We look at reports of a leaked government proposal to address care home funding, following the tragic deaths in the sector during the height of pandemic. Change is coming.
With the impact of Covid-19 on the economy and on the Treasury’s coffers, a number of new taxes have been mooted recently. A problem that has long been discussed by major political parties is what to do about the funding and staffing of care homes? The Prime Minister committed himself in a speech last year to “fix the crisis in social care once and for all”.
Since then, care homes and their structures have come under renewed scrutiny and concern, tragically, following the high death rates of older patients who were released from hospitals to care homes at the height of the pandemic. Now, according to a story reported in The Guardian, the government is looking at introducing either a new tax or a new compulsory insurance scheme where everyone over 40 would start contributing towards their cost of care in later life.
Apparently, under the new proposal, the over-40s would have to pay more in tax or national insurance, or be forced to insure themselves against care bills in later life. The money raised would then be used to pay for the assistance that frail elderly people need with washing, dressing and other activities, and / or to cover their stay in a care home.
The proposed scheme is said to be similar to those that already operate in Japan and Germany. According to the Guardian: “In Japan everyone starts contributing once they reach 40. In Germany everyone pays something towards that cost from the time they start working, and pensioners contribute too. Currently 1.5% of every person’s salary, and a further 1.5% from employers or pension funds, are ring fenced to pay for care in later life.”
Whatever policy is ultimately implemented by government, it seems that taxes may be about to increase, and savers will need to factor these changes into their long term financial planning. Alongside any central local government changes, hopefully the private sector, if given the opportunity, may be come up with some new free thinking solutions that meet the needs of those paying for their future care costs.
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