Potential National Insurance hike under Damian Green’s care system blueprint
Over-50s could be forced to pay more than £300 a year extra in National Insurance to help fund a fairer social care system under plans drawn up by senior Tory Damian Green.
The former Cabinet minister argues that the care system should adopt the model of the state pension, with everyone entitled to a basic “safety net” of support, but with individuals encouraged to top up this provision from their own savings or housing wealth.
Mr Green, who was in charge of drawing up the Government’s long-awaited green paper on social care for England while he was in government, also set out a range of measures aimed at filling a £2.75 billion funding gap – including a potential 1% National Insurance hike for over-50s.
In his Fixing The Care Crisis paper, drawn up for the Centre for Policy Studies, Mr Green suggests that the National Insurance hike is a “last resort”.
An extra £350 million could be generated by taxing the winter fuel allowance – and stopping it altogether for higher rate taxpayers – and funding could also be found by diverting savings from elsewhere in government.
If required, the 1% levy on National Insurance, which would mean an extra £308 a year for the average taxpayer between 50 and 64, would raise £2.4 billion.
“Taxing the winter fuel payment and taking it away from those who are higher rate taxpayers, allied to either a National Insurance top-up or wider Government savings, would inject £2.75 billion into the system targeted only at residential and nursing care,” Mr Green’s report said.
On top of the £6 billion already provided by the Government, this would cover the cost of the “universal care entitlement” under Mr Green’s model.
This could be boosted by a privately-funded “care supplement”, a new form of insurance which could pay for “rooms, better food, more trips, additional entertainment”.
Mr Green said: “The crisis in our social care system is one of the most pressing issues our country currently faces.
“It causes acute problems for the wider NHS, with 1.98 million delayed transfers in 2017/18 for those moving out of NHS care. The Conservative Party has an urgent need to show that it has ideas about vital domestic policy issues such as this.
“That why I propose a wholesale change in our approach to social care, mirroring the state pension system with the introduction of a universal care entitlement and care supplement.
“By combining this new system with an increase in funding we will be able to tackle this most intractable of political dilemmas fairly and responsibly.”
Robert Colvile, director of the Centre for Policy Studies, said: “This issue has been politically toxic, but we need a solution that commands consensus.
“I urge politicians from all parties to consider these proposals extremely carefully.”