1. ITV Report

Age-dependent tax call for care of elderly

Credit: Joe Giddens/PA Wire/PA Images

Wales has an increasingly ageing population and the question of how to fund social care for the elderly is the focus of an independent report out today.

It says spending per head of the population aged over 65 has been declining. That may be because of a squeeze on local authority budgets and it could mean that demand for care is not being met.

The study says the problem is only going to get worse with the population aged over 65, and especially people over 70 increasing in absolute terms and as a proportion of the population over the next two decades.

The report's author, Prof Gerald Holtham, says one solution could be a tax increase of between 1% and 3% with the latter being paid by those over 60.

The economist, who is a former adviser to the Welsh Government, said setting up a social care fund could meet the rising costs of elderly care and also provide investment of several hundred million pounds to the Welsh economy.

Given the open border with England and a tendency for more people to retire to Wales than retire out of it, improved conditions or easier access to care support could mean Welsh taxpayers supporting increasing numbers of people who have not contributed to a hypothecated tax

The steep rise in house prices and the ending of free higher education has left younger generations no better and sometimes worse off than their elders were at the same time of life.

There is an argument, therefore, for levying tax rates that depend on age cohort as well as income.

Doing so could improve intergenerational fairness and it would mean that people pay more at a time of life when they are more conscious of the need to make provision for old-age care.

– Professor Gerald Holtham, Economist

Responding to the report, the Welsh Government say they are continuing to examine options for funding of social care.

We welcome the report by Professor Holtham, which provides an indicative economic analysis of his idea for a system of enhanced social insurance that could help fund social care for older people in Wales.

Work to examine all the options to support the future funding of social care continues. This will be taken forward as part of the work of the inter-Ministerial Group on Paying for Social Care, chaired by the Minister for Older People, Children and Social Services.

– Welsh Government spokesperson