Following on from today's Health Select Committee report, a new publication from the Joseph Rowntree Foundation considers the merits of creating a 'care levy', which would see each generation paying its own care costs, resulting in a system that is fair, sustainable and easy to understand.

Funding Care: how can each generation pay its fair share? by Donald Hirsch and Philip Spiers, looks at the various options already put forward for funding the care system, including those in the government's green paper, and suggests an alternative approach, where each generation takes responsibility for their own care.

Donald Hirsch said: “Finding funding for a new care system that is fair, transparent and sustainable across the generations is a big issue at the moment. This idea for a new care levy has several advantages: as well as being fair across generations, it would also be affordable, collectable, sustainable, ring-fenced and provide immediate revenue flow.”

This option would consist of three parts:

* As many of today's older people have not put aside funds to cover care costs, a first part of the Care Levy could be to have a modest tax on the assets they have built up. A tax on inheritance could meet the funding gap in caring for this generation.
* Younger people could start to build up funds through additional National Insurance contributions as part of the Care Levy. Each successive age cohort would have the inheritance part of the levy reduced to reflect this. People aged 30 or less when the scheme was introduced would have no levy on inheritance.
* In addition to these two parts of the care levy, care would be funded partly through general taxation as at present and, potentially, through small charges to users.

Julia Unwin, Chief Executive of the Joseph Rowntree Foundation, said: "We haven't yet tested the practicalities of this idea of a new care levy but it is an interesting option, and certainly one worth exploring, as it appears to meet our core criteria for a system that is fair, easy to understand and sustainable."

This report coincides with the publication of Funding social care: what service users say, a JRF report out earlier this week, which detailed the findings of a national consultation with service users. The consultation, led by Shaping Our Lives, looked at what people actually want from the care system.

Professor Peter Beresford, author of the report, said: "The majority of participants were in favour of a general taxation system, seeing it as the fairest and simplest way to fund social care. But it was felt that political fears about raising taxes to cover social care do not take into account the ways in which properly funded social care support could prevent problems, reduce costs and enable people to contribute to society. This provides yet another prompt to further develop discussion on the issue of funding from general taxation."

Julia Unwin added: "Getting this right is vitally important for us all. We need to consider all options in a calm and dispassionate way – and to base the final decision on what will work and deliver the security and care that all of us may need as we age."

"There is never a good time to suggest a new levy or an increase in taxation. But time is running out. We urgently need to look at all the options and work out, together, how we can fund care fairly, for the common good."

http://www.jrf.org.uk/publications/funding-care-fair-share