Chancellor has chance to address one of biggest social issues of our time - Baroness Altman

• Britain has been sleepwalking into a social care crisis - time to wake up!
• Elderly people who need care face wealth tax and stealth tax while others pay nothing
• More favourable fiscal position offers opportunity to radically reform unfair care system
• Integration and incentives long overdue - consider Care ISAs, employer care saving plans, auto-enrolment, eldercare vouchers, National Insurance

• Dramatic unfairness in social care must be addressed

• Huge focus on pensions, but nothing for pre-funding social care is betrayal of elderly

• Social care for older people is pushing NHS to breaking point - and that's before the baby boomers start needing care in coming years

• NHS cannot keep picking up the pieces of our broken care system

• Babyboomers will need care within next 20 years - huge demographic timebomb for younger taxpayers

• Just giving councils more money is not the answer, that is a sticking plaster, but more radical reform needed too.

There's no single solution to care crisis - having been left so long it needs multiple approaches.

The Chancellor faces a more favourable fiscal position than previously forecast and should seize the opportunity to address the social care crisis that is causing misery to many elderly people and engulfing the NHS. Philip Hammond could be the first Chancellor to introduce long overdue reforms of the broken care system. This should encompass both short- and longer-term policies, including proper integration of health and care, extending National Insurance and new tax incentives to help families prepare for care costs in advance by setting some of their savings or pensions aside, or saving specifically for care. Signalling to families that millions of them will need some money in later life to pay for care needs, not just pensions, should have been done years ago, but successive Governments have failed to tell families to prepare for care. Government spends billions on private pensions tax breaks, and the State Pension provides a base level of income support for older people, but millions of people will also need money for later life care costs too. Currently, they don't know and neither Government, nor individuals, have set money aside. The NHS is already at breaking point as it picks up the pieces of our broken care system, and that's before huge numbers of baby boomers, now in their 60s, start needing care in future. That's where there may be a window of opportunity. Babyboomers are often criticised for having better pensions, savings and other assets than younger people. Of course, not all are well off, but the Government should encourage those that have assets to keep some of their wealth, pensions or savings for care in future.

Elderly people who need care face a wealth tax and an extra stealth tax to fund care:

Councils will only pay for care if people have less than £23,250 in assets, which could include the value of their house, unless they or their partner is still living there. So families needing care face an effective wealth tax. Those with no savings get care costs covered by council taxpayers, but those people who do have some assets have to pay for their own care. But these same people are actually hit twice - and face a stealth tax, on top of this wealth tax. Because of local authority cutbacks, councils are not paying enough to cover the costs of care for those who do get public funding, so those same people who must fund their own care not only have to pay for themselves, they also pay extra for the underspend on those funded by councils. This is clearly unfair. Radical reform is needed, giving councils extra resources can help short-term, but integrating the health and care systems is also required, to remove the artificial divide between health care and social care. Taxpayers simply cannot afford to support increasing numbers of elderly people, but the money must come from somewhere. Encouraging everyone to save for later life care, which one in four will need (and one in two of many couples), would signal that care costs must be planned for and incentivising such savings is vital in our aging population. The Chancellor should consider several reforms:

• Special ISAs for Care Savings: Chancellor could introduce a new type of ISA to help people save for care and could encourage people to switch existing ISAs into new Care ISAs. These could perhaps get an added Government bonus if the money is earmarked specifically for care. This would be a far better use of taxpayer money than subsidising Lifetime ISAs as retirement saving. This could encourage a maximum sum (perhaps up to £75,000) to be set aside, which could be passed on free of Inheritance Tax to form a Care Savings ISA for today's older generations and then passed on to next generations if not used. A 'family care savings plan' could help signal to families that Government won't cover most care costs.

• Allowing tax free pension withdrawals for care: Many baby-boomers have money in their pension funds and now have more freedom to leave their money invested, rather than buying an annuity. The Chancellor could allow tax-free withdrawals from pension funds if the money is spent on care, to encourage people to keep some back in case they need care.

• Tax incentives for employers to help staff save for later life care or auto-enrolment: A pension is not the only money you may need in retirement. Encouraging employers to contribute to a care savings plan for their staff, with similar tax breaks to pensions, could help people build up funds for later life care. Care saving could also be incorporated into auto-enrolment in future.

• 'Eldercare' vouchers to help staff with care costs: Employers could offer elder care vouchers (along the lines of childcare vouchers) which get tax relief as an employee benefit.

• Stamp duty breaks when older people downsize their home: Government could help 'last time buyers' downsize their home. Perhaps with a one-time stamp duty exemption on last home purchase. This could free up some money that could be spent on care in future years.

I do hope the Chancellor will seize the opportunity to start addressing our social care crisis.

ENDS

NOTES FOR EDITORS:

The UK social care system has reached breaking point. It is riddled with unfairness and needs urgent reform. I have identified 10 major failings of social care which the Government needs to address. Tomorrow's Budget could mark the start of a radical overhaul:

1. Government hasn't told the public about the need to prepare for care costs - Government has tried to pretend it is sorting out the problem when in fact the crisis is getting worse. Families are being left to find funds when needs suddenly arise rather than having to prepare for care in advance. Political spin is does not help those in dire need.

2. Lack of integration between health and social care services leaves the NHS paying for those who develop health needs due to lack of care - In Torbay and South Devon, the integration of health and social care has seen emergency hospital admissions for the over-65s almost eliminated. But in most other areas, failure to fund social care, often results in older people ending in the NHS - the most expensive care setting.

3. No financial or tax incentives to help families prepare for care costs in advance: There are significant incentives to help people build up private pensions, but no Government incentives for care savings. There is employer help for pensions and also the state pension to provide a base, but there is nothing for later life care needs.

4. No incentives for councils to save money to NHS - The current system actually incentivises councils to push extra costs onto the NHS. The longer councils can delay hospital discharge, the less they will have to pay for an elderly person's care. This ends up costing the taxpayer far more, as well as being worse for older people. This failure is leaving NHS resources stretched to breaking point, a lose-lose situation for us all.

5. No incentives for NHS to save money to councils e.g. GPs could help patients by recommending preventative measures -currently GPs are not incentivised to prevent care needs, rather than waiting to treat them after problems arise. It could save money and improve people's lives if GPs could recommend personal alarms, handrails or a bit of home care.

6. Health lottery - depending on what's wrong with you, taxpayers may pay all your costs via the NHS, or none if your care needs come under council control. Most people assume the NHS looks after elderly people but they are often left to pay for care themselves.

7. Postcode lottery - Many councils are cutting back care spending, leaving care homes or domiciliary care companies unable to cover their costs.

8. Triple cutbacks in publicly funded care is betrayal of British families - It is estimated that 150,000 fewer people are receiving help at home than five years ago as councils impose triple cutbacks: (a) only paying for those whose care needs are already substantial; (b) cutting the amount of care provided per person (such as 15 minute visits); (c) failing to pay the full costs.

9. Lack of cross-Departmental approach - addressing the care crisis will require several Government Departments to work together - Department of Health, DCLG, Treasury and Housing. The NHS should work with DCLG to properly integrate funding for health and care needs of rising numbers of older people. Treasury must urgently introduce incentives to help families save for care. Housing Ministers must ensure building of suitable homes for 'last time buyers' to downsize to. If people stay in unsuitable homes, rather than being able to move to good quality, smaller, user-friendly housing, they are more likely to need social care.

10. Social care means test and council cutbacks mean the same families facing a wealth tax to fund their care, also pay a stealth tax to fund care for others too. Those with no assets get care costs covered by council taxpayers but councils don't cover the full costs. Therefore those people who have to pay for their own care are hit twice, having to cross-subsidise council underpayments.