SJP urges combined public and private innovation to tackle social services crisis


The new SJP report on social protection calls on the government to make reform of social protection and public education its priority after Covid-19.

Social protection needs urgent reform and must draw on expertise and viable financing solutions from both the public and private sectors, according to a new report from wealth management group St. James’s Place. He cautions, however, that funding from the private sector – with individuals continuing to pay for the direct cost of their own care – will be essential.

With the Covid-19 crisis once again highlighting the current state of social care in the UK and the need for urgent reform, the report explains why it is imperative that social care is not again neglected, with effective measures in place to address long-standing welfare issues.

The Social Care Report from St. James’s Place – Tackling the growing problem of social protection in the UK, presents a series of practical ideas for closing the estimated £ 8 billion a year funding gap for social care. This includes general tax increases, a new compulsory social insurance scheme and voluntary complementary private insurance. The report also examines the viability or otherwise of other potential solutions, including whether a “Care ISA” would work. Another option being assessed is the use of existing pension plans to make payments to health care providers in a tax-efficient manner.

St. James’s Place recently partnered with Care Sourcer, the UK’s leading care comparison and matching site, to provide a concierge service to help elderly clients find and fund care. long duration. SJP clients are offered a confidential telephone counseling service with Care Sourcer to help them make the right choices and put the right arrangements in place to meet their long-term care needs.

Tony Müdd, author of the social care report and divisional director of tax and technical assistance at St. James’s Place, says: “Up to 1.4 million people aged 65 and over in the UK receive some form of care.2 However, among the 25% of St. James’s Place customers who are 75 years of age or older, we can see from their experience that the current system is inadequate, complex and unsustainable. Clearly, it does not meet the needs of far too many vulnerable people.

“Successive governments on all sides have been unable to tackle the problem. This is understandable, as any viable solution will ultimately have to include a higher level of public funding, which will require unpopular decisions such as raising taxes or cutting spending elsewhere.

“At St. James’s Place, we believe private finance has a parallel role to play in restarting the system. We propose that the state provide an adequate level of basic support for all, regardless of their financial situation – similar to the state pension system – and that individuals be given the opportunity to ‘supplement Their care using their own wealth.

The St. James’s Place Social Care Report describes a number of innovations that could help create a better and more integrated system for tackling social care issues. This could include granting additional tax benefits on payments from existing pension plans to fund care. Another option explored is a “Care ISA”, building on existing tax freedoms, although the report casts doubt on the effectiveness of such an option in improving the situation of the majority.

Another option could be to use private health insurance, with contributions based on a combination of age, health, family history and level of benefit purchased. This could raise public awareness of the need to prepare for spending on social protection, help spread costs more broadly in society, and shift some of the risk to the private sector. However, the report notes that providers are unlikely to want to enter such a private health insurance market unless they clarify exactly what the state would provide and when.

The report also examines models used in other countries and lessons that could be learned, including the possibility of introducing compulsory social insurance, as used in Germany and Japan, by contributing to a social protection fund. separate that is fenced and managed regardless of state. This would pool risks and potentially allow large sums to be raised in the longer term, but could face problems with public acceptance, especially after Covid, to make larger contributions, especially from employers. , in a new and untested system.

“For this scenario to be achievable for as many people as possible, financial institutions like ours must work with government to create viable investment vehicles so people can save for their complementary care – and the public must be encouraged to participate on a large scale ”, comments Tony Müdd.

“In the meantime, all financial advisors should be equipped to help their clients not only finance their current and future care needs, but also help them understand and navigate the complexities of the current care system. “


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