It was in Boris Johnson’s electoral manifesto that he would reform how social care is funded in later life as well as introducing a care fees cap with Johnston reminding us periodically that he still intends to deal with the same.
Leaked reports have appeared across the press today that Mr Johnson and Chancellor Rishi Sunak plan to increase national insurance contributions for both employees and employers by 1% pa to fund a Care Fees Levy.
This announcement is allegedly planned for Autumn 2021 but now given isolation, lockdown and increasing virus number issues the Budget may not even be until 2022.
Robbing The Young To Pay For The Old?
It is perhaps unfair that national insurance contributions start to be payable at an earnings threshold of £9,568pa where as income taxes start at £12,570pa (personal allowance). In addition, may people do not work whether disabled, on benefits, at college/university or are pensioners. It is therefore not fair that the burden falls on workers only and for younger workers, they may have to carry on paying a social care levy until they reach state pension age (when national insurance contributions stop).
Make no mistake this is the fault of all prime ministers, chancellors and health secretaries for the last 40 or 50 years. They have all ignore the ‘baby boomers’ problem.
Oldies Should Pay For All Themselves?
Many pensioners have historically paid basic rate income taxes at 30% in the 60s and 70s, dropping to 25% in the 80s and it is only under a Labour government in 2007 that Gordon Brown reduced basic rate tax to 20%. In short, many 50, 60 and 70 ‘somethings’ have already paid their way income taxes whereas 20 and 30 ‘somethings’ have only ever known 20% basic rate tax.
This is why we believe that pensioners have already paid proportionately much more than youngsters are, so thinking about intergenerational fairness, we believe a social care fees levy on top of council taxes would be fairer.
Council Tax Levy?
Our view is that a social care levy on council taxes would be fairer. It is already the responsibility of the local authority to fund social care fees (after any means testing), so it should be the local authority levy via council tax social care levy that meets social care needs.
Looking back, whilst the Poll Tax was unfair on lower earners as we all paid the same irrespective of earnings, council tax seems relatively fair with us all paying, even those on low incomes in a HMO shared property where they pay an “all-inclusive” rent, the landlord will then be paying council taxes and would meet their social care fees levy e.g. by increasing rent by the equivalent %. In addition, those in larger properties pay more council than those in a studio flat or 1 bed flat so higher wealth individuals are paying more. Finally, pensioners would also contribute via any council tax social care levy if they own a property or rent it. Therefore, there is no age burden, we all pay in some shape or form.