Our ageing population gives rise to growing concern regarding the affordability and quality of care available in the UK. Over the past ten years the care sector has experienced unprecedented demand – and with government funds lacking a crisis looms on the horizon.
The current situation is incredibly concerning for people in need of care and their families. Even if you have savings and a property funds can quickly dwindle where ongoing care is required – and the threat of having your freedom of choice removed understandably adds to existing concerns.
For those without savings or assets the outlook is even more worrisome. Local authority care standards are notoriously inconsistent and are often inadequate, failing to meet the needs of service users. Some types of care, such as live in care, are off-limits completely unless you can pay privately.
in 2018 a scheme dubbed the ‘Social Care Premium’ was proposed via a report by the Housing, Communities and Local Government Committee alongside the Health and Social Care Committee. It aims to ease pressure on the care industry but also on the individual, who at the moment must pay in order to access a good standard of care.
In addition the plan hopes to standardise and improve the quality of care available for everyone – not just those who can afford to fund private options.
Understandably this is a complex issue – so unfortunately the solution won’t be simple. Here we have broken down the proposed scheme to help those who may be affected by it to understand it more easily.
In 2018 the Housing, Communities and Local Government Committee and the Health and Social Care Committee submitted a joint report.
They did so in response to growing concern over adult social care funding and an increasing burden placed upon the NHS. In the report they called for the introduction of a solution they called a ‘Social Care Premium.’
The report calls for the introduction of a ‘Social Care Premium’, either as an additional element of National Insurance or with the premium paid into dedicated not-for-profit social insurance fund that people would be confident could only be used for social care.
To ensure fairness between the generations, the premium should only be paid by those aged over 40 and extended to those over the age of 65, with the money being held in an independent, dedicated and audited fund to help gain public trust and acceptance for the measure.
In short, the proposal identifies that:
These points guide the Social Care Premium’s approach.
One key aspect of the proposed scheme is that the tax would only be applicable to those aged over 65. Anyone aged under 40 would be exempt.
The reasoning behind this is that many younger people are struggling to afford their own homes – many are trapped in low paid jobs paying high rental rates.
Meanwhile statistics show that individuals between the ages of 70 and 90 draw on just a third of their net wealth during this time, passing much of their assets to the next generation. According to the Institute of Fiscal Studies wealth remains ‘trapped’ between middle and older generations – yet these people are most likely to need care and support and are most able to pay for it.
The aim therefore is a fairer system which is properly funded, improving standards of care and taking away some of the worry and ‘lottery’ style roulette of care quality, replacing it with freedom of choice for all.
This plan has naturally given rise to concern amongst older generations, who were hit with headlines such as ‘the over 40s tax’ and when the report landed.
But the Social Care Premium in fact aims to make things fairer for those approaching later life. At the moment those who can’t afford to pay face a poor standard of care. Meanwhile those with assets also face uncertainty and the prospect of being stripped of the savings and property they worked hard to own.
The report recognises that neither situation is ideal. Instead it recommends standardised care which is fairly priced and paid for across the board.
It is also important to note that payment would be means tested – so anyone without a pension or sufficient income would be exempt from making payments.
The first thing to note is that Social Care Premium is unlikely to be implemented as it is now.
It was set out as a basic framework – a recommendation rather than a specific set of rules and regulations. Therefore it’s difficult to speculate on how the Social Care Premium might affect an individual.
One way it could negatively impact upon older people is increasing the amount of tax they have to pay on top of current outgoings such as household bills and rent. However payment eligibility would be means tested, so those who cannot pay would not have to.
The other concern raised by critics was the report’s failure to discuss covering the cost of residential care.
It is targeted only at personal care – which represents a very small portion of the overall problem. According to the report residential care would still be means tested, therefore someone could pay years of additional tax and in the end be subject to huge additional costs if they needed to go into a care home.
This along with others is an example of loopholes that would need to be addressed should the proposal make it to parliament.
The positive implications would be numerous, including better care for all, a more standardised approach and an end to poor consistency of care and financial barriers. The proposal is well-meaning and a better standard of accessible care for all would understandably be beneficial.
However, this is provided the scheme is implemented in the right way, and the money must come from somewhere.
Whilst the plan is well-meaning and aims to provide a realistic solution to current issues within the care sector, it is not without fault. It almost certainly will need review and fine-tuning before it is passed through parliament, if it is to do so at all.
There are also other issues to address – such as the discrepancy between support available for those with medical illnesses and those with dementia.
At present a person with dementia is forced to pay expensive care costs independently, whilst a person with a costly medical illness receives free treatment under the NHS Continuing Healthcare scheme.
When you consider statistics that estimate 1 million people will be living with dementia by 2025, it’s clear to see how this will become a major issue.
There is also a postcode lottery to contend with. In Scotland free personal care is provided under Scottish legislation, yet just over the border in England this is not the case.
This means that two people living just 5 minutes away from one another over the border could have thousands of pounds discrepancy between them – one receiving free care, the other paying privately.
If the Social Care Premium falls through, it is likely that the government will need to propose something else in order to meet the rising demand and costs of care.
Whilst it’s impossible to speculate on what the government may or may not do in the future, it’s clear that a solution is needed very soon.
Other solutions have been proposed – but most include general taxation, which is unlikely to be passed through parliament.
A rise in general taxation such as VAT or petrol prices would also impact negatively upon everyone – especially those on low incomes. Insurance policies could provide another way to raise money – but getting people to sign up and pay for them may not be so easy, especially younger people.
For now it’s best to prepare as much as possible for the prospect of care in later life. You may like to meet with a financial advisor, who can help you to structure your assets and savings in order to cover future care costs.
If you’d like to find out more about the Social Care Premium there are a number of places you can go to.
There are useful resources on the gov.uk website – as well as charity websites such as Age UK.
When the plans were first announced it caused a media frenzy – with many outlets choosing to cover the scheme negatively. Keep an open mind and choose impartial news sources when looking for further information.
Many popular press included sensationalistic articles giving rise to worry and concern, simply adding anxiety to a situation that is already difficult. Bear that in mind when researching and focus on facts rather than speculative articles designed to scaremonger.
For more information on live in care you can find informative and insightful articles here on this website.