The current shock headline is ‘over 40s to pay more tax to fund social care’. Now that does grab your attention, particularly if you’re already over 40.
But the story is actually about how the government is looking at social care systems in other countries, in order to find a successful long term funding solution for the UK’s.
What is the problem with our current social care system?
The Nuffield Trust, an independent think tank, describes the UK’s social care system: “The current system is widely regarded as unfair, complex, confusing and failing to meet growing care needs in the population.”
The standard of care varies across the UK, it’s difficult to access support and, as the percentage of older people continues to rise, the pressures on the system increase dramatically. And the COVID-19 pandemic has put all the ongoing problems in the health and care systems into sharp focus.
At the moment, if you own your own home and have less than £23,250 in the bank, you might be eligible for free, council run, at home care. If you don’t have your own home, you may be able to access residential care. Some home owners either sell their property to pay for care, or work out the costs themselves.
What are the government doing about it right now?
The major issues for government are: how to have an efficient, interconnected service and how to consistently fund such a huge public expense. A succession of governments have been unable to successfully solve this problem. Not that there are any easy answers. There won’t be a solution that pleases everybody, making it difficult politically.
Prime Minister Johnson said he wanted to “fix the crisis in social care once and for all” and has set up a new health and social care taskforce to work on the issue. Part of their brief has involved looking at how other countries fund social care to their citizens. The Nuffield Trust, an independent health and social care think tank, has researched the impact and comparisons between social care systems in the UK, and Japan and Germany. This is with the aim of finding a new structure for British social care that has sustainability built in.
How much will this tax cost me?
Here’s the politically difficult part for any government. Both Germany and Japan introduced new taxes in order to fund their social care provision.
Germany
In 1994, Germany overhauled its system with the aim having identical provision across the country that will cover basic needs. Access to care is determined by the individual’s need, not their financial status.
This is paid for by a 1.5% additional tax on German taxpayers’ salaries, which is paid as soon as they start work. Employers also pay in a matched amount. This entire amount is kept separate, safe for when the individual needs it in later life. Pensioners in Germany carry on paying into this care fund. It can be used to pay for residential care, professional in-home carers or to pay the relatives and friends looking after them.
In Germany, most care services are delivered by private providers and the system is administered by health insurers.
Germany succeeded on implementing this system because they had cross-party support, kept it easy to understand and have a payment plan that is sustainable. Everyone pays in the same and everyone is entitled to access the fund based on the same assessed needs criteria. It’s not perfect and challenges will need to be met. But they are working from one system that everyone understands and, broadly, supports.
Japan
Japan changed their system in 2000. They had been heavily reliant on hospitals to provide long term care. They introduced a long-term care insurance system (LTCI) which is funded by a combination of co-payment, income tax and national insurance. It’s the last element that’s sparked the ‘over 40s pay more tax’ headlines. In Japan, when people turn 40, they start paying extra national insurance into their social care fund. Then national and local taxes provide some funding, topped up by all individuals paying 10% of the total cost of their care themselves.
There is a split in care providers. Most home care is private providers, whereas residential care homes are not allowed to be profit making.
There are two key factors to Japan’s set up that differentiate it from other countries’. Firstly, they are coming from the position of putting ageing in a positive light. Perhaps a more holistic approach considering the whole person and their quality of life, rather than focusing on health assessment and treatments.
A Nuffield Trust document summary says: “By investing in prevention and in community resources, Japan is creating supportive communities that seek to maintain wellness and reduce social isolation in order to prevent or delay the need for state-funded services.”
The second practical element in Japan’s LTCI system is the role of the care manager. Their job is to work with each individual to make sure their needs are met within their monthly budget. This is a specifically designed role that remains the same throughout the country.
What are the UK going to do?
No final proposals have been submitted to parliament for discussion, yet. In fact, according to The Independent, the PM’s spokesperson said: “It is not true that we are considering this policy.”
There are rumours that some ministers are actively in favour of an over 40s social care tax, while the Treasury are opposed. It makes sense for the government to thoroughly research all possible options, so they can make the best decision for our system.
An unpopular rise in tax seems to be unavoidable because costs are only going to continue to increase and they must be paid for somehow. One major issue involved in changes to taxation law, is how this impacts on the devolved governments of Scotland, Wales and Northern Ireland. We all want a system that’s fair across the whole of the UK, but there are complex political structures to negotiate to get there.
