Workers over 40 to be taxed 2.5% to fund cost of old-age care under plans being considered by Matt Hancock
- All workers over 40 would be taxed 2.5 per cent of annual salary under plan
- Money would go towards funding the cost of care based on system in Germany
- Move is aimed at ending the scandal of people selling homes to afford care
All workers aged over 40 would have to pay a fixed levy to fund the cost of their care in old age under plans being studied by Boris Johnson.
The radical proposals are designed to end the nightmare of pensioners being forced to sell their homes to pay for social care.
Commons sources say it would be based on a German system where employees contribute 2.5 per cent of their wages.
All workers aged over 40 would have to pay a fixed levy to fund the cost of their care in old age
Matt Hancock, Secretary of State for Health and Social Care, has previously said he was ‘attracted’ to the idea.
Mr Hancock wrote to all MPs and peers last week in a new move to get all-party agreement to resolve the social care crisis which has beset governments and the elderly for years.
He said that his aim was to deliver a scheme that meant nobody was forced to sell their home to pay for care or was hit by ‘unpredictably large costs’.
Admitting that the reform would not be easy, the Health Secretary said: ‘We need action now, finally, to seek a solution that can support future generations.’
The Mail on Sunday understands that Mr Hancock’s preferred option is similar to the system now in operation in Germany and endorsed here two years ago by a cross-party alliance of MPs.
It would involve the over-40s, including pensioners, paying into a ring-fenced pot for social care which would include cash payouts to the elderly and disabled receiving care.
That would allow them to pay carers, including family members.
One Tory MP privately conceded the new arrangements would not eliminate the possibility of people being taken into care having to sell their homes to pay for it.
The radical proposals are designed to end the nightmare of pensioners being forced to sell their homes to pay for social care
But he insisted it would reduce the possibility by allowing elderly people to pay relatives and other carers to look after them in their own homes and reduce the need for residential care.
However, critics of the German system warn that the levy may have to rise from its current level of 2.5 per cent to between 4.5 per cent and 6.5 per cent over the next 30 years due to rising costs.
At present, Britons have to fund the full cost of their social care until their assets – including the value of their home – falls to £23,250.
In his first speech as Prime Minister last year, Mr Johnson made a dramatic pledge that ‘we will fix the crisis in social care once and for all with a clear plan we have prepared to give every older person the dignity and security they deserve’.
That was followed by a General Election manifesto promise to ‘urgently seek a cross-party consensus’ to ‘bring forward the necessary proposal and legislation for long-term reform’.
MPs noted that Mr Hancock’s initiative comes one month before Jeremy Corbyn steps down as Labour leader.
The Health Secretary was reported last year to believe a cross-party consensus was impossible while Mr Corbyn was still in post.
But last week, Shadow Social Care Minister Barbara Keeley – who served in Gordon Brown’s Labour Government – appeared to pour cold water on Mr Hancock’s approach.
She said: ‘Labour has offered to engage in meaningful cross-party talks and we would be happy to do so.
‘But the process outlined by Matt Hancock is another consultation that provides no help to a system in crisis.’