This working paper from the Health Foundation and The King's Fund considers five approaches to funding social care for older people in England. The chosen models reflect the solutions most commonly raised in the debate around social care funding, and are not a comprehensive list of possible models.

The objective of this paper is not to put forward a single recommendation, but to set out the implications of each of the models.

The five models

  • Improving the current system.
  • The Conservative Party’s proposals at the time of the 2017 general election (a revised means test and a cap on care costs).
  • A single budget for health and social care.
  • Free personal care.
  • A hypothecated tax for social care.

Key conclusions

  • There is scope for making small improvements within the current system, and this approach would recognise the great difficulty successive governments have faced in achieving major reform. However, it would not address many of the fundamental problems with the current system, including the downward trend in the numbers receiving publicly funded care. Nor would it protect people against ‘catastrophic’ care costs.
  • The Conservative Party’s proposals would have, for some, resulted in a more generous system than the one currently in place. However, there are real concerns around implementing and operating such a complex system. There is also a question as to whether this would be the best use of additional funding for social care.
  • While a joint health and social care budget might support progress towards more integrated care, it will not in itself address the differences in eligibility between the two systems, or generate additional revenue for health or care.
  • Free personal care would mean increasing the government’s ‘offer’ on social care. However, given this would require an increase in public spending, there is a question as to whether this would be the best use of additional funding for social care.
  • A hypothecated tax may help gain public support for raising additional funding for social care. However, this would represent a significant shift from the existing system, and could exacerbate the lack of alignment between the health and social care.


Colin Godber

I found this review interesting but it falls into the trap of considering and then rejecting valid components of a combined solution because they don't provide the answer on their own. The time has also come to break out of the smog of 20 years of political cowardice and establishment contentment with the glaring injustices around the status quo in social care.
We are all happy to pay into (and pay more for) the NHS because it guarantees all of us treatment when we are ill (or did before dementia and other chronic neurological conditions got squeezed out in the 1980s).
Most older people (especially those in percentiles 30-90 whose assets dementia could wipe out) would readily pay into a scheme that brought these conditions back into the fold of free care at the point of need. Since only the top 5-10% could realistically contribute from income the logical and painless way to collect the money would be as a levy (say 15%) on wealth at 65, payable after death.
For the baby boomers and their seniors this would be a catch up on national/social insurance we should have paid during our working lives if we had been paying enough then to cover our medical and social care in our extended old age. Savings would be intact as the levy would be dwarfed by our windfall from house price inflation and for the best off the tax relief on pensions and free higher education.
The % chosen for the levy should be set to deliver a large boost to spending on social care (desperately needed to restore quality and community based infrastructure) and integration with the NHS. Hypothecation would legitimise more user involvement in regulation.
This part of the solution would be a win-win for the contributing generation and if applied to those currently over 50 when they in turn reach retirement will ensure sustainable integrated health and social care for older people for the next 40-50 years.
It will also take a substantial tax load off younger working people for whom there will be the additional spin off of diverting a bit of unearned inheritance as a safeguard against the legacy "wipe-outs" of today's "dementia tax".
That will facilitate the other essential part of the solution, a more progressive version of national insurance to enable each succeeding generation to fund its (but no longer its seniors') lifetime health and social care. Unlike their seniors far fewer of those currently under 40 will achieve asset levels (let alone the inflationary house price windfall) sufficient for the sort of catch up capital levy in retirement proposed above. The latter gives us the necessary breathing space to establish such a fund (which will also be important in catering for the increasing social care needs of the under 65s).
If we move towards a hypothecated insurance tax of this sort it would be logical to apply it to all income (including that of pensioners in the higher tax brackets) but for those of working age it should include an employer contribution (an important feature of the equivalent social care insurance in Germany). There would clearly need to be a tapering with the catch up levy for those paying into both schemes.
I am not suggesting this template has all the answers but something along those lines ticks the boxes for inter and intra generational fairness. It also invokes the spirit of the NHS and Beveridge. With each generation paying for its own lifetime care it neutralises the demography of the baby boomers and fluctuations in the cohorts ahead and is therefore sustainable. Hypothecation might just give the political parties the courage to step up to the plate. The challenge to the Think Tanks, the commentariat and the comfortably off establishment will be to agree on a model that can work and really hold the politicians feet to the fire.

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