The Chancellor should use his first Autumn Statement to tackle the elderly care crisis by introducing ‘elderly care vouchers’, a new Care Isa and employer care savings plans, says former pension minister Baroness Ros Altmann.
Altmann accuses politicians of focusing on pensions while ‘burying their heads in the sand’ over social care funding.
Altmann wants to see employers incentivised to help with social care with tax breaks for care saving plans or elder-care vouchers.
She is calling for a new type of Isa to help people save for care and for existing ISAs into Care ISAs, allowing saving of up to £50,000 per person with an added Government bonus if the money is earmarked specifically for care. The money could be passed on free of Inheritance Tax in a Care Savings Isa for future generations if not used, under her proposal.
She also wants to see tax-free withdrawals from pension funds for money that is spent on care and a stamp duty break for people downsizing to smaller home later in life.
Altmann has accused the Government of failing to tell the public about the need to prepare for care costs.
The call comes as media reports suggest the Chancellor is planning to axe salary sacrifice for all perks except pension, cycle to work and childcare.
Altmann says: “Will Philip Hammond be the first Chancellor to introduce tax incentives to help families prepare for care costs in advance? He could show huge political courage by starting to address this enormous crisis. Signalling to families that millions of them will need some money in later life to pay for care needs, not just pensions, should have been done years ago, but successive Governments have failed to offer any help to families to prepare for care. Government spends billions on private pensions tax breaks, and there is a State Pension to provide a base level of support. But there are no incentives to set money aside for care costs. The Autumn Statement could introduce new initiatives giving tax breaks to encourage people to allocate existing or new savings for care. This would help more people recognise the need to keep money back for later life care costs. Currently, they don’t know.
“The current system actually incentivises councils to push extra costs onto the NHS. The longer councils can delay hospital discharge, the less they will have to pay for an elderly person’s care. This ends up costing the taxpayer far more, as well as being worse for older people. This failure is leaving NHS resources stretched to breaking point, a lose-lose situation for us all.
There are also no incentives for the NHS to save councils money. GPs are not incentivised to prevent care needs, rather than waiting to treat them after problems arise. It could save money and improve people’s lives if GPs could recommend personal alarms, handrails or a bit of home care.”
Jelf Employee Benefits head of benefits strategy Steve Herbert says: “The caring issue is the hidden nasty of the UK workforce. Our soon to be published survey shows that most employers have no idea which of their employers is caring for an elderly relative. The Chancellor is talking about productivity at the moment, and an elderly care voucher system would help with that, but is there the political will to make it happen yet? No – but that is not to say it shouldn’t happen. There is a debate as to whether they would exist as an employee benefit or on a standalone basis, accessible to all, as is happening with the phasing out of childcare vouchers and the move towards Tax Free Childcare coming that is due to start being rolled out from next year.”