Missed opportunity to address social care funding

The Institute of Fiscal Studies has delivered a fairly scathing analysis of the Budget and have cast doubts on the sums. There was an unexpected shock for pensioners who will see a freeze of the cash value of their tax allowance until it aligns with the personal allowance for the working age population – the so called ‘granny tax’.

Rather than being announced in the Budget speech, this was presented as an aside and a note from HMRC that detailed the implications for pensioners. The note says that in 2013-14, 4.41 million people will be worse off in real terms with an average loss of £83. Within the total, 360,000 individuals aged 65 will lose an average of £285, reflecting the changes in entitlement to age related allowances. It also means 230,000 people will be brought into income tax.

It is an unpalatable but imperative reality that we all have to pay more in the coming years, and those older people who can afford it must also be prepared to contribute.

However, it seems extraordinary that this budget offered a tax break of at least £10 000 to the very wealthy while penalising many pensioners on fairly modest incomes, who are already being squeezed by perpetually low interest rates and inflation that has been running well above the Government’s 2% target.

The IFS has also calculated that if the cuts continued at their same pace for two years after the 2015 election, which looks likely, a further £8bn, 7.5%, would have to be taken out of the welfare budget. This will inevitable have implications for the most vulnerable.

It is disappointing that may older people will see their incomes reduced by the announcement, but it could have been much more palatable. What a shame the extra £3billion by 2015, created by reducing tax allowances for pensioners, couldn’t have been earmarked as additional funds to inject into our crumbling social care system which our recent report Care in Crisis 2012 shows needs investment on at least this scale.

The Government has acknowledged the system is in crisis and have committed to fixing it. They therefore had a great opportunity to go a long way to remedy this crisis and create a funding platform to launch the Social Care White Paper promised in the spring. How unfortunate that they chose not to take it.

Age UK are calling on the Government to reform the adult social care system. Find out more about Age UK’s Care in Crisis campaign and how to sign up to our petition.

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