Andy Burnham's plan to launch a National Care Service could mean millions of Britons paying more than £600 extra a year on their earnings, a new analysis warns. The Labour leader is determined to lead a social care revolution but has been told his controversial plan to axe the pensions triple lock in its present form will not come close to covering the giant costs.
Mr Burnham has now been challenged to rule out tax hikes as concern mounts at the potential bill for the scheme. The Institute of Economic Affairs has sounded the alarm, warning that if the full cost of an £18.5billion comprehensive social care programme was met through income tax, this would be the equivalent of forcing someone earning £35,000 to pay around £505 more a year. In such a situation, Britons earning £40,000 would have to pay approximately £617 more a year, with those on £45,000 having to stump up around an extra £730.
Conservatives challenge Burnham
Conservatives responded to the figures by warning the Prime Minister against “handing hard-pressed taxpayers another crippling bill” and urging him to “rule out hiking taxes again to pay for it”. The Government dismissed the IEA's warning as "nonsense scaremongering" and "fictional tax threats" but the Prime Minister is accused of lacking a "credible plan" to fund a new state system of social care.
Mr Burnham told Labour activists on Tuesday that the National Care Service “will be fully funded, and not through borrowing”. Baroness Louise Casey will draw up a plan for the new service in her role as chair of the Independent Commission on Adult Social Care. Already, there is alarm at the PM's plan for a service based on “NHS principles” when the health service routinely faces crises.
NHS model 'clearly does not work'
Dr Nick White, a surgeon and former healthcare leader who works with the Prosperity Institute, warned that the present NHS model “clearly does not work” and said it is “not hard to imagine” National Care Service costs “spiralling out of control once established”. He said: “In many ways, the NHS should be changing to be more like social care with a mixed model of funding drawn from national taxation, local taxation, insurance and cash pay… Now is the time to have a national conversation about healthcare reform, centred around genuine choice as the engine of improvement, rather than a conversation about a National Care Service.”
The IEA warns that even with Mr Burnham’s plan to alter the triple lock so the state pension no longer ratchets up each year in line with earnings, billions of pounds will still have to be found. The Institute for Fiscal Studies (IFS) expects the triple lock change to save only around £4billion a year in 2034-35. If the shortfall is raised through taxation, according to the IEA, this would be the equivalent of forcing someone earning £35,000 to pay around £395 more a year; those earning £40,000 to pay approximately £480 more, and an earner on £45,000 to be taxed around £570 more.
IFS warns of tax rises or spending cuts
The IFS has warned that “tax rises or other spending cuts will be needed to pay for social care”. It calculated that in order to raise £10billion to spend on social care the Government could hike VAT by 1% or add 1% to all rates of income tax. Downing Street states that the planned service “will not cover bed and board, for which existing means-tested council contributions will remain”.
Back in 2010, when Mr Burnham was Health Secretary in Gordon Brown’s Labour Government, he stamped on reports that a levy of £20,000 would be deducted from elderly people’s estates upon death to fund social care, saying that was not the “right way to go”. But the Conservatives accused Labour ministers of “secretly planning a death tax”. With Mr Burnham now in Number 10, Robert Jenrick – Nigel Farage’s pick for Chancellor in a Reform UK – suspects Labour is planning to “cut your pension” and “impose a universal death tax on grieving families”.
He said: “Andy Burnham pretends he’s straight talking, but his social care plans have a giant black hole in them… Reform will fight this betrayal of our pensioners and protect the triple lock.”
Valentin Boboc, chief economist at the IEA, said: “Politicians can make big promises on social care, but ultimately someone has to pay for them. Reforming the triple lock may slow the growth of pension spending, but it does not provide a blank cheque for a major new entitlement. The Government needs to be honest about the trade-offs. If it wants to spend billions more on social care, it must explain where that money will come from and how much more taxpayers could be asked to pay.”
Shadow Health Secretary Damian Hinds said: “The experts have made clear that Andy Burnham has no credible plan to fund his social care promises. Without a plan to pay for them, families will be left facing either higher taxes or more borrowing. Patients are already waiting too long for treatment, while taxpayers are being asked to pay more for a system that is struggling to deliver. Labour’s proposed National Care Service risks handing hard-pressed taxpayers another crippling bill. We all want to see proper provision in social care. But Andy Burnham must rule out hiking taxes again to pay for it.”
A Government spokesperson said: "Too many people are being let down by a broken social care system, and that is never going to be fixed by this kind of nonsense scaremongering. The reality is that people are already paying eye-watering sums for social care, they are having to sell their homes to fund it, and that problem will only get worse unless we grip it. The Prime Minister has been clear about what we need: a fully funded National Care Service, with free personal care for older people based on need, not ability to pay, so more people can stay in their own homes for longer, rather than moving into residential care too soon. That will be funded by adjusting the pensions triple lock from April 2030 – as part of a better deal for pensioners. We would encourage anyone with views on these issues to engage with the national conversation that Baroness Casey is leading, and the public consensus that we are seeking to build. But simply trying to scare people instead with fictional tax threats adds nothing to that debate, and will do nothing to fix the problem."
