Economist Hilary Cooper talks to workingwise.co.uk on the potential implications of the Health and Social Care Levy for older workers.
The Prime Minister has announced a 1.25 percent Health and Social Care Levy which will come into effect from April 2022 alongside a 1.25 percent increase on the dividend tax rate. The HSC Levy is estimated to raise £12 billion per year and will be ring-fenced for health and social care costs. Initially, the HSC Levy will be added to National Insurance, but from April 2023, it will become its own tax with a separate line on our payslips and will apply from then to those working who are past retirement age.
The aim is to help people pay for social care and move away from the current system which forces many families to sell all their assets to meet the costs of care. Under the proposals, patients entering the social care system from October 2023 will not have to pay more than £86,000 over their lifetime, although the cap doesn’t cover daily living costs. More means-tested support will also be provided for those with assets of between £20,000 and £100,000.
Many experts think that by the time it kicks in, only a small fraction of the levy will go towards social care, with most of the money being swallowed by the NHS before it gets anywhere near social care. “Most people think what social care will see will be less than the cuts that have been made over the last 10 years,” says Hilary Cooper, a former government economist and co-author of After the virus, a manifesto for change post-Covid-19.
“The only sense in which they have solved social care is the cap,” says Cooper, “which limits people’s liability and that is significant.” The problem is that, while it will increase demand for care places over the longer term – once the £86K cap is reached, it doesn’t address issues such as staffing shortages and low pay. There are fears that the extra cash will end up in the hands of the private equity bosses of many of the homes rather than helping to address running costs. Care homes are facing a triple whammy when it comes to staffing, says Cooper – the loss of EU staff due to Brexit, the poaching of care staff by other firms with shortages who are able to offer higher wages and the compulsory Covid vaccination requirement. This is on top of longer term changes to the care sector, such as privatisation.
“The levy will push some care homes to the edge,” says Cooper, meaning they cannot operate safely. She adds that care workers will be sad to leave, but says that many will have been traumatised by their experiences during the pandemic of a lack of PPE, the discharge of infected hospital patients into their care and high death rates.
Cooper adds that there are other problems in the care sector which may worsen, for example, the difficulty finding places for dementia patients with challenging behaviour and the rising barrier for access to care in the home. Many pay for private care, but if there are fewer care workers that might be more problematic.
The long and short of it is that more families might need to pick up the caring responsibilities, meaning many carers will have to reduce their hours or may drop out of the workforce to do so.
Cooper says: “It’s a huge mess and unsustainable given the ageing baby boomer population. In the next 10 years it will be a huge political crisis.”
She says that the current crisis is part of a continuum that began during the Thatcher era and fears women, who still tend to be the most likely to take on caring responsibilities, will be the worst affected. “If they stay in work they will be very stressed and it will add to mental health issues. Elder care responsibilities can be very unpredictable,” she says. It will also have a big impact on businesses. “Many of those women will be in their 50s or early 60s in senior management roles. They are not just a cog in the wheel that does not matter. Employers will have invested enormously in them,” says Cooper.
She is executive director of Silver East, the holding company of Caring4Elders, which provides support for unpaid carers and runs workshops for employers to highlight the problems associated with not supporting carers at work in terms of mental health issues, family tensions and stress. “It’s not going to be good,” she says.
She adds that there is little acknowledgement from the Government of the importance of unpaid caring to the economy. She cites the increase in the state retirement age. No thought was given, she says, to what women between the ages of 60 and 66 did with their time. In fact, they were looking after everyone else, from their parents or partners to their grandchildren, providing the unpaid care that enabled others to go to work. “They are the invisible workforce,” says Cooper.
The Women’s Budget Group called for a care-led recovery after Covid, but this seems to have fallen on deaf ears, she says, despite the increasing implications of low pay in the sector and the knock-on impact on working carers. “Women will hold up as much as they can,” she says. “I took early retirement from the civil service when my mum was diagnosed with a terminal illness. I had had a career break for my children. I never expected to be in the same position 20 years later, but I could afford to do that.”
Cooper would like to see more advocates for unpaid carers and much better long-term planning by the Government, but she is not hopeful that those in power are thinking ahead or interested in anything much beyond short-term political concerns. “We are facing the perfect storm of Covid, Brexit and years of cuts,” she says.