Burnham puts social care reform at top of his agenda

Prime Minister Andy Burnham has hit the ground running with a blizzard of announcements, the majority on the domestic front and intended to give us a sense of where his priorities will lie over the coming months and years.

Our new PM, the seventh in just over 10 years, is also keen to exude a greater positivity and feel-good factor than has perhaps been the case in recent years.

While this is a welcome shift in mood music in the early days of his Premiership, he will know that he faces many of the same intractable challenges that have dogged his predecessors.

Principally, this means finding the keys to unlock the door to increased growth in the UK economy, while working within the parameters of the manifesto upon which his party was elected and within the fiscal rules.

In the short time since Mr Burnham entered Downing Street, the bond and stock markets have remained steady. The markets prefer hard information to feel-good vibes.

As we have seen in recent times, the changing of the occupant in No 10 is not a big deal. What matters is what they want to do with their power and the potential tax and spending implications for businesses and consumers.

So far, the new Prime Minister has announced several policies including capping of bus fares, a rate cut for hospitality businesses, cuts to domestic energy bills and a push to get more young people to take up apprenticeships.

But, by far the policy with the biggest implications for clients, is the plan to transform social care in this country.

In a speech yesterday, the Prime Minister pledged to make fixing social care a central plank of his administration and indicated that he wanted to work with other political parties to bring about lasting change to the system.

He went on to state: “Some of what we want to do in the fuller sense will require difficult decisions.”

This suggests that some form of tax rise is likely to fund the full scale of social care that Burnham wants to bring in, including the possible revival of the so-called ‘death tax’ from Mr Burnham’s time as Health Secretary during the Gordon Brown years.

One suggestion is that the current inheritance tax system under which a 40% tax is levied on all estates above £325,000 could be replaced by a 10% levy on all estates upon death.

According to Vanguard UK, over the next 30 years, the so-called baby boomer generation are expected to pass on around £7 trillion to younger generations.

Whatever route the Government goes down with its reform of social care – capping lifetime care costs, launching a national care service, giving everyone the right to free personal care or something else – how it is funded is likely to have important implications for clients and their families.

We will, of course, keep a close watch on developments in this space and with other shifts in Government policy, ready to make any appropriate recommendations in due course.

As ever, please do get in touch if you would like to talk through anything with a member of the team.