MP and former cabinet minister Damian Green has called for an overhaul of social care provision, proposing it should be replaced with a new structure based on the current state and private pension system.
In a report for think tank Centre for Policy Studies, Fixing the Care Crisis, the MP for Ashford said his new system would see everyone benefit from a “reasonable universal safety net” with the added encouragement of individual provision on top.
Under Green’s proposals, the state would provide a ‘universal care entitlement’, which could then be topped up by private support, for those who want it, via a ‘care supplement’.
According to the report, the care entitlement would be a flat-rate level of support, adjusted for need. It would not matter whether the care was provided at home or in a residential setting, or where the care was located.
The proposals would involve moving from the existing system, whereby the state provides care via local authorities, to a nationally funded model where the state pays a set amount for each week or month that an elderly person needs support.
The report said the ‘care supplement’ would look similar to an annuity or insurance policy, which would ensure money for more expensive care was available if needed.
This money could come either from people saving small amounts across their working life, the report proposed, through the payment of a lump sum at retirement, either from savings or existing pension pots, or from equity withdrawal from people’s homes.
Figures quoted in the report suggested average annual care costs amounted to around £13,000 for domiciliary care – that is, support in the home – or between £31,000 and £44,000 for residential care. The report claimed there was a social care funding gap of around £2.2bn to £2.5bn.
To fill that gap, Green has suggested taxing the winter fuel allowance, diverting savings from the Spending Review and, as a last resort, imposing a 1% National Insurance surcharge on those over 50.
Pension policy ‘miles ahead’ of social care
Aegon pensions director Steven Cameron welcomed the proposals set out in the paper, saying urgent debate was necessary to figure out how to pay for a society that is in general living longer.
“The government needs to put in place a stable and sustainable way of sharing costs between the state and individuals, based on their wealth,” he said.
“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.”
For her part, Quilter tax and financial planning expert Rachael Griffin described UK pension policy as “miles ahead” of social care despite being “far from perfect”.
“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,” she added.