This was the question Radio Five Live’s Wake up to Money asked its audience this Monday morning. 2.5% off wages for the prospect of insurance against things going really wrong with your health in later life?
The idea is being trailed by someone (presumably in Government) in advance of a Green Paper on the subject to be released by the end of the year. The idea was first mooted in Government circles in June (see here)
I guess a 2.5% pay cut in exchange for peace of mind may not sound too high a price to pay, but when the problem is so hard to get your head around, any solution that results in a real-time drop in standards of living will prove unpopular.
Unlike a pension, which has the benefit of living better and a funeral plan which sounds a good way of sending yourself off, the prospect of an insurance that takes care of things like dementia (as well as younger problems like MS) is not a red-hot seller.
Another problem for the “pay 2.5% and forget about it” model, is that the kind of people who tune in to Wake Up to Money at 5 am on a Monday morning – aren’t the kind of people who let these things go.
So callers were making all kind of “yes if” statements. Yes- if I get to invest the money in the meantime, yes- if smokers have to pay more, yes- if I get to pick my care – and my retirement home. People who wake up to money don’t do social insurance.
The trouble with any social model is that it relies on cross- subsidies and we don’t know in advance the winners and losers. The same applies to annuities or even to collective pensions like DB or CDC. The “we’re all in this one together” argument is not very popular with those who have (or wake up to) money.
So I guess the answer from the “WU2M” listeners was a conditional yes, with the conditions being that the system had to work for them 100% of the time.
This kind of thinking is pretty worrying, because if you extend it further – you start hypothecating all kinds of things like public spending on schools, the NHS and so on- then you start rebating taxes to those who don’t use those services so that all the money ends in the hands of the childless fitness fanatics who have worked hard all their lives and have pots of money anyway.
Which was where this debate was leading – before we got to 6am – and normal service resumed!
I have no doubt that those who believe in the purest form of capitalism, have created a lot of wealth that has been historically redistributed. I’m sure they don’t want to see higher social taxes to support the smokers and other social delinquents who haven’t displayed the discipline that they have. After all we owe them one.
But the can of social care funding has been kicked suffeciently far down the road , that either the road will run out or some big juggernaut of a financial disaster will run over the can.
The numbers being touted in the program suggest that we have to sort a solution to the social care problem – especially the problem of funding care for the people in the final years of their lives. The Green Paper will be another iteration of reports that go back before Dilnot – all saying that “do nothing” is not an option.
Doing something is harder than doing nothing; it is particularly hard if you are a weak Government, which is why a degree of social responsibility is required. Listening to those who don’t want change, or want change – but only on their terms- will lead to more social unfairness. That unfairness will happen in the short term – as austerity will continue to target the have nots.
So I think it’s time we breathed in hard and prepared for this Green Paper with an acceptance that something like a 2.5% social insurance premium for the over 40’s is needed – unconditionally.