Over-40s and the Social Care Crisis:

Tax is never popular, is it? No matter when it comes up, there is room for controversy and scope for outrage. But, the question over who should pay for social care continues to be a pressing one. Nor is it just an issue of recent times. While the matter is becoming increasingly concerning, with the numbers requiring social care ever-rising, it is an issue that has long been on the radar. Successive governments have grappled with it, yet none has found a solid solution.

The Current Situation

Currently, many people who do not qualify for local council-funded care are being put in a situation where they have to sell their homes to cover their costs. When you consider that costs can exceed £1,500 per week, it is easy to see why. 

Last year, Boris Johnson outlined the need for a reform of the current system. The factor it was a prominent feature in his first speech as Prime Minister is perhaps an indication of the gravity of the situation. On the back of this, back in March, the government launched a parliamentary inquiry into the shortage of NHS care. As timing would have it, Covid-19 has meant the issue is all the more prevalent and growing in urgency on a nigh-on daily basis.

The Plan

Warning! This is where it gets controversial.

We probably all recognise that something needs to be done. And when something needs to be done, someone has to foot the bill. So it is that Ministers in Boris Johnson’s health and social care task force are considering a scheme that would see everyone over 40 contribute towards the cost of later life care. The thinking so far is that the 40+’s would be required to pay more in tax or national insurance. Other plans indicate that they would be obliged to insure themselves against substantial care bills.

The models under consideration are derived from similar systems used to great effect in Germany and Japan. Both countries have drawn admiration for the sustainable ways they are solving the challenges that an ageing population brings.

The German Scheme

Under the German system, everyone starts contributing to later life care when they start working. Employers then match their contributions, similar to workplace pension schemes in the UK. Currently, 1.5% of each person’s salary, plus a 1.5% employer contribution, are ring-fenced for social care in later life.

Elderly Germans can use this money to pay carers to help them at home or use them for care home fees. They can even give them to relatives and friends for helping to look after them. 

The Japanese Scheme

The Japanese scheme is similar to the German. The main difference is that people only start contributing at the age of 40.

The Future

These things take time. So, while the plans are in discussion, nothing concrete has been decided just yet. An over-40 model will likely be the outcome, but the exact mechanism by which they would pay is still very much under deliberation. They will, no doubt, be analysing the best possible outcome while heeding the advice of social care experts. The latter have taken pains to point out that any insurance-based model would have to be compulsory to ensure people paid. 

The scheme under consideration has found favour with campaigners. Caroline Abrahams, the charity director at Age UK, said the plan “might be rather a good deal since that system offers a level of provision and reassurance that we can only dream of here at the moment.” She added that the scheme would “arguably [be] an appropriate act of national atonement after the catastrophic loss of life we’ve seen in care homes during the pandemic.”

It will be interesting to see how the government eventually decides to finance its scheme. Watch this space…



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Written by Alex Welsh

Alex is a Resolution-accredited, Chartered financial adviser. Having joined the firm in 2012, he has extensive knowledge of all areas of financial planning.