TAXPAYERS are set to see a rise in long-term care contributions phased over the next few years as part of efforts to maintain “vital support” that the fund provides.
The proposed increase in the maximum contribution rate – outlined in the draft Budget unveiled by the government at the end of last month – would initially see it climb by 0.3% in 2028, followed by rises of 0.4% in 2029 and 0.3% in 2030.
It would mean that, by 2030, the contribution would increase from its current 1.5% to 2.5%.
The long-term care fund provides both universal and means-tested support for adults with long-term care needs.
It is maintained through taxpayer contributions – based on assessable earnings and taking into account applicable tax allowances and reliefs – alongside a States grant that stood at £41 million this year, as well as investment income.
However, the intended spending plans released by ministers cite a “sharp increase” in the costs of the scheme over the last couple of years, driven by “a combination of demographic changes and the increasing complexity of care packages”.
Warning that future costs are forecast to keep rising “steadily”, the document highlights that the 2026 Budget produced during the previous government term “provided estimates for 2027 onwards based on an increase in the long-term care contribution rate from 1.5% to 2.5%”.
“At the time ministers confirmed that a thorough review of the long-term care scheme would be undertaken to confirm the size of an increase in the contribution rate and to identify any alternative measures that could be taken to reduce the costs of the scheme,” it explained.
“The internal review has been completed and has confirmed the need to increase the
contribution rate into the fund.”
It also stated that “a number of options” to tighten eligibility criteria or reduce the value of available benefits had been “carefully considered” but “are not recommended for further development at this stage”.
“Options to improve the delivery of long-term care services which could help to mitigate the increasing cost of the overall scheme will be taken forward,” the draft Budget continued.
“However, these actions will take time to implement, and the cost savings will be achieved over the longer term.
“The review concludes that increasing the income into the fund in the short term is the only viable option to maintain the vital support provided by the fund to many local residents living with care needs.”
If approved, the spending plans would also see a one-off transfer of £5 million made from the general revenue fund to support the operation of the long-term care fund in 2027.
Acknowledging “the cost-of-living pressures being felt by many families at present”, it notes that the contribution rate increase will be deferred until 2028 and then “phased in over three years”.
Speaking to the JEP on Friday, former Health Minister and current Public Accounts Committee chair Karen Wilson said that – while she understood why the government had concluded additional funding was required – there was a desire among Islanders “to understand what’s driving the increase”.
She said that, while upping the contribution level could stabilise the fund in the short term, “it doesn’t really address the underlying issue – which is what the demand for care really looks like”.
Deputy Wilson noted that the results of an actuarial review of the Long-Term Care Fund are due in 2027, which could see the plans for the contribution rate adjusted “based on what they find”.
Health policy director Ruth Johnson recently told a Scrutiny panel that efforts to combat spiralling healthcare costs could include more tax funding, higher social security contributions, more “pay-as-you-go” payments and increased private health insurance premiums.
The Health and Social Security Scrutiny Panel heard that the department was examining options amid costs which are forecast to rise by almost 3% a year above inflation for the next 20 years.
Deputy Wilson said: “One of the things that is really important is to be focused on how we’re developing our strategic intentions around health and care generally.”
She continued: “What is it going to look like in 2050, for example, in terms of what the population needs are?
“They’re having to work with data that they’ve got now based on the model of care that they’ve got now, but actually the way to get a better grip on this is to forecast and do some modelling about what we are going to need in the longer term, and then work backwards.
“That really then should allow us to calculate the contribution rate over that time.”
Figures recently released by Statistics Jersey showed that the number of Islanders over-65 had increased by 13% in the past five years, while the number of under-16s dropped by 7%.
