Prime Minister Andy Burnham has prioritized reforming the social care system, which he stated could cost up to £18 billion per year. His goal is to create a system that safeguards the NHS and the elderly, addressing the challenges posed by an aging population. Despite the significant projected cost, Burnham has affirmed that these reforms will be fully funded from existing budgets, ruling out new taxes such as an estate levy or changes to inheritance tax. He also reiterated commitment to not raising income tax, VAT, or National Insurance, which were pledges in the Labour manifesto.
Burnham has initiated three key actions: asking Baroness Louise Casey to accelerate her review into adult social care by a year, which will include exploring the creation of a national care service in England alongside the NHS; focusing on improving the social care workforce, with an emphasis on fair pay; and launching cross-party talks to collaboratively address the issue. He expressed strong belief that social care workers should be among the best-paid in society.
Financial industry experts are encouraged by Burnham's commitment. Lucie Spencer of Evelyn Partners noted the daunting task but welcomed the prime minister's determination. The Financial Vulnerability Taskforce (FVT) and Consumer Duty Alliance suggest that immediate needs annuities could play a role in funding care, potentially allowing pension assets to be transferred tax-free into such annuities. They believe this offers a mechanism for individuals to use private wealth to secure care funding and highlight that current pension savings exceeding £1 trillion represent a significant opportunity for future care needs.
The insurance sector is also keen to contribute, with the Association of British Insurers (ABI) calling for collaborative efforts between government, industry, and society. They suggest the need for new protection products, potentially pre-funded or designed to complement state provision, and incentivizing individuals to plan for long-term care needs. While voluntary systems for long-term care insurance face challenges in take-up due to lack of awareness and future planning, there is consumer appetite for such products, as shown by Vitality research. Experts suggest that a sustainable approach requires joined-up thinking across various sectors to help people make informed decisions for later life.
