Conservatives considering new tax for all workers over 40 to tackle social care crisis

Ministers weigh up German model, where 2.5 per cent of wages are paid into a ring-fenced pot

Social care proposals have been delayed after the prime minister was wounded by her ‘dementia tax’ plan (Getty)

All workers over the age of 40 would pay a new tax under plans being considered by the government to tackle the social care crisis.

Ministers have lifted the lid on their thinking ahead of long-delayed proposals, pointing to a system in Germany already backed by a cross-party alliance of UK MPs.

They would introduce a special levy on over-40s, including pensioners – in Germany, it is 2.5 per cent of their wages – which is paid into a ring-fenced pot for social care.

The plan also includes offering cash payouts to the elderly and disabled receiving care, to enable them to pay carers including family members.

Matt Hancock, the health secretary, said he was “attracted to” the idea put forward by a panel of Commons select committees in the summer.

“I am impressed by the work of the select committees who have come up with a model that is adapted from what was introduced about 20 years ago in Germany, and it appears to be working there,” he told The Sunday Telegraph.

“One of the reasons I’m attracted to the proposal is that it’s cross party. This is a problem which can only be solved by people coming together behind a solution, because as soon as it’s turned into a political football it makes it extremely difficult to make any progress at all.

“I’m prepared to have a range of options and see if we can build a consensus around one of them rather than be dogmatic about it.”

Mr Hancock’s comments suggest the plan will form one of the government’s formal proposals in a social care green paper due to be published by Christmas.

The plan is designed to avoid families being left to pay the “catastrophic” costs of social care after the government’s failure to cap bills, or find another solution.

Dr Sarah Wollaston, Tory chair of the Commons Health and Social Care Committee, which helped propose the plan, said it would avoid placing an “unfair” burden on “working-age young employed adults”.

Under the committees’ proposals for a “social care premium”, employees and employers would split contributions, with tax levied through a new mechanism or added to the existing National Insurance scheme.

In Germany, an adult earning a £27,000 salary pays about £675 a year, while those on £50,000 pay up to £1,250.

Mr Hancock has said that major changes are required to cope with the rising number of elderly people needing care and to address injustices in the current system.

His previous proposal, allowing an “opt out” similar to the auto-enrolment system for pensions, was widely seen as not sufficient.

Theresa May was strongly criticised for announcing £20bn for the NHS over the next five years, but nothing permanent for social care – despite evidence that failures in social care rebound on the health service.

The Association of Directors of Adult Social Services warned that the NHS funding was “like pouring water down a sink with no plug in”.

The green paper has been delayed several times, after the prime minister was wounded by her election plan – dubbed a “dementia tax” by critics – for people to pay more towards social care.