The Prime Minister has made clear where his post Brexit domestic priority areas lie – fighting crime, investing in the NHS, levelling up educational standards, investing in infrastructure and reducing the cost of living through creating a high wage, high productivity economy. With a commitment that the spending review will be delivered within current fiscal rules, this suggests some departments will be big losers and others big winners.
Steven Cameron, Pensions Director at Aegon provides comments on:
Social care funding
“As our society continues to enjoy longer life expectancies, we need to face up to the additional costs of providing essential social care for our elderly. Finding a solution to funding social care is one of our greatest future challenges and must be a priority for Government and individuals alike. Repeated delays by the Government to tackle this issue through a promised Green Paper has meant a social care funding solution has been one of the greatest casualties of the Brexit deadlock. The spending round provides an opportunity for the Chancellor to offer some much needed temporary support for local councils struggling to providing care and dignity to a growing numbers of elderly, including those living with dementia. It will be interesting to see whether the Chancellor follows the recommendation of the House of Lords report earlier this summer and stumps up the £8bn they believed was needed to restore service to 2009/10 levels*.
“But additional funding for 2020-21 can only be seen as a stop gap and mustn’t detract from the much more important need to propose, consult on and deliver a sustainable, long term deal for funding social care. While the state has an essential role to play, it is likely that any deal will also involve individuals being asked to pay a share of costs, depending on their wealth, up to an overall cap. Until individuals know what they might be asked to pay, it is extremely difficult to plan ahead, and many fear having to sell their family home, dashing their inheritance aspirations.
”As the Government seeks to move on past Brexit, social care funding must be top of their priority list. A fair and stable solution will give people peace of mind around how they will meet their share of costs should they face spending a period of later life needing social care.”
NHS pensions and the tapered annual allowance
“The Chancellor may take this opportunity to address the problems the pensions ‘tapered annual allowance’ is causing for those in the NHS scheme, where many highly paid professionals are turning down extra work or even retiring early. The Government will want to stop the current drain of highly valuable expertise from the NHS but also needs to avoid special treatment for one particular employment. Removing the taper for NHS employees and others will cost the Government in terms of lower income tax receipts, and the Spending Review may set out how this will be funded.”
Income tax thresholds
“Before being appointed Prime Minister, Boris indicated his desire to increase the higher rate tax threshold from £50k to £80k. He also talked of reviewing the basic rate threshold. Increases in thresholds have an immediate impact on the take home pay of many, and could help alleviate cost of living pressures. The spending review could give an indication of the extent and speed of change we may see in this regard.”
Free TV licences for over 75s
“The Government has so far refused to bow to pressure from the BBC to cover costs if it reverses its decision to provide free TV licenses only to those over 75 receiving pension credit. The Chancellor could use the Spending Review to offer a concession, but is more likely to use it to confirm the Government is not budging on this issue.”
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