, until the autumn.
Over 40s should pay new tax to fund creaking social care, MPs say
It accused ministers of kicking the issue into the long grass and said the failure of successive governments to act had left services “at breaking point”.
Councils have been unable to meet the costs of adult social care amid growing demand and government funding cuts.
Among the LGA’s proposals for funding social care is a rise for in income tax for all taxpayers, including a 1 per cent increase on the basic rate. It said this could raise £4.4bn by 2024-25. A similar rise on national insurance would deliver £10.4bn in the same period, it said.
It also suggested a “social care premium” that would see all over-40s and working pensioners asked to make a contribution towards funding adult social care. The LGA said a payment of £33.40 per person would raise £1bn.
Other options include means testing benefits that are currently universal, such as winter fuel allowance and free TV licences, in order to raise £1.9bn, or allowing councils to increase council tax. A 1 per cent rise would generate £285m, the LGA said:
The consultation, which is the largest ever launched by the LGA, will last for eight weeks and will shape the LGA’s demands ahead of the Budget, due in the autumn.
Izzi Seccombe, chair of the LGA’s Community Wellbeing Board, said: “People have a right to live the life they want to lead and high quality adult social care and support plays an essential role in this. It is also vital to society. It strengthens communities, reduces pressures on the NHS, supports around 1.5 million jobs and contributes as much as £46bn to the UK economy.
“But work to find a long-term funding solution for adult social care and support has been kicked into the long grass by successive governments for the past two decades and has brought these services to breaking point.
“It has created a deeply uncertain and worrying future outlook for people who use adult social care services now and the growing number of people who will need them in the future.
She added: “We cannot duck this issue as a society any longer. Our green paper is the start of a nationwide public debate about the future of care for all adults, and how best to support their wellbeing, and we encourage as many people and organisations to have their say on how we pay for it and the responsibilities of citizens, families and communities.
“Adult social care and support matters. We must fund it for the long-term so that people of all ages can be supported to live the life they want to live. Building a better society means ensuring that everyone receives the care they need to lead a good life: well, independent and at home for as long as possible. This process must start now.”
The LGA said councils have had to grapple with a £6bn funding shortfall for adult social care since 2010, while the gap is likely to reach £3.5bn per year by 2025.
Social care spending now accounts for 40 per cent of council budgets, and a number of authorities are having to dip into their cash reserves to meet the funding shortfall. MPs have previously warned that this is leaving having a negative effect on other services many local authorities at risk of bankruptcy.
Ninety-six per cent of councils believe there is a major problem with social care funding and 89 per cent think new taxation must be part of the solution.
The government was criticised earlier this year for excluding social care from its new funding settlement for the NHS. While an additional £20bn a year will be pumped into the NHS, no new money was announced for social care.
Jeremy Hunt, then the health secretary, said the government’s social care green paper would be delayed until the autumn so it could be integrated with the new funding plan the government has asked NHS leaders to produce.
The LGA hopes its consultation will force ministers to speed up the introduction of a new system for funding social care. It also wants to shift the discussion on healthcare to focus more on preventative measures that be taken in the community, therefore reducing pressure on hospitals and other acute services.