Elderly Social Care (Insurance) Bill [HL]

Baroness Greengross Excerpts

2nd reading
Friday 16th July 2021 Lords Chamber

[Baroness Greengross (CB)]

I welcome the opportunity provided by this Bill to discuss funding adult social care, but I cannot support the Bill, which offers only a partial, voluntary solution to this challenge and offers nothing to renters. Instead we must develop a sustainable system for funding social care, one that commands enduring support from the whole of society and which gives young people confidence that it will be there to support them in future.

The Intergenerational Fairness Forum, which I chair, held a year-long inquiry to consider a sustainable means of funding social care which meets the test of intergenerational fairness: one in which all current generations share the cost burden, with the heaviest burden falling on those best placed to contribute, so that the costs are not imposed unduly on future generations.

We recommended that a state-hypothecated, mandatory system of social care insurance should be established, overseen by a social care contributions agency. Under our system, the Government would be the insurer of last resort, protecting people against the risk of catastrophic care costs. This will be affordable because risks will be pooled at a population level. We proposed that mandatory social care insurance contributions should be set at the rate of 1%, to be deducted alongside income tax and NICs from the incomes of all working adults from the age of 40 until they stop working. This could rise to 2% for those aged 50 and over if additional resources were required to meet rising care costs. As contributions would be set at a percentage of income, it would be a progressive system.

Sadly, it will take years to accumulate enough resources through social care insurance contributions to pay for current care costs, so, at least for a transitional period, additional revenue-raising policies will be necessary to support public expenditure on adult social care. Our forum recommended a number of additional revenue-saving and revenue-raising measures, with the revenues raised to be ring-fenced for social care.

Even with a sustainable system for funding social care, the state will still be able to provide only a decent, basic level of care—akin to the role of the state pension in our pension system. A more sustainable system of funding social care will be a mixed system with an insurance element and a savings-based element and, for as long as individuals have to make a financial contribution towards the cost of their social care, it makes sense for the Government to incentivise personal saving for those costs.

The time to act is now because the problem is urgent, and a solution is long overdue.