You will have by now noticed that the role of the Secretary of State for Health and Social Care is not to do anything important, like sorting out the NHS, but to provide gentle amusement whilst in transit.
Social care is a favourite. According to Richard Humphries of the King’s Fund, the last 20 years has seen a dozen consultations and green and white papers on how social care should be improved, and funded more fairly, but nothing has actually happened.
The present incumbent has now come up with the bright wheeze that "workers could have their pay docked to pay into a new social care fund". "People who made payments could either have all their future care costs met by the fund or, more likely, would benefit from a cap that would mean they did not have to pay care bills above a certain level."
Workers would be free to opt out of the scheme but those who did would get no benefits. Mr Hancock suggests that "auto-enrolment" for social care would just be a simple extension of "auto-enrolment" for pensions, introduced in 2012 and proving more successful than sceptics expected. But that was because employees got the benefit of employers' contribution. That would not be the case here.
Presumably workers, and everyone else, would be allowed to opt in and out according to their financial pressures at those times. Keeping track of what individuals have contributed, their entitlements, and the entitlements of their partners, would clearly be difficult. Maybe Mr Hancock, who must believe history repeats itself will come up with stamps as the solution.
A person’s entitlement, and that of their partner, would be calculated from the value of stamps purchased and when (because inflation will need to be taken into account). Just imagine how many civil servants will be needed to do these individual calculations on top of tax and pensions.
National Insurance was set up in 1911 with much the same mission, except it included pensions. They wanted to keep it simple with every worker (and employer) making the same contribution pro rata to wages. Mr Hancock no doubt has the same simplicity in mind. But his freedom to opt in and out will complicate matters. In pensions this became “Class 1” and then it dawned on the government that the self employed had to be treated differently so Classes 2 and 4 were born. Class 3 is for voluntary contributions. Labour governments are especially fond of complicating further – notably in 1948 and in the 1990s.
107 years on, HM Treasury are still fiddling with it. Class 2 is merging with Class 4 and white van man is unhappy: he thinks he is paying too much whilst others think he gets off lightly.
The key point here is that the handing out of benefits based on stamps (contributions) was deemed discriminatory. National Insurance is now simply a tax and benefits are part of state welfare available to all according (in theory) to need rather than contribution.
In short, National Insurance is a mess and it should be merged with Income Tax. But that won’t happen soon.
Mr Hancock wants to do it all over again. It will fail (if it ever happens) for the same reasons. The poor will opt out because they cannot afford the contributions but, when the time comes, will demand the benefits in the name of fairness. And based on all evidence of recent history, they will be right to assume government will capitulate and pay.
The rich do have an obligation to take care of the poor when social care is needed. There is a need to redistribute in an advanced economy that can afford it. And it is all becoming a great deal more expensive with longevity, increasing mental health problems and social care increasingly needed by those of working age: “It is notable that over half of these additional cost pressures arise from care and support to meet the needs of working age adults.”
Mr Hancock is wrong though to believe that his department, or local authorities or any other part of government, can run insurance schemes better than the free market can. Insurance companies have looked at this problem and walked away: too expensive as a whole. But the upper end of it, just like BUPA, could well be handled by the free market and that would have a small benefit for social care as a whole just like private healthcare has on the NHS.
The simple and effective way to enlarge the private social care insurance market would be to make the premiums tax deductible. What HMRC loses in tax, government saves on welfare. Then treat social care similarly and in harness, but not merged, with the NHS. Simples.