A compulsory charge will fund the new national social care system, the Government has announced.
It means the rejection of an option including greater involvement for the insurance industry in long term social care, but does mean there is potential for tax increases.
The issue is already forming one of the major election battlegrounds, with Conservatives arguing for a personal voluntary contribution system, rather than a compulsory one, and it now looks set to become even more pivotal with this confirmation.
Unveiling the plan in its Building the National Care Service white paper, Andy Burnham, secretary of state for Health, confirmed that the most popular option through consultation had been selected by the Labour Government.
"The fairest way to help everyone who is affected by a serious disease, illness or disability is for us all to pay into a system so we get free care when we need it," he says.
"I feel very strongly that this is a responsibility we must all help to shoulder.
"And it's clear from what we have heard from the thousands of people who have given us their opinions on this over the past twelve months that people agree," he adds.
Three major suggestions were put forward from last year's Social Care green paper, with 41% of respondents to the subsequent consultation favouring the compulsory option.
The insurance choice proved the least popular, with just 22% preferring it, compared to 35% choosing a partnership alternative.
A tax to fund the new service was not ruled out, but Phil Hope, Minister for Care Services said the Care Commission may play a role in the decision.
"Everybody will be required to contribute," he confirmed.
"We will ask the care commission for a range of choices on how people will pay for a system that offers free care, at the point where people need it.
"When we think of the injustices of the current system, carrying on as we are is simply not a choice."
The new service will be implemented in three stages which will not be completed until the next but one Parliament.
Stage one is the continuation of current reforms and the procedure of the Personal Care at Home Bill.
Phase two will include:
- the creation of a Care Commission to support consensus and advise the Government, including on funding;
- setting up a National Care Service Leadership Group to advise on systems and business processes;
- and from 2014, the extension of coverage so people will receive free care if they need to stay in residential care for more than two years.
Finally, the new National Care Service will be launched.
Nick Starling, the ABI's Director of General Insurance and Health, believes the insurance industry should be a part of the plans and that it can help ease the burden of social care costs.
"With an ever greater strain on public finances and the scale of the funding challenge ahead, long-term social care needs new thinking and new solutions," he says.
"The Government's own findings, in its 2009 Insurance Industry Working Group Report, said that the insurance sector has a key role to play in the provision of long-term care.
"UK insurers stand ready to play their part in tackling this vital issue for the future of the country.
"The new commission needs to work with the insurance industry and not overlook this vital resource," he adds.
Commenting on the decision, James Lloyd, Senior Research Fellow at the think-tank Social Market Foundation, says: "The decision today to again defer making a decision on how to fund long term care reflects the political challenges involved.
"However if the funding of care in old age is to be dealt with, a decision is needed sooner rather than later and the unpalatable truth is that we will all need to pay more and ultimately this will have to be made compulsory for those who don't act voluntarily."
The full details can be viewed at: http://www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH_114922
