New prime minister Andy Burnham wants to fix social care. As more people require it, what is needed to make social care reform work – and would pensions be part of it?

Over the past three decades, every prime minister has promised to deliver social care reform, but all have largely failed, notes the Institute for Government thinktank.

An ageing population and local authorities creaking at the seams mean something will soon give or is already giving. According to the IfG, 40% fewer adults aged over 65 receive care today compared with 2003-04, despite that population growing by 40% in the same timeframe. Councils have also cut many unprotected services to meet their legal obligation to provide care, affecting both young and old.

Shortly after coming to power, the Labour government abandoned reforms lined up by the Boris Johnson government in 2021, then pushed back two years by Rishi Sunak, that would have seen a £86,000 cap on care costs, but it promised the creation of a National Care Service.

Now Burnham, whose father suffers from dementia, said that he will seek to build cross-party consensus for reform. He has reached out to the Conservatives and the Liberal Democrats – though not Reform UK and the Greens. The new PM also said the Keir Starmer-commissioned review by Baroness Louise Casey will be brought forward, with a 'big conversation' on social care now live, and argued that the care workforce needs to be more integrated with the rest of the system.

Burnham avoided discussing how care should be funded but has not ruled out tax rises.  

The funding question is the crux of the matter, however, and where previous reform attempts tended to fail. Despite this – or because of it – some have welcomed the decision to put this debate off. Reacting to Burnham's social care announcement, the Nuffield Trust said: “Burnham has made a good call by not moving onto questions of tax and funding yet. We need to settle what we as a society want social care to do before deciding the fairest way to fund it."

However, it is unclear how anyone will get behind a policy without knowing the price tag or who will pay for it. Policy researcher Daniela Silcock pointed out that Burnham has committed to a National Care Service built on the NHS principle of collective contribution but has ruled out raising income tax, employee NICs or VAT.

"His acknowledgement that reform requires difficult funding decisions is significant, but the routes he has excluded are among the main means of pooling risk across society," she observed. "Burnham has endorsed collective contribution while excluding the broadest instruments for delivering it, which is the tension any funding settlement now has to resolve."  

Ultimately, the scale of the cost means funding social care requires pooling risk across society, she believes, as individuals already face uncertain outcomes from pensions. 

"Private pensions cannot be the main source of care funding because this would leave people with even lower retirement incomes than they are already on course for," she said. 

However, continuing to rely on the housing market as the unspoken source of capital for funding social care is also risky, as rates of home ownership are falling and UK house price increases are trailing inflation in many regions. 

Tom Kenny, chair of the Social Care Working Party at the Institute and Faculty of Actuaries, said resolving how care is funded in a sustainable way must be a key part of any reforms.  

"The current social care system is complex and can be difficult to navigate for those needing care. The launch of the Big Conversation on Care consultation is a positive step forward in raising awareness of how the care funding system currently works and how it could be structured in future,” he said.

In April 2022, the Boris Johnson government brought in a health and social care levy, effectively a rise in national insurance, projected to raise an extra £11.4bn a year in the three years 2022-23 to 2024-25. However, during her short stint at Number 10, Liz Truss reversed this; Rishi Sunak did not reintroduce the levy either. Labour had been opposed to it from the beginning, arguing it unfairly put the burden on working people. To avoid that impression, the Johnson government had also increased dividend tax by 1.25%, but some felt this move was largely performative.

As well as putting off a debate on funding, there has also been no mention of the ownership structures or financial leverage of care and nursing homes, which some studies have suggested are associated with increased mortality.