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A care ISA can’t fix social care

The government will need to propose a lot more than just a care ISA to meet the current service challenges.

The Government is reportedly considering an inheritance tax-exempt social care ISA. Lucy Campbell argues that both the policy, and the way it has been developed, show the Government is failing to deal with the challenge of social care funding.

When the Government announced an additional £20 billion for the NHS earlier this summer, one of the biggest outstanding questions was ‘but what about social care’?

Now we have part of an answer, with the Daily Telegraph running a story that the Government is considering an inheritance tax-exempt ISA to encourage people to save more for social care. But this isn’t an answer to the question of social care funding.

A care ISA doesn’t address the real social care funding challenge

In theory, a care ISA could incentivise people to save for their future care needs. But Sarah Wollaston, Chair of both the Health and Social Care select committee and the Liaison select committee, has spoken out against the idea, pointing out that this would only solve the issue for wealthy people who can already afford to save.

This proposal also does not address the real funding problem identified in both the Barker and Dilnot commissions: risk pooling. Essentially, no-one can forecast how much care they will need in the future. The NHS is free at the point of use, so an individual will not face a big bill if they develop health problems later in life - but they will bear the cost of any need for social care.  And there are no private insurance products to insure against care costs. Without risk pooling for social care, a person who develops dementia faces the risk of significant care bills, unlike a person who develops cancer.                                                                                                

A care ISA is another example of bad policy making behind closed doors

Social care is a challenging policy area, and it has been made more difficult by a collective political failure. Since 1997 there have been five public consultations, four white papers, two green papers, two commissions (including a royal commission), two major pieces of legislation, and one policy paper on the subject. The Government’s last attempt at social care reform in the 2017 General Election campaign led to a disastrous U-turn only four days after publishing their manifesto.

The care ISA is a misguided idea, but it also shows a deeper failure: policy making behind closed doors. It is not easy to build political consensus and sound out whether solutions are viable and implementable with limited public and parliamentary engagement. After the 2017 election, the Government has recommitted to a green paper on adult social care – but over its short life the paper has already changed department, changed remit and has been delayed three times. It will need to propose a lot more than just a care ISA to meet the current service challenges.

A cross-party inquiry is still the Government’s best chance at lasting reform

Both parties have favoured short-term opportunism, like maligning opposition policies as ‘dementia’ or ‘death’ taxes. The current pressures in social care (driven by both an aging population and a rise in people living with long-term health conditions) are not unexpected, but a failure to communicate hard decisions to the public has resulted in a service in paralysis.

But there is a better way. At the Institute for Government, we have argued that a cross-party parliamentary inquiry (similar to the Parliamentary Commission on Banking Standards) would be the best mechanism for the Government to build both the political and parliamentary support it needs to take difficult social care policy decisions. Earlier this year, a joint report by the Health & Social Care and Communities & Local Government select committees came to the same conclusion.

If the Government is serious about the social care funding challenge, there are several things it could to do to increase the likelihood of an inquiry’s success, including genuine buy-in from the Prime Minister (and preferably also the Chancellor) and a high-profile, politically savvy chair. It would need to engage extensively with the public, perhaps making use of deliberative methods such as Citizen Assemblies, which encourage participation and present a range of perspectives on an issue. Engagement would not only lead to better policy decisions, but could also be a crucial for raising public awareness (unlike the NHS, public understanding of the social care system is limited). Finally, if the Government sees some of the public buy in to their position, this can give them the courage to take difficult but necessary decisions around care.

Institute for Government

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