Conservative MP Damian Green has proposed that social care provision should be modelled on the state pension, with taxpayers partially funding their care entitlement.
In a report published by thinktank the Centre for Policy Studies, Mr Green proposed the government should adopt the state pension as the explicit model for the social care system.
This would include universal care entitlement funded by taxpayers in a similar fashion to how the NHS works.
The care people receive would have a cost attached which would vary according to where it was received and the type of care.
Under the proposals individuals would be entitled to a specified number of hours of care at home per week, or a place in a care home which includes a set level of service.
Individuals could then use their private pension to cover the remainder of the costs if a higher level of care is needed.
Rachael Griffin, tax and financial planning expert at Quilter, said: "Pension policy is far from perfect, but when compared to other areas of policy, such as social care, it is miles ahead.
"Today’s proposal from Damien Green applies the logic of the pension system and it’s easy to see why.
"Having a basic amount pledged from the state with private provision covering the rest splits the responsibility of care funding in a manner that is understandable and palatable to the public."
Mr Green said social care provision is currently unstable and will only get worse in the future if reforms are not carried out.
There are 5.3m over-75s currently, a number which is set to grow over the coming years, which means an increase in demand for social care which the current system will not be able to cope with, he said.
Steven Cameron, pensions director at Aegon, said: "With an increasing number of us facing the prospect of needing social care in later life, the government needs to put in place a stable and sustainable way of sharing costs between the state and individuals, based on their wealth.
"Importantly, this must be fair and accepted as fair across generations and wealth bands.
"The government’s share needs to be adequately funded, ensuring good quality care across the country, with an end to the current geographical lottery.
"As our society increasingly enjoys longer lives, this inevitably comes at a cost. While this has proven particularly politically sensitive, we urgently need an open debate around how to pay for this, including the potential for increased taxes, earmarked for social care. Ideally, a new deal would gain cross-party support."
Other proposals to improve social care funding in the report included taxing the winter fuel allowance and redirecting savings from other parts of government in the forthcoming spending review.
If these suggestions do not work, as a last resort, Mr Green suggested asking the over-50s to pay an extra 1 per cent national insurance contribution.
The report stated: "Using the latest available data on the income and tax paid from HMRC, there are about 7.9m taxpayers aged between 50 and 64.
"We estimate that they have a mean income of about £39,210 per year. The national insurance threshold was set at £8,424 in 2018/19, so the mean taxable income for these taxpayers was about £30,786.
"A one per cent levy, which would mean an extra £308 a year for the average taxpayer between 50 and 64, would raise £2.4bn a year – enough money to cover the funding gap."
Mr Green suggests that people should be able to purchase a care supplement, which would be something similar to an annuity or insurance policy, which would ensure funds for more expensive care if needed.
This money could come from individuals’ existing pension pots or lifetime savings or via equity withdrawal from people’s homes.
Ms Griffin said the problem with this is that often people do not realise how much they have to save for care in the future.
She said: "Worryingly, people often think the public purse will pay for their care or at least part of it. Even those that don’t are left scratching their heads as to how much they need to pay in before state funding kicks in. The whole thing leaves people confused and vulnerable.
"This is nothing new and is something the government has committed to tackling for years. However, to shift the current structure we need the government to deliver the social care green paper, which continues to be talked about as some sort of mythical being that never reveals itself."
In the March 2017 Budget, the government said that it would publish a green paper on social care, to allow a public consultation to be held. The publication of this paper has since been delayed several times since its original publication date of summer 2017.
The latest position is that it will be published "at the earliest opportunity".
Several solutions to social care are said to be on the table, including a ‘Care Isa’ – a capped savings product, exempt from inheritance tax – and a 'care pension', which mixes drawdown and care insurance.
There have also been calls for a 'Social Care Premium’, effectively a new tax on people over the age of 40.
amy.austin@ft.com
