All of the options will cost a significant amount of money – even maintaining the current system will cost more than is currently available due to increasing demand and inflation.
Currently, adult social care is funded through a complex mix of national government funding, local government funding and individuals’ own contributions.
The majority of funding is not ring-fenced, which means that there is no guarantee that money allocated to adult social care will not be spent on anything else.
In terms of government funding, there is broad public support to increase Income Tax, the introduction of a social insurance scheme, and an extension of National Insurance to people working beyond state pension age.
What is clear is that standing still is not an option – doing so would impact on people’s wellbeing and destabilise the care system.
Increasing the amount of public investment in social care will inevitably require difficult choices, especially because the Government has already promised an additional £20 billion a year to the NHS by 2023/24.
Recent public polling shows that the British public are proud of the NHS and want to see funding for it increase, even if that means paying more tax – and we are starting to see a similar consensus on the need for more funding for adult social care:
- 82 per cent of people said they support increasing public spending on social care by 3.9 per cent a year
- 71 per cent of people said that they would support an increase in Income Tax to pay for adult social care
- Four out of ten people named community and social care services as one of their top three priorities for any new funding – more support even than for routine surgery and primary care
- 84 per cent of MPs and 81 per cent of Peers agree that additional funding should go to councils’ social care budgets to tackle the funding crisis
- 87 per cent of the public agree that councils should be given additional central government funding to deal with the funding gap in adult social care
There are a number of ways that investment in social care could be funded, these include:
Means-testing universal benefits
There are currently some benefits for people over a particular age including a winter fuel payment and a free TV licence, available to everyone.
If we were to start means-testing these, giving them to just those with smaller levels of income and savings, the Government would save money that could be invested in adult social care. For instance, means testing the winter fuel payment could raise up to £1.9 billion a year in 2024/25, which could be spent on adult social care.
Social care premium
This would be a contribution, such as an addition to National Insurance or another mechanism, paid by employers and people over 40, including over 65s. If it was assumed everyone over 40 was able to pay the same amount (not the case under National Insurance), raising £1 billion would mean a cost of £33.40 for each person aged 40+ in 2024/25.
This is a purely illustrative figure and would not be the cost to individuals if the premium was attached to National Insurance given that a person’s employment status and/or how much they earn determines the amount they contribute to National Insurance.
1 per cent on Income Tax
If the Government added 1 per cent to the rate of Income Tax, it would raise different amounts, depending on which bracket of income tax it was added to:
- Basic, for those earning £11,851 to £46,350, would raise £4.4 billion in 2024/25
- Higher, for those earning £46,351 to £150,000, would raise £1.5 billion in 2024/25
- Top rate, for those earning, over £150,000, would raise £450 million in 2024/25
1 per cent on National Insurance
If an additional 1 per cent was added to the National Insurance that all workers pay, it would raise £10.4 billion for the Government to spend on social care in 2024/25.
If those beyond retirement age also paid an additional 1 per cent on National Insurance, it would raise an extra £1.1 billion in 2024/25.
And if the additional 1 per cent of National Insurance was extended to pension income, it would mean an extra 2.6 billion in 2024/25 which the Government could spend on adult social care.
1 per cent on council tax
If council tax was increased by 1 per cent, it would raise another £285 million in 2024/25 which could go towards adult social care.
Charging for accommodation costs
Some people with long-term and complex health conditions currently receive free adult social care which is funded by the NHS and this can sometimes include accommodation costs. However, if those accommodation costs were provided for free to those who most need it and those who could afford to pay were asked to, it would raise £200 million a year which could be spent on adult social care.