Suggestions to earmark revenues from a specific tax in order to fund social care is technically difficult to achieve, a think tank has warned.
Discussing social care funding at the Conservative Party Conference today (October 5), Graham Atkins, senior researcher at the Institute for Government, said although tax reform could help solve the social care problem, “hypothecated taxes” would need careful consideration.
Hypothecated taxes work by raising revenue from a specific tax for a particular expenditure - for instance a social care tax. The proposal was brought up during the debate as a possible way to fund the troublesome issue of social care.
But the government tends not to use these taxes, instead sticking to the traditional method whereby taxes form a consolidated fund which is then split up according to demand.
Mr Atkins said moving to a single tax method for social funding may not provide a solution as too little, or even too much, may be dedicated to social care.
The government would need to come up with a tax that would rise and fall in line with the demand for social care, Mr Atkins said.
He added: “It is not to say that the government cannot come up with a package of reform but if you were to say this money has to be spent just on social care it will either be too much or too less, so it is technically difficult to do.”
Also appearing on the debate, Viki Cooke, founding partner of Britain Thinks, agreed it would be difficult to make a hypothecated tax work.
She highlighted the importance of giving the public “some guarantee that sensible amounts of money are committed to social care”.
Ms Cooke said research had shown that the public was supportive of introducing ring-fenced taxes, saying “we should all be contributing more in our working lives” to pay for social care.
In addition, she said while no government has tackled the social care issue before because it is deemed too difficult, it was a matter that needed to be addressed urgently.
Ms Cooke said: “The starting point has to be a big, bold, long-term vision [...] in which everyone can buy in to.
“We need a long-term sustainable plan rather than short-term fixes.”
Meanwhile, Mr Atkins said the best approach was to build cross-party consensus and to set up an independent commission to lead reform.
He said: “It is possible for this current government to find a solution to social care but they will need to work alongside the other parties.”
However, not everyone was as optimistic.
Lord Bethnall, parliamentary under secretary of state at the Department of Health and Social Care, admitted last month (September 18) he could not commit to a plan to solve the social care problem before the end of 2020.
He said: “It will require a huge amount of political collaboration and I suspect it will take longer than the next few months.”