Key facts
- Andy Burnham is considering new taxes, potentially on workers, to fund social care reforms in Greater Manchester.
- The proposed reforms aim to establish a national care service funded on an 'NHS principle' of collective contribution.
- Analysis suggests Burnham's and Healey's pledges could cost the government £46bn to £63bn by 2030.
- Freeing social care at the point of use could cost an additional £18bn annually.
- Aligning capital gains taxes with income tax rates might reduce receipts by £7bn.
- Bond market tolerance for additional UK government borrowing is nearing its limit.
Mayor Andy Burnham is considering new taxes, potentially on workers, to fund a significant overhaul of adult social care in Greater Manchester. The proposed reforms aim to establish a national care service funded on an 'NHS principle' of collective contribution, ensuring individuals do not have to sell their homes to pay for care. This initiative, alongside other spending pledges by figures like John Healey, could cost the government between £46bn and £63bn by 2030, according to analysis by Capital Economics.
The report highlighted that making social care free at the point of use could add £18bn in annual expenditure, while boosting council housebuilding would require an additional £12bn to £23bn. Furthermore, aligning capital gains taxes with income tax rates, a proposal endorsed by Wes Streeting, could lead to a £7bn fall in receipts. Economists like Ruth Gregory have warned that the UK bond market is nearing its tolerance limit for additional government borrowing, with fiscal headroom significantly squeezed.
Burnham has suggested there is 'flexibility' in fiscal rules for investment, but Gregory indicated a ceiling of around £15bn for extra borrowing. The analysis also noted that previous Chancellors, such as Rachel Reeves, faced criticism for tax increases, and that current fiscal headroom is likely closer to £10bn. Andy Haldane, who has advised Burnham, urged caution against using capital gains tax hikes as a primary funding source.