A new proposal to tackle the impact of an increasingly aging population on social care provision has been published and is already dubbed a ‘tax on old age’.

Who has written this proposal?

The recently published report is called ‘The Fixing the Care Crisis Report’ and is written by Damien Green. He was previously Deputy Prime Minister and now works for a government think tank called the Centre for Policy Studies.

In its introduction, the report states its opinion on the current social care status, saying: “the current system is financially and politically unsustainable, opaque, unfair, and actively discourages local councils from investing in social care and housing for older people. With the number of over-75s set to double from the current level of 5.3 million in the next 40 years, the need to address this problem is – as the King’s Fund warned only days ago – moving from urgent to critical.”

What does it suggest as solutions?

It suggests a two tier system which is largely paid for by increasing tax for those over 50. There will be a basic ‘ Universal Care Entitlement, funded by a 1% increase in National Insurance Contributions for over 50s taxpayers. And then an ‘Extra Care Supplement’ for those who want “more expensive” care would also be an option. This would be a type of insurance cover that means individuals can use property equity release or their savings to ‘top up’ their care package.

How will the new system be paid for?

It is estimated that the cost of implementing this new system will be £2.75billion. The report suggests paying for it by increasing NI by 1% for everyone between 50 and 64 years old. Over the 14 years, each individual will pay around £14,000 more in National Insurance Contributions, at a rate of about £300 per year. Another option in the report is to tax the annual winter fuel allowance belonging to anyone born on or before 5th November 1953.

Will it solve the problem of funding social care for an increasingly aging population?

Unfortunately, others, like The Kings Fund, think that this plan’s £2bn to £3bn potential does not actually generate the £7bn needed to rectify the financials of our elderly social care system. By their reckoning, it doesn’t even cover half of what is truly necessary.

Labour’s response, as reported by the BBC, comes from Shadow Chancellor John McDonnell, who says the report’s plans should be rejected outright as they “punish older people with a tax on getting old”.

Mr Green supported his report during a Radio 4 interview saying: “Given you have this huge raft of wealth, particularly in housing, a sliver of that used for social care would buy peace of mind for people in their old age and would get more money into the social care system. I think that would be fairer because the big divide in our society is not between old and young, it is between those who have owned homes for 20 or 30 years and those who don’t and potentially never will.”

We all know that urgent steps need to be taken to lift the burden of elderly social care from the NHS and families, but agreeing the fairest way to do that is going to be difficult. This report does not automatically become policy, but is used by the government when they make their next set of budgetary decisions. What would you do?