How to pay for social care

5 Mar 2021 Nick Garbutt    Last updated: 5 Mar 2021

How to fund social care

Northern Ireland's powers to raise it own revenues are so limited that it is almost entirely dependent on the British Treasury via the Block Grant for the monies it can spend. 

This means that its ability to make often urgently required reform is limited by another government with no electoral mandate here which does not necessarily share the same priorities or appetite for spend.

The pandemic has served to highlight the perilous state of our social care system which even before Covid-19 struck was described by the Expert Panel Review Power to People as a “system collapsing in slow motion.”

The devastation that the virus has wreaked amongst care home residents – through both enforced isolation and the death toll has shocked and moved us all. There has never been a better time for an open and honest debate about reforming the system, and, most important of all how the changes are paid for. That’s why it is especially disappointing not to see any special provision for reform in the Budget.

In the past this debate has proved politically toxic, not least because most people still believe that social care, like health is free at the point of delivery, when it is not and only find out the truth when they or a relative needs it.

The fact is that residential care is means tested. The rules for Northern Ireland are as follows.

Before someone is  admitted to a care home they are assessed by their local health trust which looks at both their income and their capital (any savings and investments they may have and the value of their home). If their capital is more than £23,250 they have to pay the full cost of their care. There is also a lower capital cap, £14,250, under which the individual’s capital will be ignored in calculating how much they have to pay towards care.

Costs vary from home to home and region to region but across the UK the average weekly cost of living in a residential care home is £704, while the average weekly cost of a nursing home is £888.

Such high payments don't take long to eat away into most peoples' funds - and as  a consequence those in the care system for any length of time can face the prospect of having to sell their home to pay for their care.

When the King’s Fund carried out research into funding social care recently, it reported that people became angry when the current situation was explained to them.

In addition there is also the question of how we recognise, support and compensate the estimated 214,000 carers in Northern Ireland who support family members without pay, saving the state around £4.6 billion per annum and without whom the system would collapse.

This is just the start – funding all the measures that are required to build a service fit for purpose for an ageing population also need to be factored in, not least remunerating care workers properly for their important work and increasing the quality of care currently provided.

Agreeing where the money should come from to fund this necessary reform involves difficult and unpopular decisions which are exacerbated by the general ignorance of how the service is currently funded. It's hard to get people to accept that we must provide more money to pay for a service they think is free. And in Northern Ireland change will require far more than the Block Grant will provide.

It has proved politically toxic. Tony Blair in 1997, Gordon Brown in 2008, David Cameron in 2012 and Theresa May all pledged to reform adult social care. All failed.

When Boris Johnson swept to power in 2019 he addressed the issue in his very first speech: “ I am announcing now – on the steps of Downing Street – that we will fix the crisis in social care once and for all, and with a clear plan we have prepared to give every older person the dignity and security they deserve.”

There is still no sign of this “clear plan”.

The Conservative Manifesto on which Johnson won that election also contained the following on reform of social care: “We must build the same level of consensus on social care as we have already built on the NHS. So we will build a cross-party consensus to bring forward an answer that solves the problem, commands the widest possible support, and stands the test of time. That consensus will consider a range of options but one condition we do make is that nobody needing care should be forced to sell their home to pay for it.”

If there is a cross-party consensus emerging, or indeed any talks which might lead to one there has been no sign. And Rishi Sunak’s Budget made no commitments on such funding.

When she was Prime Minister Theresa May promised a Green Paper on social care reform. It was originally due for publication in summer 2017. This was the first of five Government-set deadlines for its publication that have been missed.

By last summer the government’s official position was that it would be “at the earliest opportunity”. Now the talk is that we will have to wait another year before we get any insights into the government’s plans.

It is likely that the delay is due to an understandable reluctance for government to embark on such major reform whilst the pandemic is still raging. However there should not be a delay in terms of debating what needs to be done.

A number of options are available which include:

  • a tax rise which is ring-fenced for social care. This has the advantage of spreading the costs of care across society, preventing potential financial catastrophe for individuals.
  • Increasing inheritance tax. This is unpopular in polls and creates a dependency on the strength of the property market.
  • Extending National Insurance to retired people. This would reduce inter-generational unfairness.
  • Raising the means test threshold. This might help some people from catastrophe but would increase the cost of public funding, not solving the underlying problem.
  • Some form of insurance system which people could opt out of. This kind of solution has proved workable in Germany and Japan. However insurance-based care is not popular in the UK and could be a disaster if insufficient numbers sign up.  

If Johnson proves unable or unwilling to introduce reform Northern Ireland policy-makers should consider going their own way. Two years ago the Welsh government published an independent study of how it might fund social care reform through a local tax.

Paying for Social Care argued that it was fair for younger people to pay less than older tax payers.   On that basis tax contributions ranging from 1 per cent of income for those aged 20-30 up to 3 per cent for those over 60 would be required. This would be enough in Wales to create a fund of more than £3 billion  by the 2030s, more than enough to provide decent social care for all.

Northern Ireland does not have the power to raise its own taxes. But if the Tories continue to dither and fail to provide an acceptable solution, why we not lobby to provide our own?


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