The UK will only be able to pay for future social care for older people by introducing a radical new ‘combined’ social insurance scheme according to a new report from the think tank New Local Government Network (NLGN).
In this report NLGN argues that local government must remain in the driving seat when commissioning care services and facilities for older people, but that the current local funding strains are unsustainable in there present state. With too many frail elderly people being forced to sell and move out of their homes, the report argues that a nationwide ‘combined social insurance’ offer is needed to pay for a higher quality of care for Britain’s ageing population. In particular, a combination of gradual social insurance payments by all should be supplemented by a chance for the baby-boomer generation to buy into a higher-grade of care options through a Government-backed ‘first charge’ on the equity of their properties, only to be recouped after death. In this way, a new higher quality care ‘guarantee’ could commence in 2030 funded by the compulsory social insurance payments, and until then, retirees would have the choice to commit a small portion of the eventual proceeds of their property to an insurance fund to cover their own-home care costs for the remainder of their lives
It is expected over two million extra people will need care by the middle of the 21st century, however state funding for social care is currently growing at a much slower rate than the population explosion among older people demands. Health experts have predicted that the UK is heading for a funding gap of £6bn within two decades unless the system is changed. The Government is expected to publish a new Social Care Green Paper within the next few months.
NLGN’s social insurance scheme would be based on citizens make gradual contributions over the course of their working lives, with regular contributions added to a hypothecated social insurance fund. This scheme may be funded solely on worker contributions or on a national insurance basis with contributions from both workers and employers. Similar scenes already exist in Germany and the Netherlands.
NLGN also calls for a new ‘equity release scheme’ to protect older people from having to sell their homes to pay for care costs. It advocates allowing homeowners the option to pay for immediate care by freeing up a portion of their home value which would only be realised as a ‘first charge’ on their property after their death. The state would cover the immediate costs until such a time that the capital would be available.
NLGN Director Chris Leslie said that the reforms would help more people to grow old with dignity. He said:
“Local and national government need to work together to solve this enormous demographic challenge. We believe that the only option is to move to a nationwide social insurance model, with a transitional phase involving a voluntary ‘first charge’ on home values for those facing care needs before 2030. However, we also believe that a new role for local government should be set out – less reliant on the council taxpayer to fund social care, but more reliant on elected councils to shape how the money is spent and how services are commissioned. A giant national quango for elderly social care would be too unwieldy – we need tailored provision to fit local circumstances and community needs. If councils extend their commissioning powers into the wider health and social care arena over the coming decades, this would be a thoroughly good thing.”