LGA consults on increase to income tax and NICs to pay for adult social care

01 August 2018

The Local Government Association (LGA) has launched a nationwide consultation to kick-start a “desperately-needed” debate on how to pay for adult social care and rescue the services caring for older and disabled people from collapse.

The LGA eight-week consultation, therefore, sets out options for how the system could be improved and the radical measures that need to be considered given the scale of this funding crisis. Possible solutions to paying for adult social care in the long-term outlined in the consultation include:

  • Increasing income tax for taxpayers of all ages – a 1p rise on the basic rate could raise £4.4 billion in 2024/25

  • Increasing national insurance – a 1p rise could raise £10.4 billion in 2024/25

  • A Social Care Premium - charging the over-40s and working pensioners an earmarked contribution (such as an addition to National Insurance or another mechanism). If it was assumed everyone over 40 was able to pay the same amount (not the case under National Insurance), raising £1 billion would mean a cost of £33.40 for each person aged 40+ in 2024/25.

  • Means testing universal benefits, such as winter fuel allowance and free TV licences, could raise £1.9 billion in 2024/25

  • Allowing councils to increase council tax – a 1 per cent rise would generate £285 million in 2024/25.

 

The consultation - the biggest launched by the LGA – is seeking the views of people and organisations from across society on how best to pay for care and support for adults of all ages and their unpaid carers, and aims to make the public a central part of the debate.

Recent surveys by the LGA show that 96 per cent of councils and lead members believe there is a major funding problem with adult social care; 89 per cent said taxation must be part of the long-term solution to funding it, and that 87 per cent of the public support more funding to plug the significant funding gap in the sector.

The consultation will run for eight weeks from 31 July. The LGA will respond to the findings in a further publication in the autumn, which will be used to influence the Government’s own expected green paper, forthcoming Autumn Budget for 2019/20 and Spending Review.