Tax 

MPs call for social care tax for over-40s

MPs call for social care tax for over-40s

MPs from two Parliamentary committees are calling for the government to introduce a new tax for people over 40 to fund social care.

The Housing, Communities and Local Government and the Health and Social Care committees today (27 June) published a report which suggests 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,” the MPs argued.

The Parliamentary committees said individuals and employers should pay a new contribution into a dedicated fund, “set aside to help pay for the growing demand for adult social care and implement funding reforms”.

They also noted the current system isn’t “fit to respond to the demographic trends of the future”.

Back in December, the government confirmed that the proposed £72,500 cap on social care would be scrapped.

Prime minister Theresa May’s predecessor, David Cameron, had promised to bring in an upper limit on the amount people must pay towards their own care, following recommendations of the Dilnot commission in 2011.

Instead, the government said that there would be a process of "initial engagement over the coming months" to define the long-term reforms, which will be set out in a green paper which was due to be published this summer.

However, Jeremy Hunt, secretary of state for Health and Social Care, revealed earlier this month that the document won’t be published until the autumn.

Back in May, the prime minister was forced to say the Conservative government would set an “absolute limit” on the amount people pay for social care after her original plans for funding social care, unveiled as part of the Conservative party general election manifesto, were dubbed "a dementia tax". 

After three days of mounting political criticism of her social care reforms Mrs May bowed to warnings from Tory candidates that it was hitting the party hard on the doorstep.

According to research from Just Group, round 3.8m people are delaying making financial plans for residential care until a new proposal on this area is introduced.

The report by the cross-party Committees describes the social care system as "under very great and unsustainable strain".

The MPs argued there is an “urgent need to plug a funding gap estimated at up to £2.5bn in the next financial year, before introducing wider funding reforms at both a local and national level to raise extra revenue with a long-term aspiration of providing social care free at the point of delivery”.

Labour MP Clive Betts, chair of the Housing, Communities and Local Government committee, said: “We heard during the inquiry that people would be willing to pay more if there was an absolute guarantee that the extra money would go on social care.