In 2017, Theresa May in effect blew up her own election campaign by attempting to tackle the question of social care. The taxing question was about how we meet the rising cost of supporting an increasingly elderly population. Her focus was on the bill for providing residential care for those who needed support in day to day living. The options throughout appear to have been either that the State saddles the cost or the individual and their family. The risk has always been that elderly people have had to sell their family home and lose their savings in order to pay for care.
May’s desire to deal with the issue head on was admirable. It’s the kind of political action often described as “bold” (Westminster speak for ‘fool-hardy). The issue was perhaps less with her desire to tackle the issue or even the proposal and more with the timing. Big, controversial proposals need time to plan and prepare the ground for. You want to win the argument before, not in the middle of an election. Putting the proposals out there mid-campaign also indicated complacency. The Tories were well ahead in the polls and some suggested that May was using this in order to bring through controversial measures, suggesting she was taking the electorate for granted.
Since then, social care has proven to be the dog that hasn’t barked in an election campaign. However, the challenges haven’t gone away. Alongside that, the other dog not yet truly barking is the related question of pensions. There have been scare stories about whether this or that government will raise the retirement age to 75 or about raiding the pension pots of higher earners for taxation but apart from that we still haven’t had a serious debate about pensions.
I have opinions about both. In fact, I think there is a tie in. The current approach has been to make the Triple Lock a sacred cow alongside the NHS. This means that pensions are guaranteed to rise every year in line with the highest from inflation, pay or 2.5%. I believe it is both good politics and the right thing to do that we commit to ensure that pensioners are well supported. There is also a sense in which pensioners have paid in to this. However, I think that the current system looks increasingly unsustainable. Furthermore, we are not helped by the differences between how the State pension works and how private pensions work. With your private pension, you pay in your contributions and these are invested in order to create your own pension pot. Of course the money isn’t in a separate account just for you in reality but you do have an idea of what your pension is worth. The State Pension does not work like that. Instead pensions are paid for out of current National Insurance and taxes. Workers today are paying for pensions today not for their own future pension.
I have a personal view on how we could tackle both issues together. I might add in a third point that one of the great experiments of the pandemic was the Furlough scheme. It meant that people were able to remain in their jobs and their income as well as the businesses were protected throughout. However, the scheme proved costly and has contributed to economic challenges today.
My proposal would be to scrap the current NI system and create a new national insurance and pension scheme which genuinely worked like other insurance and pension schemes do. In other words, you and your employer would make contributions into the pot and it would be invested. If you or they needed to draw from it at any point in order pay for furlough, unemployment benefits, extended maternity/paternity leave or even your children’s university fees, you would be able to. There would of course be limits to this as the pot would still need to cover your pension later. When you reached retirement age you would be able to then draw down your pension and this would be set at a level with enough to cover things like social care bills. You would have the option of relying solely on this scheme for pension, benefits and social care and you could then pay as much in as you wished over and above a statutory minimum. Alternatively, you could mix and match with private schemes. It would also be possible to opt out completely and rely entirely on a private scheme. Well, that’s of course one option and may not be the best approach. I’m not looking for politicians to agree with my back of an envelope idea. However, what I would be looking for and would encourage you to as well, would be politicians willing to have a serious conversation about these things
Faithroots 