CAMILLA CAVENDISH: Boris’s £40bn tax raid is deeply unfair on the young and risks penalising the poorly paid
When my fiercely independent aunt was getting frail, I had lunch with her and nervously broached the Care Question.
Had she thought, I asked gently, what would happen if she could no longer live alone or manage her own finances, and if she needed social care?
It was not an easy conversation. But thank goodness this formidable former head teacher and magistrate, a spinster, eventually agreed to grant me power of attorney a few years ago.
Today, aged 87, she is stricken with the Alzheimer’s that also crippled my grandmother. What would she have thought about the Government’s bombshell announcement yesterday that national insurance is to be hiked to help pay for social care – raising the overall tax burden to the highest level seen in this country during peacetime?
What would she have thought about the Government’s bombshell announcement yesterday that national insurance is to be hiked to help pay for social care – raising the overall tax burden to the highest level seen in this country during peacetime? As someone who spent her life helping others and working with children, she would have wanted everyone to enjoy the high standard of care she now does, writes Camilla Cavendish
As someone who spent her life helping others and working with children, she would have wanted everyone to enjoy the high standard of care she now does. But she would never have wanted to burden the young.
That is the first problem with yesterday’s £40billion tax hike. National insurance is almost entirely a tax on workers. Yes, the Government has decided that from April 2023, 1.2million working pensioners will also be expected to pay the new levy. This is an important symbolic move. But quite simply: we should not be protecting wealthy older people at the expense of younger workers. So why did the Government resort to raising national insurance rather than taxing income or wealth?
For starters, many voters are confused about what national insurance actually is and perhaps vaguely think it is ring-fenced for pensions or the NHS.
That’s wrong: the money simply pours into the Chancellor’s pot along with everything else we stump up. Politically, however, raising national insurance is easier than raising income tax. This new increase, along with a tax on share dividends, feels fiddly.
Don’t get me wrong: I passionately support putting more money into social care and solving a problem that has bedevilled policymakers for a generation. Twenty-three years since Tony Blair promised to address social care, and four prime ministers and ten health secretaries later, credit must go to Boris Johnson for grasping this nettle.
But not only do I worry that the new measures are deeply unfair on the young, I also fear ministers may be landing themselves with problems further down the road.
If it is to work, the Prime Minister’s promise to ‘fix the crisis in social care once and for all’ must come with the transparency Germany and Japan have used in their world-leading insurance systems.
Under the new scheme, the NHS is to receive an additional £12billion per year for each of the next three years to tackle the waiting lists caused by the pandemic. Then the national insurance hike is set to be replaced by a dedicated ‘health and social care levy’, which will also be paid by working pensioners. By that time, ministers need to have had a frank conversation with the public about how social care can be reformed to provide better treatment for the elderly and disabled.
They need a clear plan on how to develop the workforce, make care seem a worthwhile career, provide better rehabilitation after hospital and keep older people healthier in the first place.
Added to which, the so-called ‘cap’ on care costs is far from what it seems. Many voters will hear this and tell themselves that that is all they will have to pay. But, crucially, the cap will not cover bed and board, which make up about half the costs paid by residents (these costs may have a separate cap). All this needs spelling out far more clearly or it risks creating the wrong expectations.
And in a time when workers are being asked to dig so deep, the Government’s reluctance to drop the triple-lock on pensions for good is simply wrong.
This new levy risks penalising the low-paid, including those working in the sector, at the expense of wealthy care home residents. I would rather use my aunt’s money to look after her than ask poorer taxpayers to preserve my inheritance. Would she – now being helped round the clock by kind and dedicated staff – approve? I’m not so sure.
- Camilla Cavendish is an FT Weekend columnist and author of Extra Time: Ten Lessons For Living Longer Better
SIR ANDREW DILNOT: After hot air, cruelty and neglect… at last my social care plan is in action
More than ten years ago, the independent commission I chaired published its report into the funding of our social care system.
We concluded that the existing framework was not fit for purpose and root-and-branch reform was required to make it fair and sustainable.
While a great deal of hot air has been expended on the topic in the intervening years, my report’s findings have been gathering dust ever since.
So when Boris Johnson rose to unveil his plan for the future of social care in the House of Commons yesterday I was more invested in the matter than most.
And by the time he sat down, my overwhelming feeling was not so much one of pleasure that the commission’s report had been belatedly implemented, but relief that this country may finally get the care system it deserves.
My overwhelming feeling was not so much one of pleasure that the commission’s report had been belatedly implemented, but relief that this country may finally get the care system it deserves, writes Sir Andrew Dilnot
And a great deal of credit for this development must go to the Mail, which has fought long and hard for a fairer system through its mould-breaking campaigning on the subject. After all, the recent history of the social care system has been one of capriciousness and neglect.
In a sector gripped by a mood of deepening crisis, inconsistent standards are fuelled by a chronic lack of resources, low rates of pay, and high staff turnover.
Furthermore, the current funding mechanism is both inadequate and unjust. While it fails to provide sufficient levels of cash to meet the needs of Britain’s elderly population, it also imposes unpredictable and catastrophic bills on some families, who, through nothing more than bad luck, face having to sell all their assets to meet the costs of care.
This is not the way a civilised society should operate. No area of civic life is more ripe for reform than social care, yet for decades, politicians have ducked the challenge, indulging in empty rhetoric about the need for change but avoiding tough decisions.
This paralysis has continued despite a deluge of reports from campaigners, think-tanks, select committees and official commissions, including – of course – my own. Our recommendations, which included a cap on care bills, were even passed into law in 2013 – but David Cameron’s coalition government baulked at enacting them after deciding that, at a time of austerity, they were too ‘expensive’.
Indeed, given the political climate of caution, I privately said at the time that my commission’s proposals had only a one in three chance of being implemented.
But suddenly, the landscape has been transformed. Hesitancy has given way to action.
Striding into territory where so many of their predecessors feared to tread, the Government yesterday set out a comprehensive plan for reform. The move was the fulfilment of a pledge made in Mr Johnson’s very first speech on the steps of Downing Street in July 2019, when he said that he would ‘fix the social care crisis once and for all’.
He is now taking action. Under his scheme, national insurance will rise by 1.25 percentage points – for both employers and employees – ultimately providing over £12billion a year for the NHS and social care.
At the same time, the iniquity of forcing householders to sell their homes to pay for care will be ended by the introduction of an £86,000 lifetime cap on care payments.
This is not the way a civilised society should operate. No area of civic life is more ripe for reform than social care, yet for decades, politicians have ducked the challenge, indulging in empty rhetoric about the need for change but avoiding tough decisions
Meanwhile, anyone with assets worth less than £100,000 will receive help from the state with their bills down to a threshold of £20,000 in savings, below which all care will be free.
This is a sensible package that finally brings the care system into the embrace of the welfare state – where it should have always been.
The arbitrary cruelty of hammering some unfortunate households will be replaced by a new approach under which the state enables the risk of people requiring support in the twilight of their days to be pooled across the population.
Inevitably, perhaps, given the sensitivity of this issue, there have been protests. But much of this criticism is misplaced.
Some complain that through the hike in national insurance, the Government is imposing a heavy new burden on the working population in order to protect the inheritances of the wealthy.
But the reality is that everyone, including current generations of workers, will benefit from a properly funded, well-run care system, just as everyone gains from the NHS or free education.
Moreover, the new levy is broadly progressive in its application, with the wealthiest paying the most, while those on lower incomes are protected, and with the poorest paying nothing at all. That egalitarian principle comes through in the way the lifetime payments cap works with the means test. All care spending – not just by the individual but also by the state – will count towards the £86,000 limit.
In practice, therefore, a resident who has half their costs met by the local authority under the means test will reach the cap having spent just £43,000, so far less of the family’s savings are lost.
There is also sense in the decision to extend the 1.25 per cent insurance levy to pensioners who are in work or who have an income from dividends, ensuring that affluent pensioners make a contribution to the tax increase. There are still concerns to be addressed. The existing means-tested system is under enormous pressure, and will need more funds in the short term to keep it afloat and maintain its ability to care for the least well-off and most vulnerable.
And the NHS has a voracious appetite for funds, so the competition between health and social care will continue – and needs to be closely monitored. This issue will need to be resolved in the spending review this autumn.
But as I said, I once gave our commission’s proposals only a one in three chance of being implemented.
Today, I’m very pleased to say, I was far too pessimistic.
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