Over-40s may soon have to pay extra tax in order to create a provision for social care funding.
The government is considering a new tax for the over-40s to help tackle the social care funding crisis, according to a report in The Sunday Telegraph.
Health and Social Care Secretary Matt Hancock says he is “attracted to” the idea of a cross-party plan for a compulsory premium deducted from the earnings of those aged 40 to 65 to help plug the funding gap.
The system would be similar to the one used in Germany where workers over 40 pay 2.5% of their wages into a ring-fenced pot for social care.
The plan also includes offering cash payouts to those receiving care to enable them to pay carers, including family members.
Mr Hancock told The Sunday Telegraph: “I am impressed by the work of the select committees who have come up with a model that is adapted from what was introduced about 20 years ago in Germany, and it appears to be working there.
“One of the reasons I’m attracted to the proposal is that it’s cross party. This is a problem which can only be solved by people coming together behind a solution, because as soon as it’s turned into a political football it makes it extremely difficult to make any progress at all.
“I’m prepared to have a range of options and see if we can build a consensus around one of them rather than be dogmatic about it.”
Earlier this year, a joint Commons committee proposed a new payment be added to National Insurance contributions of those aged between 40 to 65 as part of an inquiry into funding the cost of adult social care.
Dr Sarah Wollaston, chair of the Health and Social Care Committee which helped propose the plan, says it would avoid placing an “unfair” burden on “working-age young employed adults”.
The Local Government Association (LGA) estimates that adult social care services face a £3.5 billion funding gap by 2025, just to maintain existing standards of care.
Meanwhile, figures show that councils in England receive 1.8 million new requests for adult social care a year – the equivalent of over 5,000 a day.
Last month’s Budget provided an extra £240 million per year for two years for adult social care, plus £410 million in 2019-20 for adults and children’s social care.
Councils will also be given £55 million this year for the Disabled Facilities Grant to provide home aids and adaptations for disabled children and adults on low incomes, plus £84 million over five years for children’s services.