For many people the coronavirus epidemic brought social care to the forefront of the political mind. The reality is that for the two main political parties over the last two decades it has been to the fore on several occasions. The 2019 Conservative manifesto committed to bring forward a Green Paper on Social Care with the time scale for publication often announced as ‘soon’. We should not be held back by the widespread truism that only through either another expert led enquiry or political consensus can progress to a solution be made. For what needs to be solved is little disputed – the scale of needs i.e. demands, the provision, i.e. supply and how to pay to meet need.
It is on these three questions that I touch in Paying for Elderly Social Care, co-authored with specialists who bring different perspectives. Take funding and the question which has dominated the discussion of social care for a decade, how we pay for it and who pays for it? No discussion of social care can therefore be complete without some discussion of how we pay for it and who pays for it. Several fundamental challenges and choices must be considered in reaching decision: the question of fairness of burden and benefit within a generation, i.e. sometimes characterised as the feckless versus the responsible and how much the well-off should pay towards the costs of the less well off; the changing demographics of our country and the dependency ratio of those retired versus employed; the intergenerational balance of risk determining the balance between a savings versus a pay as you go approach.
These persist as some of the major challenges which will be accentuated in a post Covid world, where the younger generations are likely to bear the bulk of the burden of the costs resulting from the Covid crisis. In an era of low interest rates, the incentive to save and make provision for the future may be a low priority. So, the capability and extent of an individual’s ability to self-fund will be diminished and given that some people’s care is exclusively or partially paid for by the state, a general understanding of the need for some pooling of risk is essential. Inevitably then some combination of general taxation, hypothecated taxation and co-payment models usually features as part of the solution. However, the general rise of asset prices, and house prices over the last forty years in the UK should make the idea of some element of asset related funding plausible. But given the apparent lack of appetite for such approaches, it may now be timely to offer an additional option.
The success of auto enrolment for pensions indicates that social care insurance auto enrolment might provide an attractive solution. The obvious and overwhelming advantage is that the employed person who paid in would be guaranteed a sum of money to provide for their care as and when it was needed. The scheme would need to provide that sums would be ringfenced, portable and jointly funded by an employer to a minimum level. These features would provide the certainty and the security an individual would need to be confident to invest. There are further possible variations which would make auto enrolment even more attractive such as making the individual’s guaranteed sum of money were transferrable on death to a partner. Moreover, as the individual payment is automatic there is no question of apathy or inertia preventing provision for future need being made.
Three questions nonetheless arise: Is the minimum contribution level likely to be sufficient? How could auto enrolment be made available to the self-employed? What about those already nearing retirement?
If the contribution level is set at a minimum, those with higher incomes or who believe they may have greater need, could contribute beyond the minimum. However, auto enrolment does not provide for the many self-employed, and a solution needs to be found. This could be that a higher contribution level is set for the self-employed, or the employer element of the contribution met by the taxpayer with an element paid by government. Finally, whenever such a scheme where enacted there would be some nearing retirement for whom auto enrolment cannot provide. However, all of these problems can be partially answered by using private insurance to augment the auto enrolment pot.